US hiring held firm in December capping weakest year of growth since the pandemic

• Economists characterize the labor market as in a 'no hire, no fire' phase with subdued but continuing job growth, while December layoffs were nearly half November's level
• Federal Reserve officials signal likely pause in rate cuts at their January meeting, with rates currently at 3.5-3.75%, despite Treasury Secretary Scott Bessent urging continued cuts
• Inflation cooled to 2.7% in November from 3% in September, while Fed officials suggest Trump's immigration and tariff policies have destabilized the labor market and inflation outlook

Market Summary: December Jobs Report Signals Weakest Growth Since Pandemic

Key Data Points:

• US employers added 256,000 jobs in December, missing economist expectations of approximately 273,000
• Unemployment rate declined to 4.1% from 4.2% in November
• October and November figures revised lower by 76,000 jobs combined
• October saw 173,000 job losses due to government shutdown
• Current inflation stands at 2.7% (November), down from 3% in September
• Federal Reserve interest rates currently at 3.5%-3.75% range

Labor Market Characterization:

Economists describe the current environment as a "no hire, no fire" phase, with continued but subdued job growth marking the weakest annual expansion since the pandemic. Challenger, Gray & Christmas data shows December layoffs nearly halved from November levels.

Federal Reserve Implications:

The Fed will consider this data at its late-January policy meeting to determine rate policy. Officials have signaled a likely pause in rate cuts, with December meeting minutes revealing "stark division" among board members. Fed Chair Jerome Powell emphasized proceeding with caution as they monitor labor market stabilization and inflation cooling.

Political Tensions:

Treasury Secretary Scott Bessent urged continued rate cuts to stimulate stronger economic growth, contrasting with Fed caution. The White House and Fed differ on economic assessment, particularly regarding impacts of Trump administration's immigration and tariff policies on labor markets and inflation.

Market Context:

The weak jobs data follows disrupted data collection from the October-November government shutdown, making December the first month with complete statistics. The Fed faces competing pressures between supporting labor market growth and controlling inflation risks.