Labor Market and Economy Report: A Look at Trends in December 2024

Executive Summary

Job Growth

In December, the U.S. economy added 256,000 new jobs, which was notably higher than what had been anticipated. Looking at year-over-year numbers, the U.S. employment grew by about 2.2 million jobs, or 1.4%. Significant gains were seen in healthcare (+46,100), government (+33,000) and social assistance (+23,400).

Unemployment and Labor Force Participation

Between November and December, the unemployment rate decreased slightly from 4.2% to 4.1% Despite the unemployment rate increasing to over 4% in 2024, it’s important to note that this level is still historically low. This suggests that while some individuals may have experienced a longer job search, widespread unemployment was not observed in 2024.

The labor force participation rate was 62.5% in December. Throughout the year, the labor force participation rate remained between 62.5% to 62.7%, meaning that the percentage of the U.S. population working or looking for work has remained relatively unchanged.

Unemployment rates specific to the industries Aston Carter supports were as follows for December: finance and insurance (2.1%); professional and business services (4%); hospitals (1.6%); utilities (1.4%); manufacturing (3.5%), and construction (4.7%).

Among skilled labor categories Aston Carter sources talent for, unemployment in business and financial was 2.7% and office and administrative was 3.6%.

Inflation

Between December 2023 and December 2024, the year-over-year inflation rate increased by 2.9%. This was slightly above November’s 2.7% noted rate. The Federal Reserve made its third and final interest rate cut of 2024 last month, lowering its key interest rate by 25 basis points. The Federal Reserve now plans to make just two rate cuts in 2025, instead of four, due to still-high inflation, economic resilience and policy uncertainty.

Wage Growth

Looking back at the 12 months ending December, the average hourly earnings increased by 3.9%. This is only slightly below the 4% increase recorded in November. “Real” average hourly earnings (wages adjusted for inflation) increased by 1% between December 2023 and December 2024 — suggesting that average hourly earnings are keeping up with inflation, though consumers may still be feeling the pressure of higher prices.