JANUARY 13, 2025 – NEW JOBS SOAR, RATE CUTS LIKELY TO BE SLOWED
The Labor Department released the December employment report which reported 256,000 new jobs were created, far exceeding the expectation for 150,000 new jobs. The unemployment rate fell to 4.1 percent from 4.2 percent in November. A good employment indicates the labor market has recovered from the slow down experienced this summer, and may be poised to take off. Average hourly wages were up 0.3 percent from November, or 3.9 percent year-over-year.
Such a strong labor market will likely support the Fed’s plan to slow down the pace of rate cuts for the short term. The US economy added over 2 million jobs in 2024, double expectations at the start of the year. The unemployment rate seen to be at a point that is sustainable over the long run, and the labor market is not too strong to derail the trend to a 2 percent inflation rate. US GDP grew by 2.5 percent last year, well ahead of the 1 percent growth predicted 12-months ago.
The Fed has reiterated they will be more cautious toward additional rate cuts, citing an improvement in the economy since they began policy easing in September. The Federal Reserve’s first meeting of this year is scheduled for January 28-29.