The US labor market expanded strongly in the last jobs report of the Biden administration, according to new data released on Friday.
The number of new jobs added to the economy accelerated to 256,000 in December, up from 227,000 in November, soaring past expectations. The labor market last month was bolstered by new jobs in healthcare, retail and government.
As the final jobs report of his administration, it’s a blowout for Joe Biden, who struggled to rally support around his economic agenda despite the economy strengthening after the pandemic.
In a statement, the US president celebrated the new data and said that his administration created 16.6m jobs over the course of his presidency.
“Although I inherited the worst economic crisis in decades with unemployment above 6% when I took office, we’ve had the lowest average unemployment rate of any administration in 50 years with unemployment at 4.1% as I leave,” he said.
US stocks fell Friday morning as the surprisingly strong uptick in jobs signaled to Wall Street that the Federal Reserve will likely not cut rates later this month.
Other data points released in the last week pointed to strength in the labor market. The Jobs Openings and Labor Turnover Survey (Jolts) showed that job openings topped 8m in November, soaring past expectations. Another report from outsourcing firm Challenger, Gray & Christmas reported a 33% decrease in layoffs in private firms in December, going from around 57,000 cuts in November to 38,000 layoffs in December.
Though the Fed decreased interest rates to 4.25%-4.5%, a full point below what it had been before September, economists were once worried about the impact high interest rates could have on unemployment. But the unemployment rate in December remained relatively unchanged from November, going slightly down to at 4.1% in November. Though the unemployment rate was at 3.7% at the beginning of the year, it is still at a relatively low level.
The Fed has been trying to get inflation down to 2%, though inflation has been hovering around 2.5% over the last few months.
Economists are waiting for Donald Trump to re-enter the White House to see what impacts his policies will have on the economy. Wall Street was high off a rally at the end of the year, with the S&P 500 going up a total of 23.3% in 2024.
But the president-elect has promised to implement economic measures that experts say could lead to higher inflation, including tariffs on imports. Trump has also promised to carry out a huge deportation operation, which could also bear down on the country’s economy.
Minutes from the last Federal Open Market Committee (FOMC) meeting – where interest rates are set – show some officials were concerned in December about the inflationary impacts of new trade and immigration policies that could be implemented in the coming months.
Almost all of the board’s members “judged that upside risks to the inflation outlook had increased” due to the inflation rate fluctuating in recent months and “the likely effects of potential changes in trade and immigration policy”.
The Federal Reserve’s next board meeting will be on 30 and 31 January, just days after Trump’s inauguration. Economists are largely expecting the FOMC to hold rates steady during the meeting.
