Employers Slow Hiring Amid Rising Costs, AI Integration, and Policy Risks
Hiring momentum faltered as employers grappled with mounting cost pressures, accelerating AI adoption, and shifting trade policies. The labor market added just 60,000 jobs in December—capping a year with 670,000 total payroll gains—a stark slowdown from 2024's 2 million job surge. Unemployment dipped to 4.5%, but the improvement rang hollow as businesses froze expansion plans.
Artificial intelligence emerged as a silent disruptor, enabling productivity gains without headcount growth. Companies prioritized margin protection over hiring, leaving job openings stagnant. The result: a frozen labor market characterized by minimal hires and even fewer layoffs.
Monetary policymakers remain sidelined after delivering three late-2025 rate cuts. With inflation still above target, officials demand conclusive cooling evidence before considering further moves—a stance likely extending through Q1 2026.
