As much as everyone would like an easy sign of how the economy will perform in 2025, it’s complicated. The recent jobless claims report is a reminder that finding a safe path will take a lot more work for everyone, from top Federal Reserve officials to CRE investors.
There are multiple points to consider in last week’s jobless claims report. First is the number of initial claims at 219,000 for the week ending December 14, a drop of 1,000 from the previous week. That’s an average of 227,780 from the start of 2024. The 4-week moving average was 226,500. A graph of the data for the year shows what is first a rising number of weekly claims to the end of August and then a gentle downward slope.
Jeffrey Roach, Chief Economist for LPL Financial, in emailed comments, noted that the moving average was up for the fourth consecutive week. It’s early to say that is a concern as true long-term trends are more important. But the figure is one to follow over time to see where there is too much pressure on the labor market.
Recommended For You
Another trend is continuing claims rising to 1.91 million, the highest since November 2021 noted Reuters. That figure has been rising since the lows of 2022, suggesting that people who are out of work are finding it more difficult to secure employment. If the trend continues, it could mean increasing economic uncertainty with companies cutting back hiring because they anticipate falling demand and so are reducing future labor costs.
The 10-year Treasury yield traded relatively flat early on December 26th, remaining at 4.58% as “investors digested new data on weekly jobless claims,” CNBC reported. By the end of Friday, though, it was up to 4.62%.
“The labor market has cooled from its formerly overheated state and remains solid,” Fed Chair Jerome Powell said during the December 18 press conference. “We are committed to maintaining our economy’s strength by supporting maximum employment and returning inflation to our 2 percent goal.”
The Fed indicated on that date that there would be a slower pace of interest rate cuts in 2025. They don’t seem worried. “ If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy more quickly,” Powell added. “Policy is well-positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”
There are multiple reasons to feel good about the economy, but some caution is warranted until the direction into 2025 is clearer.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
