Recent economic data has become softer. The economy added 155k jobs in November, which was a decent increase but was short of expectations of 190k, and the previous two months were revised down. While the unemployment rate stayed at 3.7%, the lowest since 1949, the broader U-6 rose +0.2pp to 7.6%. Hourly wages growth was unchanged at +3.1% y/y but a shorter workweek resulted in weekly wages falling from +3.4% y/y to +2.8%. Separately, the ISM services and manufacturing reports were both strong, but another manufacturing report was mixed. New orders for core durable goods fell for the third consecutive month, while shipments of those goods rose. The Fed’s Beige Book showed slowing growth in some districts, cost increases from tariffs, and “somewhat weaker” non-auto sales. Various reports indicate that Fed officials are becoming substantially more dovish and may sharply reduce the pace of rate increases after next week’s almost certain hike. The NFIB’s small business optimism index fell to the lowest in seven months.
