Greetings from New York,
The festive season is in full swing here, with the Rockefeller Center tree lighting bringing the crowds into Manhattan last night. Over on Wall Street, the prospects of a rate cut next week are fueling hopes of a year-end rally. Bankers attending the Reuters NEXT conference are expecting 2026 to be a bumper year for debt issuance and a solid one for M&A.
But further signs of labor market weakness are causing some unease over the health of the U.S. economy. Data from payroll processing company ADP this week showed U.S. companies shed jobs at the fastest pace in more than two and a half years in November. ADP’s figures are getting more attention because of delays in federal data after the government shutdown. The November jobs report from the Bureau of Labor Statistics, originally due Dec. 5, will now come out Dec. 16 - after next week’s Fed meeting.
Of course, speculation that White House economic adviser Kevin Hassett will be the next Fed chair is dominating the run-up to that December meeting. Hassett, a former Fed senior economist, favors a faster reduction in interest rates and markets are pricing in a more dovish rate outlook, with at least three cuts forecast for next year. A more aggressive easing cycle will offer little reprieve for the dollar, which is currently on track for its longest losing streak in over 50 years.
While Wall Street rubs its hands at the prospect of cheaper borrowing costs, the White House is getting defensive over Main Street pessimism about the cost of living. On Tuesday, President Trump suggested that the affordability issue is a "fake narrative" being pushed by Democrats. That’s a risky political path to tread, as Biden learned last year.
So how is Trump, and everyone else for that matter, going to navigate the Trump economy next year? That was the topic of my very first live podcast this week at Reuters NEXT. I took to the main stage with U.S. editor Sally Buzbee and Howard Schneider, our Fed correspondent, to talk economics, politics and Black Friday splurges. You can watch it here.
