WASHINGTON — The Labor Department reported Friday that U.S. employers added 143,000 jobs in December, missing estimates, prompting Wall Street strategists who had spent eleven months insisting tariff effects were ‘fully priced in’ to rediscover tariff uncertainty as a load-bearing pillar of their forecasts before lunch.
The print, weaker than the 175,000 consensus, sent the same desks scrambling to update notes that had, as recently as Tuesday, described the labor market as ‘resilient,’ ‘robust,’ and in one flash dated December 18, ‘frankly bulletproof.’
‘Look, the goalposts haven’t moved, the field has,’ said Aaron Veil, a senior labor economist at the Cresswell Macro Group, eating a tuna salad sandwich over a printed copy of the household survey at 8:42 a.m. ‘The data is telling us that tariffs, which were priced in, were also somehow not in this print. Both things are true. That’s the nuance.’
Inside the BLS release itself, the word ‘cooling’ appeared four times, marking its eleventh consecutive monthly appearance in the agency’s narrative summary. Economists have used it so consistently since March that the National Association for Business Economics quietly added a footnote to its style guide reminding members that ‘cooling’ is now understood to mean ‘between 110,000 and 200,000 jobs, leaning whichever way supports the headline.’
Wage growth came in at 3.7% year-over-year, a figure simultaneously described in published research notes as ‘sticky,’ ‘moderating,’ ‘concerning,’ and ‘in line.’ A single JPMorgan note, sent at 9:04 a.m., described it as all four in the same paragraph.
The unemployment rate ticked up to 4.3%, a development the White House attributed to seasonal noise and the opposing party attributed to a referendum on the administration, which is the same thing they attributed last month’s print to when it ticked the other way.
At a midtown Manhattan trading floor — beige carpet, three muted CNBC feeds, a printer that has been jammed since November — junior analysts spent the morning recalibrating models that had assumed the labor market would continue to do whatever it had been doing, only more so. ‘The thing we said was going to happen is still going to happen,’ said one analyst, who asked not to be named because he had just told his MD the opposite. ‘Just maybe in Q2 instead of Q1. Or Q3.’
Futures markets responded by pricing in a quarter-point cut in March that was already priced in, then unpricing it, then pricing it back in, all before the European close. The Fed declined to comment, though a person familiar with the matter said Chair Powell spent the morning looking at a wall.
The next jobs report is due February 6, at which point ‘cooling’ is expected to be deployed for a twelfth consecutive month, possibly this time accompanied by ‘softening,’ its synonymic understudy, currently warming up in the bullpen.