#USJobsData

The Federal Reserve faces a pivotal and unusually contentious policy meeting on December 9-10, tasked with setting interest rates against a backdrop of a weakening job market and persistently elevated inflation.

The most recent labor signals are concerning. Private-sector employment, as measured by the ADP National Employment Report, fell by 32,000 jobs in November, the largest monthly drop in over two years. This decline was led by steep cuts at small businesses, which shed an estimated 120,000 jobs and are often seen as a leading indicator of broader labor market health. This private-sector data, the last major jobs snapshot before the Fed's meeting, follows the delayed official report for September which showed a resilient 119,000-job gain but also an unemployment rate rising to 4.4%, its highest level in four years.

Critically, inflation remains above the Fed's 2% target, with the Cleveland Fed's nowcasts estimating PCE inflation near 2.87% as of November. These conflicting signals—weak hiring but high inflation—have produced a sharply divided rate-setting committee. "Hawkish" officials worry a rate cut could reignite inflation, while "dovish" members like Governor Christopher Waller argue a cut is necessary for "risk management" to support the labor market before it deteriorates further. The resulting policy is widely expected to be a "hawkish cut," where the Fed lowers its key rate by a quarter-point but signals a likely pause to assess incoming data.

💡 Conclusion: A Pause for Data, Not an End to the Cycle

The Fed's probable December action represents a tactical pause in its easing cycle, not a definitive end. The decision underscores the central bank's delicate balancing act between its dual mandates as it navigates a complex, data-scarce environment.

For markets and the economy, the immediate consequence is likely reduced volatility and a focus on the December 16th release of the official October and November jobs reports. Should tho#USJobsData