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On Tuesday, December 16, the US will release two non-farm payrolls reports (October and November) simultaneously, a delay caused by the recent federal government shutdown. These two releases will be the last major macroeconomic events in 2025, and may also be one of the most decisive events for the Fed’s monetary policy outlook in 2026.
These numbers are very interesting because the U.S. unemployment rate has reached 4.4%, which is quite high. This level is not ordinary: it is well within the warning levels set by the Fed in its 2026 base case, as stated in the official forecast released during the last meeting of the Federal Open Market Committee (FOMC). In other words, the U.S. economy today reached an unemployment rate that the Fed expects will be acceptable a year from now. This faster-than-expected deterioration makes the labor market a deciding factor in the coming months.
Under normal circumstances, a non-farm payrolls report is often enough to change market expectations. But this time, the pressure is doubled: the double announcement will provide two months of labor market dynamics, directly affecting the monetary policy decision timetable in January and March 2026. While inflation has begun to partially normalize, there are still differences among its components, but the Fed is now relying primarily on labor market conditions to decide whether it is necessary to start cutting interest rates.
If these two reports show that job growth has slowed significantly, or even contracted, the Fed will find itself facing a clear risk: a sharp decline in the labor market, which may require a faster rate cut in January, or at least a change in rhetoric toward preemptively supporting economic activity. Rapidly rising unemployment at a time when core inflation has yet to stabilize will be a complex political and economic challenge.
However, if employment growth remains strong – between 1.200,000 and 150,000 jobs per month – and the unemployment rate stabilizes or declines slightly, the Fed may take a more cautious stance and prefer to wait until March before adjusting monetary policy. In this case, some may say that the 4.4% level has not been continuously exceeded, and labor market pressure is still within the range that allows for an orderly downward trend in inflation.
Regardless, the Dec. 16 data will serve as a fulcrum for bond markets, interest rate expectations, and all assets that are sensitive to the economic cycle. In short, this may be the most important economic indicator at the end of the year, as it will determine whether the 2026 monetary policy scenario outlined by the Fed last week is still feasible – or if it needs to be revised.
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