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    Where new jobs were in 2024, and potential growth areas in a second Trump term

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    Health care and government were the two sectors that saw the most job growth in both 2024 and 2023.
    But a second Trump administration may pose risks to growth in both areas.
    Conversely, Trump’s proposed tariffs could boost lagging sectors, such as manufacturing.

    Shapecharge | E+ | Getty Images

    The labor market may be poised for dislocation with President-elect Donald Trump set to take office for the second time later this month.
    For the past two years, health care has dominated all other industries in terms of growth, aided partly by Covid-related spending. The health care and social assistance sectors added 902,000 jobs in 2024, according to Friday’s employment report from the Bureau of Labor Statistics, almost as many as the 966,000 jobs they created in 2023.

    The government sector came in a distant second, creating some 440,000 jobs in 2024, down from 709,000 in 2023.
    Part of the growth in health care jobs is also tied to rising population and a burgeoning number of retirees, said Elise Gould, senior economist at the Economic Policy Institute.

    “Healthcare and social insurance has been rising gangbusters for years now,” Gould told CNBC in a Friday interview. “Some of that is an aging population, some of it is just population growth.”
    Looming change
    But that could change in a second Trump administration, especially if it brings mass deportations and a renewed debate over foreign labor visas. Immigrants accounted for nearly 18% of health care workers in 2021, according to the Migration Policy Institute.
    “There’s already such high demand there and if we have mass deportations, that’s certainly going to come at a cost for the services that can be provided in those sectors,” Gould said. “You could then have shortages that could lead to more inflation because you’re going to have employers trying to beat out each other to try to get the fewer workers that there might be, and that could cause problems in the macroeconomy.”

    The government sector has been the second-fastest growing sector the past two years. Much of that growth has happened at the state level, Gould said. The state-level government workforce grew at a faster pace than local last year, while the federal government employee base rose at roughly the national rate.

    But, as with health care, the government sector could see workforce reductions under President-elect Trump’s new Department of Government Efficiency, a strictly advisory body headed by Elon Musk and Vivek Ramaswamy that aims to slash government spending.
    “If you get rid of that kind of a policy at the federal level, you’re going to lose lots of highly productive workers, and so that could be a detriment to the services that they provide and obviously to the overall economy,” Gould said. “Unemployment can go up … So many things can happen if you damage that vital federal workforce, and if there’s less funding at the same local level that can be problematic as well.”
    Manufacturing growth — maybe
    Conversely, a Trump administration may prove positive for sectors such as manufacturing and mining and logging, the two groups that saw the weakest job creation in 2024. Trump’s proposed tariffs could boost growth in these industries, but Gould said it’s impossible to predict by how much.
    With concerns around sticky inflation looming into the new year, Gould said that the focus on the labor economy moving forward should be the share of corporate sector income that goes to workers versus profits, which she said is still “very, very low.”
    “When workers have money in their pockets and they spend it on goods and services, that drives the production of goods and the provision of services,” she said. “Even though we’ve seen productivity growth and we’ve had inflation come down, there is just a lot more room for wages to rise without putting upward pressure on inflation.” More

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    IMF chief sees steady world growth in 2025, continuing disinflation

