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0 News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/us-labor-market-ends-2024-strong-raising-policy-and-market-implications-for-2025/
The December US labor market report provided a robust snapshot of employment, showing resilience as 2024 concluded.
Headline nonfarm payrolls surged by an impressive 256,000, exceeding expectations and marking a sharp rise from the previous month’s gain of 212,000.
This monthly increase represented the largest gain since March, further emphasizing the strength of the job market.
Unemployment also unexpectedly dropped to 4.1%, down 0.1 percentage points from the prior figure, despite labor force participation remaining steady at 62.5%. Earnings growth was in line with expectations, with average hourly wages rising by 0.3% month-over-month and 3.9% year-over-year, signaling continued upward pressure on compensation.
Taken together, the report suggests a resilient labor market heading into 2025, which is unlikely to prompt immediate changes in Federal Reserve policy. The Federal Open Market Committee (FOMC) is expected to maintain its “skip” approach at the January meeting, holding the federal funds rate steady to assess the impact of the 100 basis points of tightening implemented in 2024. This also provides the FOMC an opportunity to evaluate inflation risks and the broader economic effects of policies under the incoming administration of President Trump.
Looking ahead to 2025, further policy normalization is expected, but at a slower pace. The FOMC’s “dot plot” suggests two 25 basis point cuts as the median expectation, which is a significantly more gradual approach compared to last year’s aggressive tightening.
While the labor market strength and economic growth should support a generally positive environment for risk assets, the outlook for 2025 suggests a more volatile market. The easing of the “policy put,” or the safety net of deeper and faster rate cuts, signals that markets may face more turbulence as they adjust to a new phase of economic policy. This backdrop points to a bumpy ride for investors, even as strong earnings and growth continue to support an optimistic growth trajectory for risk assets.
In conclusion, 2025 could see more cautious steps toward neutral policy, with a shift away from the aggressive rate cuts that characterized the past 18 months, leaving markets navigating new uncertainties amidst sustained economic expansion.
News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/us-labor-market-ends-2024-strong-raising-policy-and-market-implications-for-2025/
