US labour market data: America’s k-shaped recovery deepens divide despite falling unemployment
Katy Stoves, investment manager at Mattioli Woods says: December’s US labour market data offered a positive, with unemployment edging down to 4.4% from November’s 4.6% – below expectations and providing some relief after the uncertainty created by the recent government shutdown. Although 4.4% remains low by historical standards, the steady rise from 4% at the start of 2025 continues to cause unease as hiring momentum slows.
The real story lies beneath the headline figure. America’s K-shaped recovery is deepening the divide between the affluent and those under strain, with affordability pressures weighing most heavily on lower-income households. Whether this narrative is fully borne out by the data matters less than the prevailing sentiment and consumer confidence shapes spending patterns that reverberate across global markets.
With inflation proving more persistent than hoped and unemployment softening but far from alarming, a Federal Reserve rate cut at month-end appears increasingly improbable. December’s slightly firmer jobs figure removes one of the key arguments for looser policy. For now, the Fed is likely to remain watchful, as the labour market occupies an ambiguous middle ground; clearly cooling, yet not sufficiently weak to justify immediate intervention