U.S. Unemployment Rose in November ​Despite Job Gains The 4.6% rate is the highest in more than four years, according to a delayed government report

A long-delayed government report on Tuesday showed that 64,000 jobs were gained in November, while 105,000 jobs were lost in October. Job losses in June, August and October mean the U.S. economy has shed jobs in three out of the past six months. (…)

Taken together, the data point to one of the weakest American labor markets in years. While the economy has added jobs so far this year, mostly on the back of gains in healthcare and education, the shock of shifting trade policies and an immigration crackdown has restrained labor demand and supply, making for tepid hiring overall.

“All roads lead back to policy out of Washington, D.C.,” said Joseph Brusuelas, chief economist at RSM. “I’m not saying this is a harbinger of a recession, but we have some real challenges to the economy that we didn’t have one year ago.” (…)

The Labor Department revised down payrolls for both September and August, for a total gain of 82,000 jobs, instead of the 115,000 previously reported.

Taking out the impact of the government sector, the economy then added 121,000 private sector jobs over October and November. Those were driven by the healthcare and social-assistance sector, which gained 128,600 jobs. Manufacturing, transportation and warehousing and temporary-help services were among the sectors shedding jobs. So did the typically white-collar information and finance sectors. But the construction sector gained 27,000. (…)

Overall, economists describe the current labor market as a low-fire, low-hire environment. Most companies aren’t laying off workers en masse. But they also aren’t willing to hire too many new workers. Many employers that typically rush to hire seasonal workers at this time of year are sitting tight. Others are experimenting to see how many job tasks can be replaced by artificial intelligence.

Earnings growth continued to slow, with hourly earnings in the private sector rising 3.5% from a year earlier. Outside of pandemic-era distortions, it was the lowest rate of growth in several years—a factor that could be adding to many Americans’ sense of disillusionment with the economy. (…)

Indeed:

The combined two-month report shows notable declines in employment in October as tens of thousands of government employees who had remained on payrolls through the summer finally came off as their buyout deals took effect. Job growth rebounded in November, but was weak overall, with continued growth in healthcare and certain trades jobs, and weaknesses essentially everywhere else. Certain healthcare roles now account for virtually all of this year’s job growth, a worrisome concentration that is helping to push up unemployment overall as non-healthcare workers struggle to enter the market.

The economy as a whole has added 499,000 jobs on net since the start of the year — and 630,000 of them have come from the private education and health services sector. Put another way, without this sector, the overall labor market would have actually lost 131,000 jobs so far in 2025. Needless to say, this limited job growth is very problematic, especially for workers in other sectors who don’t want or are not qualified for these jobs. Sidelined workers are showing signs of turning to temporary or gig work to get by — the share of workers with multiple jobs has risen to 5.8%, the highest level in more than 25 years, representing almost 9.5 million workers. (…)

Manufacturing, transportation and warehousing, and financial activities jobs all saw declines again in October and November, a pattern that has become commonplace this year. It is difficult not to attribute at least some of this weakness to tariff policy, and potentially even more to the uncertainty surrounding it. Manufacturing sub-sectors, including machinery manufacturing, electronics manufacturing, and transportation equipment manufacturing, have each lost more than 10,000 jobs in the last year and are all relatively exposed to tariffs on both their final goods and the intermediate goods used in production.

The least we can say is that the labor market has become very erratic. Since May, only 17k monthly jobs were added on average. On a YoY basis, employment is up 0.6%, half of its January growth rate. Remember that Powell said that  job creation numbers could be overstated by around 60,000 per month.

Weekly earnings are rising 3.5% YoY. Aggregate weekly payrolls were up 4.3% YoY in November thanks to a suspect jump in hours worked. Labor income is really rising at a 4.0% rate and weakening while inflation is nearing 3.0%.

Total real consumer spending could slow to a 1.0% annualized rate unless Americans sustain consumption with savings.

Total retail sales were flat MoM in October after +0.1% in September, a sharp slowdown from the June-August pace of +0.7%. The 3.5% YoY October growth pales versus the +4.4% average growth of the previous 4 months.

Wells Fargo:

On the face of it, the retail sales report for October was a dud, but the underlying details offer more encouraging signals for Q4 consumer spending and an elevated starting point for the critical two-month stretch for holiday sales.

The headline miss (0.0%) is entirely due to autos, which slipped 1.6%, reflecting payback after a pull-forward ahead of tariffs and then expiring tax credits.

Ex-autos, sales surprised to the upside and control group sales, which track well with broader goods consumption, came in even stronger (up 0.9%), suggesting a more solid start to Q4 consumer spending than our 1% CAGR forecast accounts for.

