Hiring freeze, How AI is replacing half of recent unemployment rise, Wolfe Research

U.S. employment figures for December presented a muddled picture of the American labor market.

Clouding the portrait were nonfarm payrolls, which showed that the number of jobs added during the month was fewer than anticipated, while the totals for October and November were also revised lower.

Yet the unemployment rate, which some analysts suggested would be more consequential to a Federal Reserve that has been heavily focused on joblessness when calibrating recent policy decisions, was cooler than expected at 4.4%.

In general, the data left many on Wall Street with the sense that little had changed in what has become common refrain about the job market: Business are neither hiring nor firing workers.

But, according to analysts at Wolfe Research, industries exposed to artificial intelligence have begun to experience persistent net job losses.

Underlining the emerging importance of AI in shaping the American workforce, the analysts led by Stephanie Roth said their research has found that the nascent technology accounts for roughly 35 basis points — or nearly half — of the rise in the unemployment rate since the launch of OpenAI’s ChatGPT chatbot in November 2022.

The rest of the increase can be chalked up to cyclical factors, which have tempered by a crackdown on immigration into the U.S. “tightening sectors with a foreign-born workforce” such as construction, building, or maintenance.

“Looking ahead to 2026, we expect continued pressure in the most-exposed industries, while a cyclical pickup and easing constraints on government hiring should partially offset rising AI adoption elsewhere,” the analysts wrote.