Nonfarm payrolls rose by 50,000 in December, while the unemployment rate edged down to 4.4%, the U.S. Bureau of Labor Statistics reported Friday. But the December gain did little to change the broader picture: employers added just 584,000 jobs in all of 2025, a sharp decline from 2 million jobs in 2024. It was the weakest year for job growth outside of a recession since the early 2000s, Heather Long, chief economist at the Navy Federal Credit Union, told Fortune. 

“This really caps off a year of anemic job gains,” Long said shortly after the report came out. “It’s fair to call this a hiring recession or a jobless boom.”

Markets initially reacted positively to the report but later gave up gains. The S&P 500 was flat and Nasdaq inched up slightly lower. Bond yields were little changed, suggesting investors saw the report as weak but not weak enough to force the Federal Reserve into near-term rate cuts.

Yet under the hood of a relatively stable unemployment rate, the composition of the job growth remains starkly narrow. Nearly all of last year’s net job creation came from health care and social assistance, sectors that rely heavily on government funding. According to Long, roughly 85% of all jobs added in 2025 were created by April, with little momentum afterward. 

In fact, health care alone accounted for about 405,000 of those gains, while social assistance added roughly 308,000. Together, those two sectors contributed more than the entire net increase of 584,000 jobs overall last year, meaning the rest of the economy shed jobs on balance, Long said.

Elsewhere, hiring was flat or negative across much of the economy. Blue collar jobs were heavily hit: manufacturing failed to rebound, and construction posted only marginal gains and mining. Meanwhile, wholesale trade, transportation and warehousing lost jobs over the year. Federal government employment also declined sharply as the White House pushed to shrink the workforce.

“There was no manufacturing revival in 2025,” Long said. “Manufacturing was already weak, and the tariffs didn’t help. After that, you started to see other sectors getting worse too.”

White-collar hiring was no stronger. Professional and business services and the information sector both posted net job losses for the year, reflecting persistent layoffs in tech and corporate roles. 

“In many ways, 2025 was both a white-collar and a blue-collar jobs recession,” Long said.

The unemployment rate, meanwhile, has remained relatively low—but that stability is increasingly misleading, economists say. The jobless rate has risen gradually from 4.0% in January to 4.4% in December, and there are now about 583,000 more unemployed people than a year ago.

In addition, long-term unemployment has climbed, and more workers are stuck in part-time jobs because they can’t find full-time work.

“It’s a slowly weakening job picture,” Long said. “Whatever metric you want to focus on, that story shows up.”

Recent revisions added to the sense of fragility. The Labor Department revised October payrolls down to a loss of 173,000 jobs and November down to a gain of 56,000, confirming that hiring late in the year was weaker than initially reported.

The “jobless boom” is also being sustained by an immigration crackdown that has lowered the labor supply. By reducing the pool of available workers, the administration has effectively reduced the breakeven bar for the labor market; because there are fewer people looking for work, the unemployment rate remains low even as the private-sector engine hits stall speed.

Analysts at Jefferies were cautious to interpret the weak December payroll figure on its own, pointing to firmer signals in the household survey, which they described as “very encouraging.” They noted that employment rose by 232,000 in December while the number of unemployed fell by 279,000.

“The decline in the unemployment rate came from more of the right reasons than we anticipated,” Jefferies economist Thomas Simons wrote, adding that broader underemployment also improved.

Simons also emphasized that December jobs data are among the noisiest of the year and should not be over-interpreted.

 “There is an enormous amount of seasonal noise this month, and even more in January,” he said, noting that upcoming annual benchmark revisions could “re-contextualize the path of job growth over the course of last year.” 

That backdrop helps explain the Fed’s policy direction. Despite inflation remaining above target, the central bank has prioritized supporting the labor market. Wage growth remains relatively strong—average hourly earnings rose 3.8% over the past year—but Long said that strength is unlikely to persist.

“That was the number that surprised me,” she said. “Wage gains are still pretty strong, but I expect them to cool. Workers can feel they’ve lost bargaining power. It’s not just job seekers—people who still have jobs are frustrated too.”

Looking ahead, Long expects the Fed to pause in January, with a possible rate cut in March if hiring continues to lag. “This jobless boom is very uneasy on Main Street,” she said. “There’s justification for more cuts if this continues.”