Ultimately these October data and early estimates of Black Friday weekend sales suggest a decent pace of holiday spending, which is now tracking in the middle of our 3.5-4.0% annual range.

That said, other high-frequency data suggest some slowdown through mid-December and leave us cautious on how the consumer crosses the finish line. This lost momentum at year-end is also in line with a key theme from our holiday sales forecast amid the steady moderation in the jobs market plus compounding nature of price gains weighing on households’ ability to spend.

Source: U.S. Department of Commerce, Bloomberg Finance L.P. and Wells Fargo Economics

Bank of America Institute provides a preview for November:

In November, total credit and debit card spending per household increased by 1.3% year-over-year (YoY), according to Bank of America aggregated card data – a dip from 2.4% YoY in October. Seasonally-adjusted (SA) spending growth per household was flat month-over-month (MoM), after a solid run of increases over the previous five months.

Looking across categories, retail spending (excluding gasoline and restaurants) was flat MoM, while services spending (including restaurants) declined. Within services, travel spending, including airlines and lodging, also saw declines, potentially in part reflecting an impact from the government shutdown. However, despite the recent decreases, “discretionary” outlays such as travel and entertainment have still shown solid growth over the past quarter.

Spending trends by income continue to show a K-shaped pattern: in November, lower-income households saw just 0.6% YoY growth in their three-month average total card spending, compared to a 2.6% increase for higher-income households.

While spending gains softened across all income cohorts in November, middle-income households moderated the most, with spending growth up 1.4% YoY compared to the 1.7% YoY increase in October.

Labor market trends likely remained a key driver, even as wage growth has stabilized a bit. After-tax wage and salary growth among lower-income households continued to lag behind higher-income households. However, the deceleration in lower-income wage growth seen in the spring and summer appears to have leveled off.

 

An important question is whether holiday spending growth reflects higher prices or increased purchasing activity. Exhibit 10 suggests the latter: most of the growth appears to be driven by more transactions, with average spending per transaction on holiday items showing little change. In other words, it appears that consumers are actually making more purchases as opposed to just spending more.

Why might this be? For one, price increases on holiday items relative to last year could be limited, though this seems relatively unlikely given that commonly bought holiday goods like clothing and durables (e.g., electronics and furniture) have been impacted by tariffs. Interestingly, the spending amount and the number of purchases grew at a similar rate YoY for clothing. However, consumers spent more YoY at general merchandise stores, but made slightly fewer purchases, while spending on holiday durables declined with transactions down further.

In our view, it may be that consumers are becoming more price sensitive – and selective – this season, especially given stubbornly elevated inflation and potential price increases due to tariffs. This is likely as shoppers often have a total spending goal in mind for gift giving, so in the face of higher prices they are economizing. It could also be that some retailers are absorbing some cost increases while others have passed them along to consumers.

Faced with cost-of-living pressures, are consumers purchasing more on credit to see them through the holidays? So far, Bank of America internal data suggests this is not the case. The share of total spending on credit versus debit cards has remained unchanged in the four weeks to November 28, compared to the same period in 2024. This is also the case with total retail spending.

Bloomberg’s Joe Weisenthal:

Here is a literal picture of the number of unemployed workers in America. As you can see from the red bars (which indicate recession) history suggests that when we see moves like this we usually experience a recession before the trend reverses.

Goldman Sachs:

Congressional Republicans could pass another fiscal package in 2026 to provide additional stimulus, but we think the hurdles to doing so are high. President Trump’s proposed $2000/person tariff rebate has not gained traction among congressional Republicans, given fiscal concerns and, in some cases, opposition to the tariffs that would ostensibly fund them. While we think the odds are slightly better than even that Congress extends soon-to-lapse health insurance subsidies next year, this is unlikely to become the basis of a second package. Some officials in the Trump administration have also proposed passing a second “reconciliation” bill to further boost defense spending, which bears watching but also faces an uphill climb.

SURVEYS SAY:

• Deloitte polled 200 CFOs at North American companies with at least $1 billion in revenue from Nov. 14 – Dec. 8.

Chief financial officers’ confidence in the final quarter of 2025 hit its highest point since 2021, according to Deloitte’s CFO Signals survey out Wednesday morning.

Confidence rose to 6.6 in the fourth quarter from 5.7 in the previous quarter and 5.8 a year ago — considered medium levels.

“When you take a step back and look at the main drivers of the macroeconomy that a CFO needs to contemplate, those things are probably as settled as they’ve been in the last five or six quarters,” Steve Gallucci, global and U.S. leader of Deloitte’s CFO program, tells Axios.

