The United States labor market exhibited robust growth in December, marking a strong close to the Biden administration's tenure. The economy added 256,000 new jobs last month, surpassing expectations and continuing the momentum witnessed earlier in the year. Despite a minor reduction, the unemployment rate remained relatively stable, decreasing slightly to 4.1% from 4.2% in November. The labor market's performance was bolstered by significant job creation in sectors such as healthcare, retail, and government.
November saw job openings surpassing expectations, topping 8 million according to the Jobs Openings and Labor Turnover Survey (Jolts). This surge reflects an ongoing demand for labor across various industries. Notably, private firms reported a 33% decrease in layoffs in December, with the number of layoffs dropping to around 38,000 from 57,000 in November. These indicators highlight the labor market's resilience and adaptability amid economic fluctuations.
The Federal Reserve adjusted its monetary policy in December by decreasing interest rates to a range between 4.25% and 4.5%. Despite this change, economists largely anticipate that the Federal Open Market Committee (FOMC) will maintain steady rates during their upcoming meeting on January 30-31. The backdrop to these developments includes an inflation rate that has hovered around 2.5% over recent months, though fluctuations have increased the upside risks to the inflation outlook.
"Judged that upside risks to the inflation outlook had increased" – The Federal Reserve's board members
The S&P 500 also reflected positive trends, rising by a total of 23.3% in 2024. This growth underscores investor confidence in the economy's resilience and potential for continued expansion. However, the inflation rate's recent fluctuations have prompted caution among policymakers and analysts alike.