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    WASHINGTON (Reuters) – The International Monetary Fund will forecast steady global growth and continuing disinflation when it releases an updated World Economic Outlook on Jan. 17, IMF Managing Director Kristalina Georgieva told reporters on Friday.Georgieva said the U.S. economy was doing “quite a bit better” than expected, although there was high uncertainty around the trade policies of the administration of President-elect Donald Trump that was adding to headwinds facing the global economy and driving long-term interest rates higher.With inflation moving closer to the U.S. Federal Reserve’s target, and data showing a stable labor market, the Fed could afford to wait for more data before undertaking further interest rate cuts, she said. Overall, interest rates were expected to stay “somewhat higher for quite some time,” she said.The IMF will release an update to its global outlook on Jan. 17, just days before Trump takes office. Georgieva’s comments are the first indication this year of the IMF’s evolving global outlook, but she gave no detailed projections.In October, the IMF raised its 2024 economic growth forecasts for the U.S., Brazil and Britain but cut them for China, Japan and the euro zone, citing risks from potential new trade wars, armed conflicts and tight monetary policy.At the time, it left its forecast for 2024 global growth unchanged at the 3.2% projected in July, and lowered its global forecast for 3.2% growth in 2025 by one-tenth of a percentage point, warning that global medium-term growth would fade to 3.1% in five years, well below its pre-pandemic trend.”Not surprisingly, given the size and role of the U.S. economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Georgieva said.”This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region.”Georgieva said it was “very unusual” that this uncertainty was expressed in higher long-term interest rates even though short-term interest rates had gone down, a trend not seen in recent history.The IMF saw divergent trends in different regions, with growth expected to stall somewhat in the European Union and to weaken “a little” in India, while Brazil was facing somewhat higher inflation, Georgieva said.In China, the world’s second-largest economy after the United States, the IMF was seeing deflationary pressure and ongoing challenges with domestic demand, she said.Lower-income countries, despite reform efforts, were in a position where any new shocks would hit them “quite negatively,” she said.Georgieva said it was notable that higher interest rates needed to combat inflation had not pushed the global economy into recession, but headline inflation developments were divergent, which meant central bankers needed to carefully monitor local data.The strong U.S. dollar could potentially result in higher funding costs for emerging market economies and especially low-income countries, she said.Most countries needed to cut fiscal spending after high outlays during the COVID pandemic and adopt reforms to boost growth in a durable way, she said, adding that in most cases this could be done while protecting their growth prospects.”Countries cannot borrow their way out. They can only grow out of this problem,” she said, noting that the medium-growth prospects for the world were the lowest seen in decades. More

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    IRS says taxpayer service will suffer if Congress cuts modernization funds

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    WASHINGTON (Reuters) – The Internal Revenue Service said on Friday it will launch the 2025 tax filing season on Jan. 27 with expanded tools that cannot be adequately supported if the Republican-controlled Congress rescinds tens of billions of dollars in supplemental IRS funding.IRS Commissioner Danny Werfel said that should the IRS lose funding that was initially enacted at $80 billion over 10 years, it will have to reduce staffing levels that have improved taxpayer service and reduced processing times and backlogs for tax returns. The agency will also see its modernization program stagnate, putting many technology improvements in limbo, he said.”And so if we don’t have the right staffing levels, the performance will backslide, and we will see inevitably slower processing delays and potential backlogs,” Werfel told reporters during a news briefing to preview the 2025 filing season.The IRS won the supplemental funding in 2022 as part of the Biden administration’s Inflation Reduction Act, largely a clean energy subsidy and healthcare bill. The funding, which was passed with votes only from Democrats, made up for more than a decade of understaffing, and the U.S. Treasury had estimated that it would enable beefed up enforcement that would yield $564 billion in new tax revenue over a decade.Republicans called unsuccessfully for the funding to be rescinded, arguing that it would unleash an army of new auditors to harass taxpayers. But they subsequently chopped back $20 billion during government funding battles in 2023, bringing the total down to $60 billion through 2031.But another $20 billion in funding was suspended under a stop-gap funding measure last fall due to a drafting anomaly that repeated the prior year’s language. Unless that amount is restored, Deputy Treasury Secretary Wally Adeyemo said the U.S. budget deficit could rise by $140 billion over 10 years due to reduced enforcement.EXPANDED DIRECT FILE SYSTEMWhile Trump has said little about the IRS funds, billionaire Elon Musk, who co-leads the informal Department of Government Efficiency cost-cutting effort, asked subscribers on his X social media platform in November whether IRS funding should be “deleted.”The IRS, which collects 95% of federal revenues, has focused its initial new funding on increasing taxpayer-facing staff to answer questions, bringing average taxpayer phone waiting times to under five minutes. It introduced new scanning technology to allow it to process paper tax returns far more quickly.  Enhancements scheduled for the new tax year include an expanded Direct File system now available in 25 states, up from 12 in a pilot program last year, allowing taxpayers to file simpler electronic returns for free directly with the IRS without the need for a third-party preparer or software. New electronic form-signing capabilities and phone chatbots also are being made available, the IRS said.Werfel said reduced funding would cause new technology advances to “stagnate” and recently rolled-out tools will have fewer employees supporting them, creating longer wait times for taxpayers with issues.It also will hurt revenue collections as the rebuilding of the IRS’ capacity for sophisticated audits of wealthy taxpayers suffers, he added. More