Adapted from Deloitte’s CFO Signals report; Note: Measured as an average score from 1 to 10, where 1 is lowest confidence; Chart: Axios Visuals

• Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta polled 548 respondents from Nov. 11 to Dec. 1.

When asked between Nov. 11 and Dec. 1 to rate optimism about the overall U.S. economy on a scale from 0 to 100, the average rating from CFOs was 60.2, a slight dip from 62.9 in the third quarter of the year.

CFOs’ expectations for real GDP growth over the next four quarters remained relatively unchanged from the third quarter survey. Moreover, the probability respondents assign to negative year-ahead economic growth also remained the same, at 13.6 percent.

• NY Fed Business Leaders Survey

Business activity continued to decline significantly in the region’s service sector in December, according to firms responding to the Federal Reserve Bank of New York’s Business Leaders Survey.

The survey’s headline business activity index was little changed at -20.0. The business climate index drifted down to -44.2, suggesting the business climate remained much worse than normal.

Twenty-two percent of respondents reported that conditions improved last month while 42 percent said that conditions worsoned.

Employment fell for a fourth consecutive month, and wage growth remained modest. Supply availability continued to worsen somewhat. Both input price increases and selling price increases picked up after slowing last month.

Looking ahead, firms expected little improvement in conditions over the next six months.

• PIES is a quarterly survey of firms in the Third District (Philly Fed) that helps to provide a better understanding of the price expectations of businesses. The survey asks participants to provide forecasts of changes in prices for their own goods or services, compensation for their employees, and U.S. inflation. Respondents are also asked to report the change in prices of their own goods or services they observed over the past year.

For the fourth quarter of 2025 through the fourth quarter of 2026, the firms’ mean forecast for their own prices was for an increase of 2.6 percent, down from 3.3 percent last quarter. Firms expected compensation costs per employee to rise 3.3 percent over the same time period, unchanged from last quarter. The mean forecast for U.S. inflation was 3.6 percent, down from 4.7 percent last quarter.

Looking back over the past year (the fourth quarter of 2024 to the fourth quarter of 2025), firms reported that the prices they received for their own goods and services rose 3.0 percent, little changed from the 2.9 percent they reported last quarter and higher than the 2.6 percent growth they expect over the next four quarters.

For the longer run, firms’ median expectation of the average annual price increase that U.S. consumers will experience over the next 10 years moved up to 4.0 percent, following nine consecutive quarters at 3.0 percent. The mean expectation dropped to 6.1 percent from 9.3 percent, after rising in five consecutive quarters.

• Trump’s approval rating on the economy hits record low 31%

The survey, conducted from Dec. 4-8, sampled more than 1,100 adults mainly via web interviews.

• 68% of voters — including 44% of Republicans — say the economy is in poor shape.
• About half of Americans say it’s harder than usual to afford holiday gifts this year.
• About half say they are cutting back on nonessential purchases more than they usually would.
• A “vast majority” report seeing higher prices for groceries and electricity, underscoring a persistent cost-of-living strain.
• About 4 in 10 U.S. adults expect next year will be economically worse for the country. Roughly 3 in 10 say conditions won’t change much. Only about 2 in 10 think things will get better, with Republicans being more optimistic.

From The Transcript:

• “And so as we look at the data right now, the data looks good, consumers look resilient, small businesses are resilient, but there’s less capacity to weather an incremental stress because cash buffers have normalized and price levels absolutely are high even as inflation has come down at least. So I would just say that I would characterize the environment as being a little bit more fragile.” (…) “Yes, there is a divergence in spend growth between higher income customers and lower-income customers, but that relative level of spend growth is a sort of relatively normal trend. And so it’s not diverging nor is it narrowing? It looks pretty normal. And so I don’t want to discount their concerns. They are real. And — but the data is good for right now.”– JPMorgan Chase & Co Head of Strategic Growth Marianne Lake
• “We haven’t seen anything at this point that would lead us to believe that there’s any sort of credit cycle or any softening. We watch it very, very carefully.” – American Express CEO Stephen Squeri
• “You know, we are a very middle-income, lower-income, main street America sort of consumer base in our portfolio. We also skew retail and a little bit more discretionary. And when you look at that, we continue to see consumers spending less, trading down, average order values down, and just a shifting in that space. That has persisted.“ – PayPal CFO Jamie Miller
• “In terms of the flow-through and what we’ve seen in the overall marketplace, we continue to see sort of pressure in the apparel space. We held share in premium athletic and lost some slight share in the performance apparel as we see guest behavior and trading down.” – Lululemon athletica Inc. CEO Calvin McDonald
• “Here’s still this divergence between the more affluent, the less affluent. Nothing is new there. Nothing has changed. It certainly isn’t spreading to any real extent. And spend patterns seem very, very consistent across age groups, across geographies and things like that.” – Wells Fargo & Company CEO Charles Scharf
• “The way they’re spending the money has a little bit of the elements of the K economy to it, not as much as people think if you actually watch what’s happened over the last few months in 3 terciles, the bottom terciles has been growing at a slower rate, still growing.” – Bank of America  CEO Brian Moynihan

