Given that the United States added a startling 256,000 jobs in December and the unemployment rate decreased slightly to 4.1%, President Joe Biden will leave office with a comparatively strong labor market.
Both numbers, which were released by the Bureau of Labor Statistics on Friday, exceeded Wall Street projections and compare favorably to historical averages. According to a Dow Jones survey of analysts, the unemployment rate was predicted to have stayed at 4.2% in December and only 155,000 new jobs would have been created.
When taken separately, the most recent data show that the U.S. economy has mostly succeeded in achieving the “soft landing” scenario that Biden had hoped for: comparatively low unemployment and low inflation.
Even if hiring has significantly slowed over the previous year, layoffs are still quite low today. The government, healthcare, and retail industries account for the majority of newly created jobs, with other industries stagnating. The BLS reported little employment increases in manufacturing, professional and business services, leisure and hospitality, and construction in December, continuing that pattern.
As a result of Friday’s news, borrowing costs increased, and Wall Street traders now anticipate that the Fed will only lower interest rates once in 2025. Stocks dropped.
Out of displeasure with the Biden-era economy, especially with regard to consumer price increases that started to skyrocket shortly after he took office in 2021, millions of people chose to put President-elect Donald Trump back in the White House. Despite a significant decline, inflation continues to stubbornly linger slightly above the Federal Reserve’s 2% target.
A strong job market and significant salary increases that raised many households’ net spending power were eclipsed by those pricing pressures. As the economy recovered from the pandemic, hundreds of thousands of new jobs were created every month, and the unemployment rate fell to levels not seen in decades.
While the stock market reached new heights and salary rises generally kept up with inflation, rising costs have left consumers feeling worse off psychologically, which has helped Democrats lose the Senate and the White House.
With economic growth continuing at a steady pace and interest rates continuing to decline following Federal Reserve easing, forecasters anticipate that hiring will continue to increase, albeit slowly.
Actually, the BLS said this week that there were a few more job opportunities. According to Julia Pollak, Chief Economist at ZipRecruiter, the data suggests that there may be better news to come, including the chance of higher hiring as 2025 gets underway.
According to Pollak, small business openings have been particularly increasing, which other studies indicate is primarily due to optimism about how the economy will develop under Trump.
Following an extraordinary surge in consumer spending, consumer credit data released this week also indicates that American borrowers are looking to pay down their debt. While that would indicate a slowdown in spending, the same statistics revealed that borrowing for car purchases increased in November, pointing to a more balanced view of consumer health.
This week, S&P Global announced that the employment component of its business confidence services purchasing managers index increased for the first time in five months, bringing the index to an 18-month high.
According to Berger, a number of factors will come together to cause the job market to stabilize and perhaps even warm up a bit.