US labor market ends 2024 with strong job gains

Kaityn Mills
2 Min Read
strong gains

The US labor market ended 2024 on a strong note, with nonfarm payrolls increasing by 256,000 jobs in December, surpassing economists’ expectations. The unemployment rate also decreased to 4.1% from 4.2% in the previous month, signaling a strengthening labor market. The number of permanent job losers declined, and the duration of unemployment fell, further indicating the resilience of the US economy as it moves into the new year.

Average hourly earnings rose by 0.3% in December, resulting in a year-over-year increase of 3.9%, demonstrating improving wage growth. However, the robust job gains and wage growth may influence upcoming decisions by the Federal Reserve regarding interest rates. While a pause in rate cuts is expected for January, the strong employment data has raised concerns about potential inflationary pressures.

Labor market shows strong job gains

The better-than-expected job numbers have led some analysts to adjust their expectations for the Fed’s rate-cutting path in 2025. Goldman Sachs now anticipates only two rate cuts this year, in June and December, as opposed to the previously anticipated three.

Bank of America economists believe the Fed is done cutting rates and see a growing possibility that central bankers may need to consider raising rates. “The conversation should move to hikes, which could be in play,” said Aditya Bhave, senior US economist at Bank of America. Despite the diverging forecasts on Wall Street, the latest labor market data highlights the strength of the US economy as it enters the new year, with robust job creation and improving wage growth.

The Federal Reserve will closely monitor these developments as it makes decisions on interest rates in the coming months.

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Kaitlyn covers all things investing. She especially covers rising stocks, investment ideas, and where big investors are putting their money. Born and raised in San Diego, California.