Inflationary Pressures Appear Contained, Bank of Canada’s Macklem Says The central bank’s governor expects the upheaval in global trade and the restructuring of Canada’s economy to dominate again in 2026

In a year-end speech in Montreal, Macklem said he expects the upheaval in global trade, fueled by President Trump’s tariffs, and the restructuring of Canada’s economy to dominate again in 2026. He reiterated that the central bank’s policy interest rate, at 2.25%, is “at about the right level” to support the economy through a period of modest growth while keeping inflation in check.

Inflation data for November, published on Monday, indicated total prices rose 2.2% from a year ago. Meanwhile, the average of the Bank of Canada’s preferred measures of core inflation—which strips out volatile prices like food and energy—decelerated to 2.8%, marking the slowest increase since January. The central bank sets interest rates to achieve and maintain 2% inflation, or the midpoint of a 1% to 3% range.

The central bank judges underlying inflation to be in the 2.5% range.

“Inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade,” Macklem said in remarks before Montreal’s chamber of commerce. He added he expects inflation to remain close to 2% for the next two years. (…)

“It’s critical that we keep inflation expectations well anchored,” he said, “because one thing we know for sure is if we don’t do that, nothing in the economy is going to work well.”

Hefty U.S. tariffs of up to 50% on key sectors such as steel, aluminum and automobiles are weighing on the domestic manufacturing sector, Macklem said. “But so far, the economy is proving resilient overall.” (…)

Chip Shortage Lingers as Honda to Halt Output in Japan, China

The Japanese carmaker will suspend output in Japan on Jan. 5 and Jan. 6, a spokesperson said Thursday, without specifying which plants will be affected. All three of the facilities in its joint venture in China, Guangqi Honda Automobile Co., will be offline from Dec. 29 to Jan. 2.

The company had said it anticipated getting disrupted production back on track from late November, but the looming suspension of some of its factories indicates ongoing snarls in the supply chain. (…)

Carmakers around the world have had their production plans thrown into disarray in recent months after China blocked Nexperia BV — owned by Chinese company Wingtech Technology Co. — from exporting products made at its local plants.

Honda has been hit hard, with the chip shortage prompting it to reduce its sales forecast to to 3.34 million units from 3.62 million. It had previously curbed or suspended output at some plants in North American due the issue.

Nexperia makes semiconductors used in vehicle control systems for functions such as activating windshield wipers and opening a window.

FYI:

Source:  @RyanDetrick

• New White House plaques attack Trump’s Democratic predecessors, Bush

President Trump has added partisan plaques under the portraits along his new Presidential Walk of Fame on the White House colonnade. White House Press Secretary Karoline Leavitt said: “As a student of history, many were written directly by the President himself.”

Student of history?

• During a 2019 July Fourth speech, Trump claimed the Continental Army “took over the airports” from the British in 1775, though the first successful powered flight did not occur until 1903.
• In the same 1775 context, he referenced the Battle of Fort McHenry, which actually took place during the War of 1812.
• He has repeatedly stated that the “Spanish Flu” pandemic occurred in 1917 and contributed to the end of World War I; historical records show it began in 1918 and World War I ended due to military and political developments, not the virus. (Google)

December 17, 2025

As investors, we must observe, research/analyze, evaluate/judge before betting. Unlike professional investors, me, my family and my friends, bet with our own money, with real personal, lasting consequences.

We went to China to observe with our own eyes in order to better analyze and evaluate and, hopefully, invest smartly.

We had done that in 2004 when Shanghai and Beijing were literally fields of cranes. Easy investment calls.

I don’t pretend that, in 10 days in 3 cities, we now know and fully understand China. But we observed and learned a lot. Our analysis and judgement are personal and in no way seek to be investment advice.

Also, there is no political endorsement here even though some of our observations will cover some social aspects that we share only FYI. Take whatever you want from these personal views.

