But is the worst behind us? After rising for 34 months, unemployment took a dip in December 2025, with the unemployment rate dropping from a revised 4.5 percent down to 4.4 percent. And, the unemployment level fell by 278,000 from 7.78 million down to about 7.5 million. This is great news for the economy, and […]
But is the worst behind us?
After rising for 34 months, unemployment took a dip in December 2025, with the unemployment rate dropping from a revised 4.5 percent down to 4.4 percent. And, the unemployment level fell by 278,000 from 7.78 million down to about 7.5 million.
This is great news for the economy, and could mean — although only time will tell — that peak unemployment might have been reached in November. For the current cycle, the unemployment level is currently up by 1.75 million since January 2023 — 1.3 million of which happened before President Donald Trump was sworn into office.
Looking at real-time data, continued jobless claims increased during the week of Dec. 27 by 56,000 on a seasonally adjusted basis and 323,000 on an unadjusted basis. But that’s rather normal right after Christmas. There could still be a little bit of time left on the cycle, and depending how the population adjustment is ascertained [in January], next month’s jobs report could also show further uptick.
The longest period for increasing unemployment in modern history was 39 months, from March 1989 to June 1992 when it rose by 3.8 million to 10 million. So, the current trend is bound to end likely sooner rather than later, if it did not just end altogether. The good news is that whatever weakness economically arose out of the great inflation of the Biden era should almost be over.
More good news comes from average weekly earnings, which are growing on an annual basis of 3.75 percent, still outpacing the current inflation rate of 2.7 percent.
Going forward, if unemployment continues falling, more Americans will be finding jobs, moving into new rentals, buying homes, and spending more money, and demand will increase. That’s usually when inflation begins to heat up again. How that manifests itself will depend greatly on the supply side of the equation. Are we growing more food? Breeding more cows? Overall, are markets being flooded with goods in the supplies necessary to keep inflation cool or to even help prices to fall?
And will incomes and wages continue to stay ahead of inflation, as they have since mid-2023? If so, then the worst might be behind us, but it could still be a little while before the American people feel it.
Robert Romano is the executive director of Americans for Limited Government, a conservative 501(c)(4) nonprofit organization that says it is dedicated to restoring constitutionally limited government, allowing individuals to pursue life, liberty, and happiness.
Robert Romano
