We live in interesting times. I can’t imagine a scenario where we would think the US economy is too strong, but that’s how the markets reacted this month to the job report last week. You’d think it’s a good thing to have more hiring, wages increases, and more people starting new jobs than ever before.

All markets dropped after the Bureau of Labor Statistics reported 256K new jobs added in December – which was well over the estimate of 155K. The unemployment rate also dropped to 4.1% (lower than forecasted.)

This is great for us as recruiters, great for job seekers, great for all workers. So why did the stock market drop based on good news?

It means the Fed isn’t cutting interest rates as much as anticipated. Initially, they were forecasting three decreases in 2025, but now major players are saying it will only be two, with Bank of America predicting the Fed will increase rates on the next go around.

Here’s the interesting thing. If the case for the Fed cutting rates is decreasing, that means the unspoken goal is to weaken the economy. No one is saying that out loud, but when they explain why they can’t cut rates, it seemingly means nothing in the economy has been bad enough to justify loosening financial conditions?

Maybe an economist can explain it to me… What I do know is many recruiters are seeing a big increase in inbound leads and increased responsiveness from their respective markets. (Not all markets, with tech still struggling.) It feels busier. There’s more activity. More meetings. More hiring. This is likely going to continue for the near term.

As we saw last week, if the jobs market continues at the pace we’re anticipating, it could lead to increased interest rates and inflation. Does that mean the stock markets will continue to decline in face of job growth? No one can predict the future, but it’s worth considering.