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U.S. Economy Adds 256K Jobs in December, Unemployment Falls to 4.1%

U.S. Economy Adds 256K Jobs in December, Unemployment Falls to 4.1%/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The U.S. added 256,000 jobs in December, surpassing expectations as the unemployment rate dipped to 4.1%. Despite high interest rates, the economy showed resilience with steady hiring, declining inflation, and robust GDP growth. Experts predict wage growth remains aligned with the Fed’s inflation goals.

A hiring sign is displayed at a restaurant in Skokie, Ill., Wednesday, Jan. 8, 2025. (AP Photo/Nam Y. Huh)

U.S. Jobs Report: Quick Looks

  • Job Growth Surges: 256,000 jobs were added in December, up from 212,000 in November.
  • Unemployment Dips: The rate fell to 4.1%, reflecting a strong labor market.
  • Economic Resilience: High interest rates haven’t stalled hiring or consumer spending.
  • Inflation Progress: Annual inflation dropped to 2.7% in November, from a peak of 9.1% in June 2022.
  • Fed’s Next Steps: Fewer rate cuts expected in 2025 as inflation stabilizes.

U.S. Economy Adds 256K Jobs in December, Unemployment Falls to 4.1%

Deep Look

The U.S. labor market closed out 2024 on a high note, with December’s jobs report revealing the addition of 256,000 jobs and a dip in unemployment to 4.1%. These figures highlight the economy’s surprising resilience despite prolonged high interest rates, offering optimism for continued growth into 2025.

December Hiring Momentum

December’s job gains exceeded November’s 212,000 and marked a robust conclusion to the year. Labor market clarity had been clouded in prior months due to external disruptions like hurricanes and Boeing strikes. However, December’s numbers provided a more accurate snapshot of hiring strength.

Over the past year, the U.S. economy has defied expectations of a slowdown. Despite the Federal Reserve’s aggressive interest rate hikes—11 increases between 2022 and 2023—economic growth has remained steady. U.S. GDP expanded at an annual pace of 3% or higher in four of the last five quarters, demonstrating the economy’s resilience.

Wages and Inflation

Average hourly wages in December are projected to have risen 0.3% from November and 4% compared to December 2023, according to FactSet. While wage growth often raises concerns about inflationary pressures, experts believe it aligns with the Federal Reserve’s goals.

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, noted that current wage increases reflect gains in productivity, allowing businesses to balance profits without raising prices. “Earnings growth won’t give the Fed any headaches,” she remarked.

Inflation Cooling, but Challenges Remain

Inflation, which peaked at 9.1% in June 2022, has steadily declined to 2.7% as of November. This progress allowed the Fed to implement three interest rate cuts in late 2024. However, further rate reductions may be limited, with Fed officials signaling just two cuts in 2025.

While inflation remains above the Fed’s 2% target, progress has stalled in recent months, prompting caution among policymakers. The Fed’s careful approach aims to ensure price stability without disrupting economic momentum.

Unemployment and Job Security

Layoffs remain at historically low levels, underscoring strong job security for American workers. The Labor Department reported just 211,000 initial unemployment claims last week—the lowest figure in nearly a year.

This trend highlights employers’ reluctance to reduce headcounts despite economic uncertainties, a dynamic that has supported consumer spending and sustained overall growth.

Looking Ahead

The December jobs report reflects an economy defying predictions of recession, maintaining growth in employment and productivity. As 2025 begins, the Federal Reserve’s cautious approach to interest rate adjustments and continued vigilance on inflation will shape the trajectory of the labor market and broader economy.


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