The U.S. labor market continued to grow at its cooler pace of growth in December
The U.S. economy 50,000 jobs in December and the unemployment rate fell to 4.4 percent, the Labor Department said Friday.
Economists were expecting around 55,000 jobs, with forecasts ranging from 40,000 to 100,000, according to Econoday.
Last month, the Bureau of Labor Statistics published jobs data for October and November after the government shutdown delayed the collection and release of economic reports. It showed the economy added 64,000 jobs in November after losing 105,000 jobs in October. The unemployment rate climbed to 4.6 percent in November, the highest in almost four years.
Hiring has slowed in 2025 as employers adjust to an economy with a slower-growing workforce. President Trump’s immigration policies have encouraged many workers in the country illegally to depart. Thousands more have been ordered to leave by immigration authorities who have begun enforcing U.S. law after years of neglect under President Biden. Economists now think the “break even” rate for the U.S. economy—the pace of job creation required to keep unemployment steady—is aroound 40,000, down from prior estimates of 100,000.
The slowdown in hiring, however, has not slowed economic growth, defying the predictions of many economists. The economy grew at a 3.8 percent annualized pace in the second quarter of this year and then accelerated to a 4.1 percent annualized pace in the third quarter. The Atlanta Fed’s GDPNow gauge, which tracks newly released economic data to estimate growth, has the economy growing at a 5.4 percent pace in the fourth quarter.
This appears to be driven by businesses and workers improving productivity, likely through capital investment and a renewed emphasis on innovation. Productivity rose at a 4.9 percent annualized pace in the third quarter of last year, data from the Department of Labor showed Thursday, and 4.1 percent in the second quarter.
The Trump administration says its policies are driving this shift from growth through immigration to growth through investment. In a speech in Minneapolis on Thursday, Secretary of the Treasury Scott Bessent described the administration’s economic strategy as built around “three Is” of innovation, investment, and income. This contrasts with the Biden administration’s economy, which Bessent said was characterized by a different three Is: immigration, high interest rates, and inflation.on
The Trump administration has also been shrinking the size of the federal government’s workforce. Through November, the government’s payrolls shrank by 265,000.
The Federal Reserve held off on cutting interest rates last year despite concerns that the labor market appeared to be softening. Fed chairman Jerome Powell said that the central bank was hesitant to cut rates because it expected President Trump’s tariffs would push up consumer prices significantly, risking higher inflation if households and businesses saw the increases as likely to be part of a longer-lasting pattern for the economy. After months of tariffs and billions of revenue collected, however, any price effects have proved smaller and more contained than many economists expected.
The Fed eventually decided to cut interest rates, reducing its benchmark rate by a quarter point at each of its meetings in September, October, and December. (There was no November meeting.) The Fed has since signaled that it is likely to hold off on further shifts in monetary policy as it watches to see how the economy absorbs those cuts.
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