US job growth slows in December; unemployment rate eases to 4.4%

• December's 50,000 jobs added followed a downwardly revised 56,000 in November, with the labor market remaining in a 'no hire, no fire' mode
• The BLS estimates about 911,000 fewer jobs were created in the 12 months through March 2025 than previously reported, with a benchmark revision coming next month
• Economists increasingly view labor market challenges as structural rather than cyclical due to tariffs and AI factors, making Fed rate cuts less effective for stimulating job growth

Summary: US Job Growth Slows in December; Unemployment Rate Eases to 4.4%

Key Employment Figures:

US nonfarm payrolls increased by only 50,000 jobs in December, significantly below the 60,000 forecast and down from a downwardly revised 56,000 in November. The unemployment rate improved to 4.4% from a revised 4.5% in November (originally reported as 4.6%).

Primary Drivers:

Job growth slowdown is attributed to business caution over import tariffs and increased artificial intelligence investment. Economists describe the labor market as in "no hire, no fire" mode, with the economy experiencing a "jobless expansion" despite strong GDP and productivity gains in Q3.

Policy Impact:

President Trump's aggressive trade and immigration policies have reduced both worker demand and supply. The labor market lost considerable momentum throughout 2024, though economic output surged due to AI spending.

Benchmark Revisions:

The Bureau of Labor Statistics estimated approximately 911,000 fewer jobs were created in the 12 months through March 2025 than previously reported. The agency will publish formal benchmark revisions with January's employment report and is reforming its birth-death model starting January to improve accuracy.

Market Implications:

The Federal Reserve is expected to leave interest rates unchanged at 3.50%-3.75% this month after a quarter-point cut in December. Economists increasingly view labor market challenges as structural rather than cyclical, suggesting rate cuts may be less effective at stimulating job growth. Analysts estimate 50,000-120,000 monthly jobs are needed to match working-age population growth, indicating the current pace barely meets minimum requirements.