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US employers added just 50,000 jobs in December, and with hiring
momentum fading fast, the Federal Reserve now faces mounting pressure
to accelerate interest-rate cuts at its next meeting rather than
continue with cautious, incremental easing.
This is the warning from Nigel Green, CEO of global financial advisory
giant deVere Group, as today’s labor data transforms the rate
debate.
“The Federal Reserve already began easing, but
December’s employment numbers need to change the nature of
that easing,” he says.
“Early cuts were about calibration. What comes next is about
protection. When job creation slows to this level, policy cannot
remain incremental. The pace must increase.”
He adds: “This moment demands a new urgency. The risk profile
of the US economy has shifted, and monetary policy must move faster
to keep up.”
Hiring slowed sharply through the final quarter, leaving last year
among the weakest periods for employment expansion outside downturn
conditions.
Employers across multiple sectors are delaying recruitment plans,
citing cost pressures, policy uncertainty, and tighter financial
conditions.
“Businesses are not shedding workers at scale, yet
they’re refusing to add new ones,” says the deVere
CEO.
“This is how slowdowns deepen. Momentum fades quietly before
damage becomes visible.”
The unemployment rate dipped to 4.4%, yet Nigel Green argues that
figure masks the true state of labor demand.
“Unemployment numbers lag reality,” he says.
“Payroll growth tells the forward story. Hiring at this pace
points to fragility, not strength. Participation remains soft,
pipelines are thin, and confidence is slipping.”
Inflation trends strengthen the case for faster action. Price
pressures have eased significantly from their peaks, with goods
inflation cooling and services inflation showing consistent
moderation.
“The inflation fight has moved into a different phase. Rates
designed for crisis control now sit on top of an economy losing
traction. Holding policy tight under these conditions magnifies the
downside risk.”
He continues: “Central banking works best when action stays
ahead of damage. Delays convert manageable slowdowns into extended
stagnation.”
Financial conditions remain restrictive for households and firms,
particularly outside large corporates.
“Credit remains expensive,” Nigel Green explains.
“Small and mid-sized businesses feel it first. When borrowing
costs stay elevated, investment slows, hiring freezes follow, and
confidence drains from the system.”
Structural changes are also reshaping labor demand.
“Automation and AI improve productivity, yet they suppress
near-term job creation,” he notes.
“Economic policy must reflect that shift. Labor markets no
longer respond to rate changes the way they did a few years ago.
“The Fed will continue easing, but the tempo needs to changes
now,” he says. “Incremental moves belong to a different
stage of the cycle. December’s data forces
acceleration.”
Nigel Green believes the broader path for rates is becoming clear.
“Three reductions before the end of the year stands as the
base case,” he says.
“Employment weakness, cooling inflation, and restrictive
financial conditions create a powerful case for faster
adjustment.”
Delaying action carries consequences, he warns.
“History teaches us that central banks rarely get it wrong
from moving a little early.
December’s employment report, therefore, marks a defining
inflection point.
He concludes: “Economic signals now argue for speed. The task
ahead involves protecting momentum before erosion becomes embedded.
The jobs data leaves little room for delay.”
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