President Joe Biden will end his term with a relatively healthy labor market, as the United States added 256,000 jobs in December and the unemployment rate fell to 4.1%.
Both figures compare favorably with historical averages. For the month, analysts surveyed by Dow Jones expected 155,000 jobs to be added in the month, down from the revised 212,000 in November, and the unemployment rate was expected to remain unchanged at 4.2. %.
The latest figures alone suggest that the US economy has largely achieved the “soft landing” scenario sought by Biden: relatively low unemployment and relatively low inflation.
Today, layoffs remain moderate, although the pace of hiring has slowed.
Many in the United States have considered unacceptable the economic conditions that prevailed for large periods of Biden’s term, namely an inflation rate that began to soar shortly after he took office in 2021 and that remains above the 2021 target. % of the Federal Reserve.
That pace of price increases overshadowed a booming labor market that saw the unemployment rate fall to lows not seen in decades, with hundreds of thousands of jobs created most months as the U.S. economy returned to normal. life after the end of the Covid-19 pandemic. locks.
While the pace of wage growth on average largely kept pace with inflation (and even as the stock market hit new highs), rising costs have left consumers feeling psychologically worse, something that played a role. important in derailing Democrats’ efforts to maintain control of the sector. White House and Senate.
Overall, however, forecasters project that hiring will begin to rise again, albeit slowly, as overall economic activity continues apace and interest rates continue to decline in the wake of the Federal Reserve’s easing.
In fact, the Bureau of Labor Statistics also reported this week that job openings had increased. This, wrote Julia Pollak, chief economist at ZipRecruiter, “hints at the possibility of better news ahead, with potential for more hiring as 2025 progresses.”
Small business openings have especially been growing, Pollak said, which other surveys suggest is largely due to optimism about what the economy will look like once President-elect Donald Trump takes office.
Consumer credit data released this week also shows that American borrowers are trying to pay off their debt balances after an aggressive increase in purchasing behavior. That may suggest slower spending, but the same set of data showed that borrowing for car purchases increased in November, suggesting a more balanced picture of consumer health.
Guy Berger, director of economic research at the Burning Glass Institute, which specializes in the future of work, has said that for anyone looking for work right now, the short-term outlook is bleak.
But in a new note, Berger said a further cooling of the labor market should begin to reverse in the coming months, given surveys showing that American companies are increasingly optimistic about increasing the number of employees in 2025.
For example, S&P Global reported this week that its business confidence services purchasing managers’ index was at its highest level in 18 months, and the employment component rose for the first time in five months.
“There is a confluence of factors that will lead the labor market to stabilize and possibly even warm up a bit,” Berger wrote.
