Citi Economists Anticipate Rising Unemployment Rates in the U.S.

Citi's economists are more pessimistic than most about the state of the labor market and have a bleak forecast for the December employment report set to be released on Friday. They anticipate that job creation will drop from 227,000 in November to 120,000, and they expect the unemployment rate to rise from 4.2% in November to 4.4%. Current surveys suggest an expected employment increase of 155,000 for December, with the unemployment rate expected to remain steady at 4.2%. Citi believes that unemployment could rise to 4.5% over the next few months, which might lead the market to adjust its expectations for more Fed rate cuts in 2025 than currently anticipated.