Unemployment Falls to 4.4% as Economy Adds 50,000 Jobs in December
The U.S. job market continued to grow at a slower pace in December, while the unemployment rate fell sharply.
The U.S. economy added 50,000 jobs in December and the unemployment rate fell to 4.4 percent, the Labor Department said Friday.
Economists expected about 55,000 jobs, with forecasts ranging from 40,000 to 100,000, according to Econoday. Employment increased by 584,000 in 2025, an average monthly gain of 49,000. Private sector employers created 61,000 jobs on average each month in 2025.
Even if the employment figure does not meet expectations, the report is interpreted by markets and analysts as a sign that the job market has regained its footing. The market suggested that the chances of the Federal Reserve cutting interest rates at its meeting later this month have fallen to near zero, a sign that the market believes the Fed will view these numbers as indicating that the labor market does not need additional support from monetary policy.
Employment continued to increase in restaurants and bars. Retail and manufacturing lost jobs. The federal government, which had been cutting jobs, added 2,000, perhaps reflecting the end of the government shutdown. The government-adjacent health care and social assistance sectors have created jobs. Leisure and hospitality added jobs. Private sector payrolls increased overall by 37,000 in November.
Among Black Americans, the unemployment rate fell from 8.2% to 7.5%. The white unemployment rate fell from 3.9 percent to 3.8 percent. The unemployment rate for Hispanics increased from 5 to 4.9 percent. Among Asians, the unemployment rate remained unchanged at 3.6 percent.
Last month, the Bureau of Labor Statistics released employment data for October and November after the government shutdown delayed the collection and release of economic reports. The economy created 64,000 jobs in November, after losing 105,000 in October. The unemployment rate was initially reported to have climbed to 4.6 percent in November, the highest rate in almost four years.
This earlier data was revised to show that significantly more jobs were lost in October and fewer jobs were recovered in November. It is now estimated that there was a loss of 173,000 jobs in October and a gain of 56,000 in November. The unemployment rate for November, however, was revised downward to 4.5 percent, better than previously reported.
Hiring slowed in 2025 as employers adjust to an economy where the workforce grows more slowly. President Trump’s immigration policies have encouraged many of the country’s workers to leave illegally. Thousands more were ordered to leave by immigration authorities who began enforcing U.S. law after years of neglect under President Biden. Economists now estimate that the U.S. economy’s “breakeven point” — the pace of job creation needed to keep unemployment stable — is around 40,000, down from previous estimates of 100,000.
The slowdown in hiring, however, has not slowed economic growth, contrary to many economists’ predictions. The economy grew at an annualized rate of 3.8% in the second quarter of this year, then accelerated to an annualized pace of 4.1% in the third quarter. The Atlanta Fed’s GDPNow indicator, which tracks recently released economic data to estimate growth, indicates that the economy grew 5.4% in the fourth quarter.
This appears to be due to improved productivity of businesses and workers, likely through capital investment and a renewed emphasis on innovation. Productivity grew at an annualized rate of 4.9 percent in the third quarter of last year, Labor Department data showed Thursday, and 4.1 percent in the second quarter.
The Trump administration says its policies are behind this shift from growth through immigration to growth through investment. In a speech Thursday in Minneapolis, Treasury Secretary Scott Bessent described the administration’s economic strategy as being built around the “three I’s” of innovation, investment and income. This contrasts with the Biden administration’s economy, which Bessent said was characterized by three different I’s: immigration, high interest rates and inflation.
The average hourly wage for all nonfarm private sector employees increased 12 cents, or 0.3 percent, to $37.02. Over the past 12 months, the average hourly wage has increased by 3.8 percent, well outpacing the rate of inflation. As a result, household purchasing power increased.
The Trump administration has also reduced the size of the federal government’s workforce. Through November, government payrolls fell by 265,000 people.
The Federal Reserve backed away from cutting interest rates last year, despite fears of a slowdown in the labor market. Fed Chairman Jerome Powell said the central bank was reluctant to cut rates because it expected President Trump’s tariffs would raise consumer prices significantly, risking higher inflation if households and businesses viewed the increases as likely part of a longer-term trend for the economy. However, after months of tariffs and billions in revenue collections, the effects on prices proved more limited and contained than many economists had hoped.
The Fed ultimately 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 meeting in November.) The Fed has since signaled that it will likely refrain from further changes to monetary policy, while watching how the economy absorbs those cuts.
