2 January 2024
The U.S. labor market is poised to be a crucial buffer against potential Federal Reserve policy errors in 2024. With the Fed’s decisions on interest rate cuts being a focal point, the strength of the job market remains vital for averting a severe recession. The unemployment rate is expected to stay below 4% for a record stretch, showcasing an inclusive job market with significant gains for prime-age women, workers with disabilities, and Black men. This robust employment scenario, reflecting the longest period of such strength since the 1960s, is instrumental in mitigating the impact of high consumer prices. Notably, wages are increasing at a rate outpacing inflation, and sustained productivity growth is expected to maintain these wage gains, thereby bolstering the U.S. economy in the face of monetary policy changes.