Dismal Job Growth, Decent Jobs Report
Stable unemployment the best we can hope for given stagnant workforce
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Today’s jobs report is disappointing at a glance. U.S. employers added just 50,000 jobs in December, and employment actually declined by 67,000 jobs during 2025’s fourth quarter.
Industry dynamics remained pretty much unchanged in December, with momentum confined to healthcare, private education, and leisure and hospitality. Half of the major industry sectors lost jobs for the month, and it was a particularly difficult month for construction and trade, transportation, and utilities.
No way around it, tariffs are crushing domestic manufacturing, which lost jobs for the 8th straight month in December. Industry employment has declined by 68,000 over the past year.
Overall, 2025 was a dismal year for employment growth, as you can see below, and the economy would have lost jobs were it not for the scorching hot and utterly noncyclical healthcare sector.
Even so, this was a decent-enough jobs report. The unemployment rate fell to 4.4% (technically 4.38%), the lowest since August, and the prime age (25-54) employment-to-population ratio rebounded to 80.7%, while the prime age labor force participation rate remained near the cyclical high.
Given immigration policy and demographic dynamics, the workforce is not growing. As a result, we need to add very few jobs to keep unemployment stable.
The Upshot
We’re not adding jobs, but prime age employment and workforce participation are relatively high and stable. It’s not the economy I want, and there will be downstream problems, particularly for anyone who needs a job, but stable unemployment and anemic job growth is the best we can hope with a stagnant workforce.
What’s Next
This week was loaded with important data releases (beyond just this one), and Anirban will cover all of them in Week in Review, our every-Friday post that covers everything you need to know about the economy in a breezy, five minute read. That’s just for paying subscribers. If that’s not you and you want it to be, just click the button below:
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