U.S. Unemployment Rate Falls to 3.5% in December: What It Means

The U.S. labor market continues to demonstrate remarkable strength as the unemployment rate fell to 3.5% in December, matching its lowest level in half a century. This positive news comes as the Labor Department reported impressive job growth, signaling continued resilience in the American economy. In another indication of the resilience of the labor market, employers added 223,000 jobs in December, while the unemployment fell to 3.5%, the Labor Department.

December Jobs Report Highlights

Today, the Bureau of Labor Statistics reported that the American economy added 223,000 jobs in the month of December, and the unemployment rate fell to a historically low point. Today we learned that U.S. employers added 223,000 jobs last month as the unemployment rate fell to just 3.5%, matching its lowest level in half a century. And at the same time, wage growth showed signs of moderation, potentially easing concerns about persistent inflation. This paints a complex picture of a robust, but potentially cooling, economy.

Unemployment Rate Details

The unemployment rate edged down to 3.5 percent in December and has remained in a narrow range of 3.5 percent to 3.7 percent since March. The number of unemployed persons edged down to 5.7 million in December. (See table A-1.) Among the major worker groups, the unemployment rates showed little change. This consistency suggests a generally stable labor market across various demographics.

Looking Ahead

While some forecasts predicted a slowdown, U.S. job growth likely slowed to a still-healthy clip in December while the unemployment rate held steady at 4.2%, reinforcing the Federal Reserve's cautious approach to future interest rate hikes. The Federal Reserve will likely consider this data carefully as it navigates the delicate balance of combating inflation without triggering a recession. This latest jobs report provides further evidence that the U.S. labor market remains a key driver of economic activity.