Cato Expert Discusses December Jobs Report
Jai Kedia
Cato Institute Research Fellow Jai Kedia is available for interviews regarding this morning’s December jobs report.
Kedia issued the following statement in reaction:
“The latest jobs report revealed significantly higher-than-expected job growth, with nonfarm payrolls rising by 256,000—far surpassing the Dow Jones consensus forecast of 155,000. However, these month-to-month fluctuations continue to have outsized effects on financial markets, which remain heavily influenced by the Federal Reserve’s policy decisions.
The stock market’s reaction was swift, with the S&P 500 dropping more than 1.5% following the news. This suggests that Wall Street anticipates the report will prompt the Fed to maintain higher interest rates for an extended period. Yet, this interpretation runs counter to substantial evidence that the Fed funds rate holds less influence over the broader economy than traders often assume.
The Fed had already revised its outlook, reducing the expectation of four rate cuts in 2025 to two. Viewing this single jobs report as a decisive factor that could tighten monetary policy further seems like an overreaction. Moreover, the Fed’s ability to sustain elevated rates for several quarters without tipping the economy into recession points to a shifting monetary landscape—a departure from the zero lower bound regime of the past decade.”
If you would like to speak with Kedia on this issue, please contact me to set up an interview.
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