The Chance of a December Rate Cut is Dwindling

Fed Futures Overstate December Rate Cut Odds 

As of this writing, the Federal Reserve (Fed) Futures markets indicate a 70.2% chance of another 0.25% rate cut at the Fed meeting on December 10.  This is likely to be an overstatement, as we will explore. We did get the ADP employment for October this week, along with several other lesser-known reports that are now the only economic reports painting the current jobs picture due to the government shutdown. 

Shutdown Impacts Data, Benefits, and Travel   

The government shutdown is now the longest in history, and we are seeing far-ranging effects. Not only do we have an absence of economic data to consider, but we are also seeing important benefits, such as SNAP/Food Stamps, greatly reduced or even eliminated. Many families, including those with children, rely on this support to supplement their grocery shopping cart to put food on the table. With Thanksgiving approaching, it is sad to think that families may go hungry over a political dispute. Speaking of Thanksgiving, the FAA has also cut approximately 10% of all flights, passenger and commercial, due to Air Traffic Controller shortages. It is easy to be critical of ATC workers and blame them for causing delays. Remember, they must work without pay. Perhaps people need to seek secondary jobs, like driving for Uber, to ensure they can put food on the table. Expect delays, at best, if traveling for the holidays until the shutdown ends. 

Fed Leaders Signal Pause Amid Data Gaps 

In the absence of economic reporting, several key Fed members, including Chairman Powell, have indicated their unwillingness to continue rate cuts. They don’t want to “fly blind” with the US economy. Even if the shutdown were to end very soon, it is questionable whether the Bureau of Labor Statistics (BLS) could move quickly enough to publish data before the December meeting. This is causing markets to believe the rate cut chances are much lower than betting markets currently show.  

WARN Act Notices Hit 15-Year High 

Worker Adjustment and Retraining Notification (WARN) Act notices are on the rise. WARN Act notifications require large businesses with over 100 employees to provide at least 60 days’ advance written notice of a plant closing or mass layoff affecting 50 or more workers at a single location. As of October, the 6-month number of WARN notices has increased to 202,616, the highest number since September 2009. Previously, when WARN notices reached this level, it was a sign of a recession.  

ADP Report Shows Modest Job Gains 

October’s ADP report showed a higher-than-expected job creation in the private sector.  42,000 jobs were created where 24,000 was expected. When comparing to the 6-month average of WARN notices, which was over 200K, 42,000 is not a very strong number. Is it weak enough to push the Fed to cut rates? We will see. 

Challenger Report Reveals Job Cuts Surge 

The Challenger report came out showing job cut announcements in October. Similar to WARN notifications, we are at the highest level for October in 22 years, at 153,000 job cut announcements. In 2025, over 1 million job cut announcements have occurred, the highest 10-month period since 2009. The total number of unemployed in the US is 7.4 million, so 1 million in 10 months is a significant portion of the total.  

Revelio Labs Data Points to Job Losses  

As a special “treat” to the market, Revelio Labs, a private company that releases economic data to its subscribers, released its own October Jobs Report to help replace the missing BLS Jobs Report. They look at over 100 million job profiles to mirror the national workforce, covering about 2/3s of all employed individuals. The BLS report covers 27% of the workforce by comparison. They reported there were 9,000 losses in October, with September being revised down to 33,000 jobs. Unlike ADP, Revelio Labs likely includes government job losses, but clearly there is general weakness in the labor markets. 

Looking Ahead: Next week is shortened by the Veterans Day holiday 

Thursday, (November 13): Initial and Continuing Jobless Claims (Shutdown), CPI Inflation (Shutdown) 

Friday, (November 14): PPI (Shutdown), Retail Sales (shutdown)