Job Growth

In December 2024, the US economy demonstrated significant job growth, adding 256,000 jobs, far exceeding economists’ forecasts of 164,000. This unexpected growth may influence the Federal Reserve’s approach to potential future interest rate cuts.

Non-Farm Sector Growth

The number of non-farm jobs increased by 256,000 after a revised upward growth of 212,000 in November. The Bureau of Labor Statistics reported that this growth indicates strong demand for labor in the US.

Unemployment Rate

The unemployment rate in December stood at 4.1%, slightly below the expected rate of 4.2%. The monthly increase in average hourly earnings also slowed to 0.3%, in line with estimates.

Federal Reserve Caution

The Federal Reserve, which cut borrowing costs by 25 basis points in December and by a full percentage point last year, expressed caution regarding further cuts. The minutes from the latest Fed meeting also indicate that some members are paying more attention to President-elect Donald Trump’s plans to introduce substantial new tariffs.

Impact of Trump’s Policies

Price growth could slow due to changes in Trump’s policies, potentially complicating the Federal Reserve’s goal of achieving a 2% inflation target. Fed officials agree that there is no need to rush further interest rate cuts.

Market Forecasts

Markets now forecast fewer than two rate cuts this year, with the Fed expecting to maintain rates at its upcoming meeting this month. The first cut is not fully priced in until June, when there may be more clarity on Trump’s trade proposals.