The number of Americans filing new jobless claims dropped by 22,000 to 220,000 last week, a sign of labor market resilience as 2024 draws to a close. The decline reversed the previous week’s spike and coincided with a 3.1% upward revision to third-quarter GDP growth, reflecting robust consumer spending and export performance. These figures come on the heels of the Federal Reserve’s third consecutive rate cut, with policymakers signaling a slower pace of reductions in 2025 due to continued economic strength.
Consumer spending, which accounts for over two-thirds of economic activity, grew at a revised 3.7% annualized rate in the third quarter, underpinning the broader expansion. The labor market’s orderly slowdown, characterized by historically low layoffs, has driven nonfarm payroll growth and tempered fears of a deeper economic downturn. However, uncertainties tied to President-elect Donald Trump’s incoming policies, including tariffs and tax cuts, have introduced potential headwinds for 2025.
-
Market Overview
- Weekly jobless claims fell to 220,000, beating expectations of 230,000.
- Third-quarter GDP growth was revised up to 3.1%, reflecting strong consumer demand.
- The Fed delivered a 25-basis-point rate cut, bringing the benchmark rate to 4.25%-4.50%.
-
Key Points
- Consumer spending in Q3 was revised to a 3.7% annualized growth rate.
- Nonfarm payrolls rose by 227,000 in November, boosted by the end of major strikes.
- Fed projections for 2025 indicate a slower pace of rate cuts amid economic strength.
-
Looking Ahead
- Jobless claims data for December will provide insights into labor market conditions.
- Trump’s economic policies could impact inflation and growth in 2025.
- Robust consumer demand is expected to continue supporting GDP growth in early 2025.
The latest data highlights the U.S. economy’s resilience as strong consumer spending and a robust labor market drive growth. The upward revision to third-quarter GDP underscores the effectiveness of spending and export momentum, even as policymakers remain cautious about future rate cuts.
As the Federal Reserve navigates an evolving economic landscape, uncertainties surrounding fiscal policies under the Trump administration will shape 2025 projections. For now, solid fundamentals keep the U.S. economy on stable footing heading into the new year.