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    Jobs report fuels Treasury yield surge as markets brace for 5% threshold

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    NEW YORK (Reuters) – A recent surge in U.S. Treasury yields may gain even more momentum after a strong jobs report reinforced expectations that interest rates will stay high for longer and raised the spectre of benchmark 10-year yields hitting 5% — a level that some fear could rattle broader markets.Friday’s jobs report revealed that employers added 256,000 jobs in December, well above economists’ forecasts, while the unemployment rate dropped, bolstering market expectations that the Federal Reserve will maintain elevated interest rates to curb economic overheating.That news dashed investors’ hopes for some respite from a sharp rise in Treasury yields that has wobbled stocks since the beginning of the year. The data also re-ignited concerns about inflation, which remains stubbornly above the Fed’s 2% target.”The report was obviously negative for inflation,” said Felipe Villarroel, partner and portfolio manager at TwentyFour Asset Management. “This is definitely not an economy that is decelerating.”Traders are now expecting the central bank will wait until at least June to reduce its policy rate. Before the jobs data, they were betting the Fed would cut rates as early as May with about a 50% chance of a second cut before year end.Both J.P. Morgan and Goldman Sachs pushed their Fed rate cut forecast to June, having earlier projected a cut in March.Concerns over a rebound in inflation have also begun to raise the prospect that the Fed’s next move could be a hike – a scenario that would have been unthinkable a few months ago when investors expected interest rates would have declined to about 2.8% by the end of this year. They are now at 4.25%-4.5%. “Our base case has the Fed on an extended hold. But we think the risks for the next move are skewed toward a hike,” analysts at BofA Securities said in a note on Friday.Longer-dated U.S. Treasury yields, which move inversely to prices, jumped to their highest levels since November 2023, with the 10-year hitting a high of 4.79%. Yields have gained 20 basis points since the beginning of the year amid a global government bonds selloff that has hit UK government bonds particularly hard, pushing 30-year gilt yields to their highest since 1998.Many in the bond market fear further weakness lies ahead, as fiscal and trade policies under the upcoming Donald Trump administration could lead to more Treasury issuance and a rebound in inflation. A BMO Capital Markets client survey before the jobs report showed 69% of respondents expect 10-year yields will test 5% at some point this year. Next (LON:NXT) week’s economic reports will feature December’s producer and consumer price inflation data, which could be key for the direction of yields. The yield curve comparing two-year with 10-year yields has steepened in recent weeks because 10-year yields have been rising while shorter-dated ones have remained flat, a so-called “bear steepening” dynamic, bad for long-term bond prices, indicating the market expects interest rates to remain high due to ongoing resilience in the economy.But that could change should inflation rise again, warned Jack McIntyre, a portfolio manager at Brandywine Global.”Look for Treasury market to shift to a bear flattening from its recent bear steepening trajectory,” he said in a note. Bear flattening occurs when short-term interest rates rise faster than long-term interest rates, which can happen when investors anticipate central banks will increase interest rates.Outside of bonds, rising U.S. Treasury yields could dampen investor interest in stocks and other high-risk assets by tightening financial conditions and increasing borrowing costs for businesses and individuals.Higher yields can also improve the attractiveness of bonds against equities, “with 5% still seen as a trigger point for asset allocation shifts,” said BNY in a recent note.In late 2023, stocks declined when benchmark 10-year yields reached 5% for the first time since 2007, and while they largely shrugged off the increase in yields late last year as the move was linked to an improved economy, stocks tumbled this week as upbeat economic data propelled yields higher.The S&P 500 was down 1% on Friday.”The 10-year yield will remain above 4% this year and as a result it could be quite challenging for the stock market,” said Sam Stovall, chief investment strategist of CFRA Research, after the jobs data. “We started the year on the wrong foot.” More

