The U.S. labor market experienced its slowest job growth since the COVID-19 pandemic in 2025, adding only 584,000 jobs for the year according to data from the U.S. Bureau of Labor Statistics (BLS). This represents a drastic decrease from the 2 million jobs added in 2024 and marks the weakest non-recessionary growth since 2003.
The unemployment rate remained stable at 4.4% in December 2025, with approximately 7.5 million Americans classified as unemployed. However, the report reveals deeper challenges: 6.2 million people who want jobs aren't actively looking and aren't counted in unemployment figures, while 5.3 million are working part-time for economic reasons—an increase of nearly 1 million over the past year.
December 2025 saw only 50,000 new jobs added, signaling ongoing economic pressures. "This was the worst year of job gains for the US economy since 2020 during the COVID-19 pandemic. And if you exclude recessions, this was the worst year for job growth for the US economy since 2003," stated Matt Egan of CNN, highlighting the historical significance of the slowdown.
Artificial intelligence and automation are identified as major contributors to the labor market challenges, particularly affecting entry-level positions in customer service, manufacturing, and technology. Companies are increasingly shifting toward automation to maintain profit margins amid inflation, economic pressures, and increased tariffs.
The report shows concerning parallels to pandemic-era statistics: layoffs in 2025 were on par with 2020 levels, and a quarter of currently unemployed individuals have been jobless for over six months—matching pandemic-era figures. For the first time since 2021, the number of unemployed Americans has outpaced job openings.
Despite the somber employment data, stocks reacted positively to the report, opening higher as investors interpreted the weak job growth as potentially delaying Federal Reserve interest rate hikes. Sector performance varied, with healthcare showing resilience while construction faced volatility.
Looking ahead, JP Morgan's December 2025 report predicts continued slow growth in the first half of 2026, while the Society for Human Resource Management (SHRM) anticipates entry-level positions will continue to be impacted by AI displacement. Additional labor market data is scheduled for release by the BLS in early February 2026.
