The labor market took a hit in December, with the jobless rate hitting a two-year high and payroll increases falling well short of predictions. Nonfarm payrolls rose just 18,000, much less than both November’s 115,000 and the 50,000 prognosticators expected. The gloomy numbers increase the odds that the Fed will cut rates for the fourth straight time later this month, the Wall Street Journal reports.
Annual job growth fell to 1.3 million, from 2006’s 2.3 million. Labor had been the lone bright spot in an economy that shows every sign of sliding toward recession. Economists expect fourth-quarter growth to fall from 4.9% to around 1-1.5%. In its last report, the Fed noted the “marked deceleration” in consumer spending, leaving the door open to further cuts.