A bad year for the U.S. jobs market can't get any worse. Or can it?

By Jeffry Bartash

2025 was a terrible time to be looking for work

A man delivers consumer purchases during the holidays. The economy isn't adding many jobs, but layoffs are also low.

The best thing that could be said about the U.S. jobs market at the end of 2025 is at least it didn't get any worse. And maybe - just maybe - hiring might improve in the new year.

That's the main takeaway of economists after a deep dive into the widely anticipated December jobs report, the first "normal" one since the end of the U.S. government shutdown.

"We would regard today's report as somewhat comforting in that we didn't see the jobs picture decelerate further, but we would have a hard time characterizing hiring as anything but anemic," summed up Rick Reider, CIO of global fixed income at BlackRock.

In December, the U.S. added a net 50,000 new jobs. That is, the economy created 50,000 more jobs than it eliminated.

Taken by itself, it's a paltry increase. By contrast, the economy added an average of 168,000 new jobs a month in 2024.

The total number of jobs created last year, what's more, was the lowest in any year since 2003 if recessions are excluded. The U.S. created just 584,000 new jobs in 2025.

Additionally, almost all of the hiring was limited to just two areas of the economy: healthcare and hospitality. Hiring was either stagnant or declined last year in every other major industry.

For people who lost their jobs or were looking for one, it was a tough year to be unemployed.

The sharp slowdown in hiring took place even though the U.S. economy grew well above its normal speed in 2025, at least based on gross domestic product. Last year's GDP figure is likely to show growth of as much as 2.5%.

Why the disconnect?

Economists largely blame the uncertainty caused by high U.S. tariffs implemented by the Trump White House. Other factors include cuts to federal employment and more widespread use of artificial intelligence to replace some jobs.

"Headwinds from tariffs, DOGE cuts, weakness in construction, and AI adoption held back job growth in 2025," said Bill Adams, chief economist at Comerica.

Hiring might rebound in 2026, economists say, but probably not in a big way. Businesses are expected to hold the line until they get a better sense of whether the economy shows more improvement.

There were a few bright spots in the December jobs report. The unemployment rate fell to 4.4% from 4.5% - the first decline in seven months - and worker pay increased at a faster rate.

The low unemployment rate, perhaps the biggest surprise of the postpandemic labor market, has been a lifesaver for the economy. Companies aren't adding a lot of new jobs, but they aren't eliminating many either.

The result: Most breadwinners still have jobs, and they are still spending. That's a big reason why the economy has kept growing and is likely to continue to do so.

Still, it wouldn't take much for the fragile labor market to take a big turn for the worse. If the economy began to slow and layoffs surged, the five-year-old U.S. expansion would be in big trouble.

"It gives one pause to think about what the situation might look like if the economy began to slow and companies started actually making job cuts," Rieder said.

Few economists see such trouble on the horizon, but a jobless expansion can't go on forever. The first few months of 2026 should help provide an answer as to what happens next.

"The real question is whether the evident cracks in the labor economy fade or widen in the coming months," said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

-Jeffry Bartash

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01-10-26 0900ET