But home mortgage rates hang in the balance
By Joe Higgins, Quest4Quality
The U.S. economy is back to a period where good news for our businesses is somehow bad news for financial markets.
No one could think that adding an extraordinary number of jobs would shake investors or that an unemployment rate that is historically low and then goes lower is somehow a bad thing.
The U.S. economy added over 250,000 jobs in December, trouncing expectations of 155,000 new hires. (In fact, the labor market has added more than 200,000 jobs in seven out of the last 12 months.) In addition to this good economic news, the unemployment rate fell to 4.1%, beating expectations of 4.2%.
Bye-bye Rate Cuts
Apparently, the labor market has reversed itself from its October lows and the impact of hurricanes Milton and Helene, and it looks like it is on its way to new heights. With this bit of news, you can forget about another rate cut in the first quarter of 2025, and if this level of employment growth extends into this year, you will not see lower interest rates until the second half.
By Sept. 18 the Federal Reserve was confident that it could cut rates by 50 basis points without increasing inflation, thanks to a cooling job market. It went on to cut rates another half point by year’s end, for a total reduction of a full percentage point since September.
Fed Chair Jerome Powell initially committed to four more 25 basis-point cuts in 2025, but now that is off the table.
Investors ignored the jobs report and took the Dow down 684 points on Jan. 10, which strongly suggests that a robust economy is not nearly as important to Wall Street as interest rate cuts. There is no doubt that strength in hiring and spending is inflationary. Still, many investors have missed the point that a strong labor market usually increases the profit potential of those corporations listed on the Dow or S&P 500.
Jobs vs. Rate Hikes
There is word on the street that the Fed may begin to raise interest rates again due to the December job numbers. I am not sure why Wall Street is so concerned about inflation at 2.7%. I think it is better to have full employment than a return to interest rate hikes. I would rather have a robust jobs market with full employment than the Fed in a position of trying to slow the economy.
Our last cycle ended with a soft landing; the economy may not be able to sustain that again. Maybe 2% inflation is unreasonable today; we may have to lower our goals to preserve labor in this country.
I would prefer the Fed enact a plan targeting job growth through education for white- and blue-collar Americans. The only way we will ever get our national debt under control is to have more citizens paying into the treasury.
Better jobs, on-the-job training and the use of artificial intelligence would go a long way toward sustaining our leadership in the world.
The ‘R’ Word
I hope this is not lost on the Fed’s economic insight, but every recession over the past 70 years began with a rapid rise in unemployment. I am afraid that the more pressure we put on prices and ignore employment, the faster we go into something that looks like 2008.
My biggest concern is that the rate hikes over the past few years impacted housing more than any other sector due to high mortgage rates. Millions of Americans desperately want to sell or buy a home. Our dealers’ businesses have been grossly impacted by mortgage rates hovering today at 6.9%. It is unconscionable that three years have passed, homes are sitting, consumers are frustrated, and we are in another stalemate with the Fed.
I hope we can make some progress this year with more reasonable mortgage rates.

Joe Higgins is a 44-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at Q4QwithJoe.com.