Can Low Unemployment Last Under Trump?

Hiring has slowed, but joblessness remains at levels defying economic norms. Big policy changes under a new administration could test that resilience.

For a time, not too long ago, it was the central question animating economic forecasts and bets laid by investors in financial markets: Will the U.S. economy avoid a recession?

Now, for many in the business world, that question feels almost passé, part of an earlier, more fretful era of narratives.

After a superlative run of hovering below 4 percent for more than two years, the unemployment rate — at 4.2 percent — has ticked up since last spring. But only by a bit so far; the December reading will come on Friday. While hiring has slowed, layoffs remain low by long-term standards.

Inflation, having calmed substantially, is still being eyed warily by the Federal Reserve, which began steeply raising interest rates in 2022 to combat price increases. But at three consecutive meetings in the final months of 2024, the Fed slightly lowered the key interest rate it controls — an attempt to surgically take some pressure off commercial activity and support employment.

Predictions of a downturn, once omnipresent, were mostly absent from the year-ahead forecasts that major financial firms typically send around to clients over the holidays.

Near the start of 2024, Jeremy Barnum, the chief financial officer at JPMorgan Chase, told listeners asking about U.S. economic vitality during a conference call, “Everyone wants to see a problem — but the reality is we aren’t seeing any yet.”