Also note that Suzanne and David contributed to this report and analysis, as well as my “conversations” with GPT 5.2 (via Perplexity.ai) and Gemini 3.0 (Google) used to supplement our observations.

***

I suspect that most Chinese thought we were Americans. A bunch of students said so and most people were surprised to learn that we were Canadians.

We were welcomed everywhere. Very nice people (even immigration officers), always willing to help, patiently using their translator to communicate.

People seem happy, certainly not depressed.

Cameras everywhere. Not so much police presence, except in Beijing where policemen seem to be at every corner. As foreigners, your passport is your entry ticket just about everywhere. Your journey is registered.

Competition is fierce, most visibly on cars and most scarily in Shanghai taxis. There are more than 150 car brands, private and state owned. And now the tech companies are entering the fray (see Shhh,,,). Many good companies in a pretty bad industry for now, and possibly getting worse (Shhh,,,)

China’s housing sector is undoubtedly messy. But it is also very complicated because of the hukou system.

The Chinese hukou is a household registration system that officially identifies a person as a permanent resident of a specific area. It functions as a type of internal passport, linking an individual’s access to social services to their registered location.

Established in its current form in 1958, its primary objectives are to control internal migration, manage social protection, and preserve social stability.

Initially, it was designed to support China’s industrialization by preventing a large-scale exodus from agricultural areas to cities, thereby ensuring a stable food supply and urban order.​

A defining feature of the hukou system is its classification of citizens into either “agricultural” (rural) or “non-agricultural” (urban) status.

This designation, which is inherited from one’s parents, dictates an individual’s eligibility for housing and public services.

Urban hukou holders typically have access to better education, healthcare, subsidized housing, and government jobs, while rural hukou holders receive arable land for their livelihood but have limited access to urban benefits.

This has created significant disparities and is often cited as a major source of social inequality in China.

While people can travel and work in places where they are not registered, their lack of a local hukou creates significant barriers.

For instance, a migrant worker from a rural area living in a major city may be unable to enroll their children in local public schools or access the same healthcare benefits as a registered urban resident.

Changing one’s hukou from rural to urban is a difficult process, making these individuals similar to migrants without full rights in their city of residence. Although reforms have been introduced, the system continues to shape economic and social mobility for hundreds of millions.

For Chinese citizens, the ability to purchase a home is strictly gated by hukou status, particularly in top-tier cities like Shanghai, Beijing or Shenzhen, where demand is highest.

In cities like Shanghai, local hukou holders (households) are typically permitted to purchase up to two properties.

In contrast, non-local hukou holders must be married and show proof of local tax or social insurance contributions for several years (often 5+ years) just to qualify to buy a single home.​

To combat high inventory of unsold homes, many smaller (tier 2 and 3) cities have relaxed these restrictions, allowing non-locals to buy property more freely, sometimes even offering hukou registration as a perk for buying a home.

Home ownership in China is above 90% (US: 63%), among the highest in the world:

• 87% in urban areas (urban residents with local hukou (non‑migrants). Homeownership for migrants in the destination city is about 14%, but they often have a housing “fallback” in their rural place of registration through family housing/homestead arrangements.

• 96% in rural areas where households are given land and generally self build their house. 

A declining population, high ownership and a stiff hukou system make housing a slow growth sector at best. Knowing that, Beijing is mainly trying to help slowly clear the overhang without a major crisis, unlikely given the relatively low housing leverage in China.

As a mitigating factor, the housing overhang has kept rents low in recent years, helping urban migrants’ cashflows.

Urban Chinese (67% of the population) live in apartments, with the average size around 40sqm (430sqf), about 25% the size of the average US home and 15% that of newly built US houses.

This significantly limits the quantity of physical stuff Chinese households can possess compared with American households, effectively curbing consumption of certain types of goods.

Until the government sets up a comprehensive social safety net, the Chinese will keep saving at a very high rate (24.5% in 2024).

Prospects for a meaningful and lasting domestic consumption cycle in China are thus limited by several key factors that don’t seem likely to change rapidly.

What do Chinese do with their money?

• They save.

• They travel.

• They eat out.

• They buy cars, high end electronics, luxury goods, jewelry, cosmetics.

It means China will continue to send goods abroad, further contributing to global goods deflation or noflation.

Transportation in China is very efficient. Subways, trains and airports are integrated and fairly cheap. Taxis everywhere but foreigners should use Didi, cheaper, efficient, much safer and easier on communications.

Alipay and WeChat are very important “super apps”, integrating several useful functions (chat, social media, e-commerce, travel and financial services) and used as payment systems everywhere. In 10 days we used cash only 2-3 times.