In superb news, the Bureau of Labor Statistics announced that the economy added 130,000 jobs in January, nearly triple the amount expected. In suboptimal news, the BLS also found in its annual benchmark of data that last year’s economy added only 181,000 jobs instead of the 584,000 initially estimated, amounting to 30,000 monthly job gains across 2025 instead of the preliminary estimate of 49,000.
If this were 2008, such anemic job gains would justify panic. It is no longer 2008, however, and, if anything, both data sets tell the same reassuring story about the contemporary economy: We have no reason yet to fret about mass unemployment.
January’s unemployment rate fell to 4.3%, down from the post-pandemic peak in November of last year. That peak was only 4.5%, still over a full point below the post-World War II average. Job gains can slow down without wreaking havoc across the economy when the denominator of the unemployment rate — that is, the total number of people 16 and older in the labor force (employed or looking for a job) — is facing a long-term trajectory of cataclysmic contraction rather than expansion.
Over 4 million Americans will turn 65 each year from 2024 to 2028, amounting to more than 1.2% of the population hitting the retirement age annually. Meanwhile, the share of Americans turning 16 each year is shrinking, with the absolute value of people aging out of the workforce set to outpace the number aging into it within this decade. This is a problem that’s projected to worsen dramatically over time: the Congressional Budget Office projects that native births will be outnumbered by deaths by 2030, and by 2055, the over-65 demographic will be growing at over three times the rate as the prime-age demographic of 25 through 54 years old.
And President Donald Trump has accelerated this natural shrinkage of the labor force with his immigration policy, with the president estimating that deportations and self-deportations last year amounted to over 2 million immigrants leaving the country.
So adding 181,000 jobs in one year looks a lot less like defeat and more like a success story when the country has coerced over 2 million noncitizens out of its borders and lost more than 4 million seniors who have aged into the entitlement state; doubly so when the content of the jobs gains are so stacked away from the inefficiencies of government and back toward the private sector.
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Since peaking right before Trump won the 2024 election, federal employment is down 327,000 jobs, or 10.9%, its lowest level since 1966. Instead, net job gains are going to healthcare, social assistance, leisure and hospitality, and construction. And while we have to wait for January inflation data to be published, strong nominal wage growth seems to be outpacing inflation substantially, with real average weekly earnings about 1.5% higher than they were when Trump took office.
The January jobs report should be unambiguously good news for Trump if he chooses to stop “Panican” about the economy in his inane attempt to browbeat the Federal Reserve into prematurely and futilely slashing the federal funds rate. The fact is that with the Atlanta Federal Reserve Bank projecting fourth-quarter GDP to surpass our blockbuster productivity growth rate of 5% and the unemployment rate staying closer to half-century lows than half-century averages, neither the White House nor Wall Street has a reason to panic about an economic slowdown.