U.S. labor market signaled most pronounced easing, as 2025 capped off with an expected rate hike that left increasingly good job market in the dust. Employers created a meager 50,000 jobs last month. That small increase points to a bigger story of cooling hiring over the course of the year. While the unemployment rate fell a tick to 4.4%, worries about a fragile job market remain strong.
Today’s Labor Department report was sobering. Further, in 2025, the average monthly job gains decreased to just 49,000, the lowest rate since the massive job losses caused by the onset of the Covid pandemic in 2020. By way of comparison, 2024 had an extremely robust job creation rate. It averaged a remarkable gain of two million jobs per month. This visual drop off begs the question: what is underlying this dramatic increase in lagging job growth.
Myriad policy shifts enacted by his predecessor, US President Donald Trump, have surely reshaped the locus and flow of labor market forces. The administration’s changes were wide-ranging, but notable aspects included retaliatory tariffs that shattered trade partnerships. They included an immigration crackdown that shrank the available labor pool and austerity measures, both of which likely constrained economic activity. Collectively these actions have created a climate wherein hiring has significantly and consistently cooled over the past year.
While job creation numbers are soft, the anticipated wave of mass layoffs never came. Yet this surprising stability is a bright spot in an otherwise grim picture. Despite the growth, some analysts are pointing out that the labor market is quite weak. Yet despite these challenges, they find encouraging prospects for job creation in various industries.