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    Bankers hope for IPO revival in 2025 as high-profile listings stack up

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    NEW YORK (Reuters) – Investment bankers are gearing up for a pickup in dealmaking activity in global equity capital markets this year, buoyed by a promising pipeline of anticipated initial public offerings of several high-profile companies. Liquefied natural gas producer Venture Global, privately held medical supply giant Medline, and cybersecurity company Sailpoint, backed by private equity firm Thoma Bravo, are expected to headline a crowded line-up of stock market flotations in the first half of 2025, according to people familiar with the matter. An increase in capital markets activity, driven by improving economic confidence, is expected to be a major boon for several of these private equity-backed companies.Private equity firms have been struggling to sell or list portfolio companies over the past two years due to high interest rates and volatile stock markets that put a chill on dealmaking. “Many of the companies owned by private equity firms have become sizeable,” said Arnaud Blanchard, global co-head of equity capital markets for Morgan Stanley (NYSE:MS). “Sponsors know it may take a while to complete a full exit, so they are becoming active now, early in the cycle.” Other buzzy names that could potentially go public in the U.S. this year include the likes of Swedish payments firm Klarna, artificial intelligence cloud platform CoreWeave, and financial technology firm Chime, which confidentially submitted paperwork for its flotation in December, the sources said.The largest private equity firms have become more bullish about IPOs of their portfolio companies in recent months.When major U.S. banks report earnings next week, investors will focus on the outlook for capital markets, which had a surge of activity last year.Global equity issuance rose 20% last year, but stock market launches have so far lagged that increase, remaining far below their 2021 peak. IPOs raised $123 billion last year, compared with a record-breaking haul of $594 billion in 2021, according to Dealogic.Moreover, Wall Street’s most-watched gauge of investor anxiety, the Cboe Volatility Index, is currently at a relatively low level of about 18, raising expectations of a near-term upswing in capital markets. LARGER DEALSBankers are expecting more large IPOs, which typically refer to share sales worth $750 million and above, and are appealing because they often feature established companies with strong financial performance and offer greater liquidity to investors.“IPOs, on average, are likely to be larger in size perhaps than they ever have been,” Brian Friedman, president of Jefferies, told Reuters in an interview. Bankers also expect the 2025 surge in IPOs to reach across a broad swathe of sectors.”Investors continue to favor scaled, profitable companies with sensible balance sheets and durable cash flows, especially as rates may be staying higher for longer,” said Matt Warren, Bank of America’s head of Americas equity capital markets cash origination. While valuations have risen, many startups backed by private equity firms are still falling short of their targeted returns, said JPMorgan Chase (NYSE:JPM) president Daniel Pinto. “A lot of the companies in the sponsor books, even with these valuations, are not able to produce a good enough exit for these investments,” he said. “Private equity firms can unlock value in several ways, including small stake sales in IPOs, which can then be used for a strategic sale with a premium.”Tech companies may buck the trend, attracting demand from investors even if they are smaller in size, Goldman Sachs Chief Financial Officer Dennis Coleman said during the firm’s financial conference in December.The Wall Street investment banking giant has a “substantial tech pipeline” of IPOs and expects to see offerings for fast-growing companies to rebound after strong performances from recent small and mid-cap tech IPOs. More