Economy adds 256,000 jobs in December, uncertainty remains with upcoming tariff policies: CEI analysis

The job numbers released today from the Bureau of Labor Statistics show 256,000 jobs were added to the economy in the last month of 2024. While the labor market remains steady, uncertainty surrounding tariff policies in the next administration is giving the Fed and employers pause.

CEI Senior Economist Ryan Young:

“The labor market remains stable, which is about what one would expect. Rapid job growth is difficult with essentially full employment, so it makes sense that 256,000 new jobs last month roughly tracks population growth. At the same time, GDP is growing at a healthy 3.0 percent, so a fall in employment would be a surprise. So steady as she goes it is.

“Although upcoming tariffs and deportations will harm the economy and the labor market, nobody knows yet how extensive these will be. That policy uncertainty puts the Federal Reserve in a tight spot. 

“Part of the Fed’s job is telling the future. At its next interest rate meeting on January 28-29, it should avoid a rate cut. While growth and employment are both solid, inflation is still above target levels. Moreover, new tariffs and other shocks from the incoming administration will likely worsen inflation indicators. 

“In the long run, a stable price system is the best way to ensure a healthy labor market, and that should be the Fed’s primary goal.”

CEI Research Fellow Sean Higgins:

“The nation’s unemployment rate has hovered at between 4.1-4.2 percent for the last 7 months, the Labor Department reported Friday. While the bottom-line number is historically low and December’s gains of 256,000 are good news, the lack of any notable shift in the unemployment rate indicates that the boomtime for workers has passed. Employers are no longer aggressively hiring and are instead making do with smaller staffs and more automation. Tellingly, the number of long-term unemployed is up by 278,000 from this time last year, a sign that increasing numbers of people are giving up.

“Wages are up 3.9 percent from last year, but the inflation rate is 2.7 percent. This is a bad time for Washington to throw up new trade barriers which will only cause further inflation and hobble the domestic industries that rely on foreign goods and raw materials.”