The US Economy Closes 2024 with Strong Job Growth
Source: CNN
The US economy closed out 2024 with another month of massive job growth, adding 256,000 positions in December. The unemployment rate dipped to 4.1% from 4.2%, wrapping up a year that marked a return to pre-pandemic norms, according to Bureau of Labor Statistics data released Friday.
While the final jobs report for 2024 underscores how the US labor market has turned the corner since the pandemic, there’s plenty of uncertainty as to what 2025 could bring for the trajectory of the labor market — in part because of potential policy changes involving trade, immigration, taxes, and the federal workforce.
Including December’s gains, the economy added about 2.2 million jobs in 2024, an average of 186,000 jobs per month. The US has now added jobs for 48 months in a row, tying the second-longest period of employment expansion on record.
Elizabeth Crofoot, senior economist at labor analytics firm Lightcast, told CNN, “The labor market is strong, and in an aggregate sense, it really doesn’t get much better than this. There’s very robust job growth. We have low unemployment — it ticked down in the latest month. Layoffs are low. People have jobs, and they are spending, and that continues to bolster the economy and the labor market.”
Positive Trends in the Labor Market
Economists were expecting a net gain of 153,000 jobs and for the unemployment rate to stay at 4.2%, according to FactSet. However, US stocks dropped sharply after the better-than-expected report, with the Dow falling by more than 600 points. The 10-year Treasury yield surged to 4.7% as traders fear the robust data and a stronger economy could lead the Federal Reserve to pause its rate-cutting campaign.
The December jobs report was expected to provide a more straightforward look at the health and trajectory of the labor market following two distorted reports in October and November. The ongoing hurricane-related recovery and seasonal moves likely factored into December’s stronger-than-anticipated gains.
Wages rose 3.9% on an annual basis in December, according to the report. Pay gains have moderated significantly in recent years but still remain above pre-pandemic levels.
Potential Concerns for the Future
Despite the positive trends, there are concerns about job growth slowing, hiring dropping off, and weaknesses in the manufacturing sector. Economists and policymakers have raised alarms about potential policy changes and their impact on inflation, job shortages, and public services.
Progress on inflation has stalled out, with prices still rising above the Fed’s target. The Fed has cut interest rates to ensure maximum employment and moderate inflation, but the pace of cuts is expected to slow in 2025.
“With so much policy uncertainty and with a healthy labor market and pretty robust job growth, the smartest thing to do in terms of interest rates is to just wait out the data and see what those incoming policy changes are before they react one way or another,” said Elizabeth Crofoot of Lightcast.