The job market still an issue even as the markets continue to peak.

Seems like the one part of the economy that doesn't want to take off.

• Nonfarm payrolls rose a seasonally adjusted 50,000 in December, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate for 73,000.

• The unemployment rate fell to 4.4%, compared with the forecast for 4.5%. A more encompassing measure that includes discouraged workers and the underemployed dropped to 8.4%.

• Average hourly earnings rose 0.3% for the month, in line with the forecast, although the annual increase of 3.8% was 0.2 percentage point higher than expected.

I am not 100% convinced that the job market is the same as it was a few years ago. Not that I believe it is fundamentally worse or better, but just different. According to available sources the workforce is only mildly growing, if not actually shrinking over the past few months. All of this is complicated by the fact that we are still dealing with some of the statistical fallout of the covid shutdowns, even years later. But the bottom line is that we may no longer need 150,000 jobs a month to keep up with a growing workforce. While unemployment has ticked up a 0.3% since last January, this is largely due to the reduction of jobs in the public sector. The lack of new jobs has not provided us with a real employment problem as of yet.

The good thing is that the economy is humming along while only adding about 50,000 jobs a month on average in 2025. The other good thing is that the weaker labor market along with lower than expected inflation likely suggests that we could see another rate cut when the Fed meets again. While most believe Powell is done with cuts for now, a weakening job market should prompt more action. Time will tell what the feds will do there.

Meanwhile, the GDP now estimate for the fourth quarter growth sits at a fairly amazing 5.1 percent, while the "blue chip consensus" continues to lag that number by around 4% (only projecting a one percent fourth quarter gain). These same experts are suggesting only about 2% growth in 2026, while the gut feeling among many is that we may be looking at a continuation of the last couple of quarters of well above average growth. I wouldn't be shocked to see 3%, 4% or even 5% growth in 2026 given everything happening now. If we can get the job market to react positively, then 2026 could end up being a good year for the Party in power.