Key takeaways
- U.S. employers likely added 153,000 jobs in December, close to the common over the past six months, while the unemployment rate likely remained at a comparatively low 4.2%.
- The labor market has slowed because the post-pandemic boom, but has remained stable.
- The trajectory of the labor market next 12 months is uncertain and will rely on the policy decisions of future President Donald Trump.
The U.S. economy is probably going to end 2024 with regular job growth, continuing the trend of recent months.
A labor market report to be released Friday by the Bureau of Labor Statistics is probably going to show that the U.S. economy added 153,000 jobs in December, according to the consensus forecast of economists polled by Bloomberg Finance and reported by Wells Fargo Economics. That could be lower than the 227,000 jobs added in December and just above the 143,000 jobs added on average in each of the last six months. Forecasts expect the unemployment rate to remain regular at 4.2%, which is comparatively low by historical standards.
The pace of job creation has slowed compared to the sooner post-pandemic period, when there was much greater demand for employees and the economy was rebounding from the Covid-19 recession. High borrowing costs – the results of the Federal Reserve’s campaign to raise rates of interest to curb inflation starting in 2022 – discourage borrowing and spending and have thrown some sand into the gears of the labor market.
What awaits the labor market?
Some economists expect a rebound within the labor market in 2025, while others predict an extra slowdown.
Economic forecasts are at all times taken with a pinch of salt, and there could also be much more of them this 12 months given the uncertainty surrounding the policies of the second Trump administration. The labor market’s course could rely on the extent to which Trump imposes tariffs on foreign trade or imposes tax cuts on corporations, amongst other major policy changes he promised through the campaign.
For now, nevertheless, economists perceive the labor market as stable for workers: employers will not be hiring tons of employees, but they will not be starting mass layoffs either.
“Employers, terrified of post-pandemic labor shortages and aware that the days of abundant labor supply are likely over, tell me they do not want to be caught short again,” Thomas Barkin, president of the Federal Reserve Bank of Richmond, said in an announcement Friday speech. “As a result, while prudent employers allow their workforces to decline through downsizing and downsizing, they are slowly reducing their workforces. The layoff rate remains close to historically low. A labor market characterized by low hiring and low layoffs remains healthy.”