Economic Update | December 2024

This month, Ginger Chambless, Head of Research for JPMorgan Chase Commercial Banking, provides perspective into the latest stats on labor, inflation, commodities and other factors affecting the economy.

Economy: On track for soft landing with continued growth expected in 2025

Economic growth has surprised to the upside the last two years despite high inflation and high interest rates. Expect slight moderation next year toward long-term average growth of 2%.

Labor: Supply and demand for workers has come into better balance

We expect recent labor market trends to persist into 2025, including modest levels of hiring compared to the past few years, but also limited layoffs. Unemployment rate likely to stay in low 4% area.?

Inflation: Moving in the right direction slowly but surely

Inflation should gradually moderate over the next year assuming wage growth continues to cool, goods prices remain subdued, and services inflation moves toward historical levels.

Commodities: Notable variance in price trends by category

Expect subdued energy price trends and higher precious metals trends to continue in 2025, while price volatility for industrial metals and agriculture could pick up given exposure to trade and tariff risks.?

Interest rates: Expect Fed to move on slow path toward neutral monetary policy

For 2025, we expect quarterly cuts of 25bp until the Fed Funds target range reaches 3.5-3.75% around the third quarter of next year.

Foreign exchange: Dollar has strengthened year-to-date

U.S. exceptionalism has been a key support for the dollar over the past few years. The recent surge has been driven by potential new tariffs given the Republican sweep and shallow easing cycle outlook.

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