US hiring grows at robust pace, indicating Trump will inherit healthy economy
U.S. hiring grew at a robust pace in December, far exceeding economists' expectations and demonstrating the health of the nation's economy days before it transfers to the stewardship of President-elect Donald Trump.
Employers added 256,000 workers last month, surpassing economist expectations of 155,000 jobs added, U.S. Bureau of Labor Statistics data on Friday showed. The unemployment rate ticked down to 4.1%, which is historically low.
Robust hiring could give the Fed reason to delay interest rate cuts forecasted for later this year, since the flex of economic strength may ease concern that a continuation of high interest rates would tip the economy into a downturn. Central bankers will meet later this month to decide the direction of interest rates.
The latest jobs data marked an acceleration from the previous month. In November, employers added a solid 227,000 jobs.
U.S. hiring has defied doomsayers for much of President Joe Biden’s term in office. Stubborn inflation, high interest rates and a contentious presidential campaign have proven no match for a resilient labor market.
Alongside steady hiring, inflation has eased and the economy has expanded, giving rise to hope that the U.S. can achieve a soft landing.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain higher than the Fed’s target of 2%. The pace of price increases has ticked up in recent months.
The Fed dialed back its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed's interest rate remains at a historically high level of between 4.25% and 4.5%.
Last month, the Fed predicted fewer rate cuts in 2025 than it had previously indicated, suggesting concern that inflation may prove more difficult to bring under control than policymakers thought just a few months ago.
In light of latest jobs report, the Fed could wait and see if inflation falls closer to target levels, while remaining somewhat assured that the labor market will remain sturdy.
Speaking at a press conference in Washington, D.C., on Wednesday, Fed Chair Jerome Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed's expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
"It's common-sense thinking that when the path is uncertain, you get a little slower," Powell said. "It's not unlike driving on a foggy night or walking around in a dark room full of furniture."
Trump has proposed tariffs of between 60% and 100% on Chinese goods, and a tax of between 10% and 20% on every product imported from all U.S. trading partners.
Economists widely forecast that tariffs of this magnitude would increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.
