Economy
The "slow hire, slow fire" labor market continued through December, according to the Friday's jobs report. For the month, the economy added just 50,000 jobs - fewer than November's 56,000 and below economists' expectations. It's still a net positive report, but it's a further sign of labor market that's no longer as strong as it has been in the past few years. With the year in the rearview, we added 584,000 jobs in 2025, far below the 2 million added in 2024. Perhaps to muddy the waters a bit, the unemployment rate declined from 4.6% to 4.4% last month, a number near historic lows, suggesting we have full employment. The labor market is in a stasis, seeing neither rampant job creation nor mass layoffs.
Next week we'll get an important report on December inflation from the Bureau of Labor Statistics. The recent jobs report decreased the already slim odds of a rate cut at the Fed's January meeting, and the Cleveland Fed's December projections of a 2.6% core inflation reading would likely further reduce those odds.
Markets
The S&P 500 rose 1.57% this week, closing at an all-time high of 6,966. We don't write about the Dow much, but we'll include it this week because it's a good day away from 50,000. For reference, the Dow was around 6,500 back in pits of the 2008 financial crisis. It appears Wall Street is confident that we'll continue to work our way through the current labor market slowdown and looking ahead to higher corporate profits in 2026. We'll soon find out more about the profit story as we get into earnings season next week. The banks will lead off, and the financial sector is one that has been showing more strength in recent months - further evidence that the market rally isn't just happening in a handful of stocks.
What We're Reading
- It Happened Again- Ben Carlson
- Jobless Claims Start 2026 Where They Left Off 2025- Bonddad
Have a great weekend.
Dogwood Wealth Management