Artificial Intelligence and Tariffs Impact U.S. Job Market

U.S. job growth in December slowed significantly due to business caution amid rising tariffs and artificial intelligence investments. The unemployment rate fell to 4.4%, leading the Federal Reserve to maintain current interest rates. Employment data revisions and economic challenges signal ongoing labor market structure issues.

U.S. job growth showed an unexpected slowdown in December as businesses exercised caution in hiring amidst the impacts of import tariffs and increased investments in artificial intelligence. Despite this slowdown, the unemployment rate decreased to 4.4%, prompting expectations that the Federal Reserve will maintain steady interest rates this month. The Bureau of Labor Statistics reported that nonfarm payrolls rose by 50,000 last month, following a downward adjustment for November's figures.

Analysts describe the labor market as being in a 'no hire, no fire' mode, indicating a period of jobless economic expansion attributed partly to a boom in AI investments. The previous year saw a slowdown in job growth due to policies on trade and immigration under President Donald Trump, which affected both employment demand and supply.

The Bureau acknowledged overcounting in job creation data from recent years, with 911,000 fewer jobs estimated than previously reported. The issue is related to the birth-death model used for job estimation. In addition to these findings, annual revisions to survey data have been published alongside the December report. As tariffs and AI continue to affect hiring, economists see these labor market challenges as structural, lessening the efficacy of rate cuts to boost employment.

(With inputs from agencies.)