Traders and investors were finally privy to fresh economic data with the release of the November employment report. The economy generated 64,000 non-farm jobs in November, besting the consensus estimate of 50,000 but a muddling result, nonetheless. The unemployment rate rose to a cycle high of 4.6%, the highest since 4.7% touched in September 2021. The actual rise in unemployment was a little over a tenth of a percent, because the 3 decimal rate was 4.564%, but the BLS rounds to a single decimal, and hence rounded up to 4.6%. The number of people in the labor force rose a healthy 323,000 since the last count in October. Those numbers, while clearly less than robust, are not indicative of a contracting economy. The initial report of GDP growth in the third quarter is to be released on December 23rd, and the expectation is that the economy expanded 3.2%, decelerating slightly from the 3.8% recorded in the second quarter.

Investors and traders find themselves in a challenging predicament. With the government closed for business, the branches that report economic data cannot do so. This comes at a time of transition in the market. At the last FOMC meeting the message was that concern over the state of the labor market had risen as the new jobs added over the last several months had deteriorated significantly. The first day of closure was October 1st, just days before the release date of the September jobs report, which was expected to show the economy added 50,000 jobs in the month.

Liberation Day, the April 2nd date on which President Trump unilaterally imposed across-the-board tariffs on all trading partners of the United States created several dislocations in the economy and the capital markets. Initially, it prompted importers to buy inventory in advance of the tariffs, causing a huge spike in the monthly trade deficit prior to that imposition. As expected, in the months that followed the deficit contracted when buyers, swelled with inventory, paused their buying.

May was a tumultuous month, but not in the way it was expected to be. Since the chaotic implementation of the global tariffs by the Trump administration market participants had been waiting for the consequences, mainly the duality of rising inflation and rising unemployment. The expectation had been that the bad news would be fully felt, starting six weeks after the so-called liberation day, falling squarely in the month of May. Surprisingly, that bad news never arrived.

It’s been just over three months since Donald Trump was inaugurated as President and he has so far avoided significant criticism of Fed Chairman Powell. But everyone knew it was coming! It finally came on Thursday April 17th when Trump messaged that “Powell’s termination cannot come fast enough,” followed by Powell “is always TOO LATE AND WRONG.”

While he didn’t directly cite the catalyst for his ire, the obvious culprit was Powell’s speech to the Economic Club of Chicago the previous day in which he said there’s a “strong likelihood” that tariffs would cause consumers to face higher prices and that unemployment would rise, at least in the short run.