Unadorned Notes: January 4-7, 2025
U.S. Job Openings Rise Unexpectedly; U.S. Services Activity Accelerates; AI Drives Holiday Sales Growth; Biden Signs Social Security Expansion; Tencent, CATL Among U.S. Blacklisted Firms
Economics, Finance, and Business
U.S. Job Openings Rise Unexpectedly: U.S. job openings rose by 259,000 to 8.098 million in November 2024, according to the Bureau of Labor Statistics’ JOLTS report, surpassing economists’ expectations of 7.70 million. October 2024 data was revised upward to 7.839 million vacancies, reflecting sustained labor demand despite employers’ hesitancy to expand hiring. Hires declined by 125,000 to 5.269 million, while layoffs remained steady at 1.765 million. Nonfarm payrolls likely increased by 160,000 jobs in December 2024, as growth slowed from November’s 227,000 surge. The Federal Reserve raised interest rates in December but signaled fewer rate cuts for 2025 than previously anticipated.1
U.S. Services Activity Accelerates: The U.S. services sector expanded in December 2024, with the ISM nonmanufacturing PMI rising to 54.1 from 52.1, surpassing expectations of 53.3. Strong demand fueled growth, while input costs surged, with the prices paid index reaching 64.4, its highest since February 2023, signaling persistent inflation pressures. The Federal Reserve, projecting slower progress on inflation, anticipates only two reductions in 2025, reflecting economic resilience. Business activity and new orders within the sector showed notable gains, while employment in services was largely stable at 51.4.2
U.S. Trade Gap Expands: The U.S. trade deficit widened by 6.2% to $78.2 billion in November 2024, exceeding forecasts, as imports rose 3.4% to $351.6 billion, led by industrial supplies, semiconductors, and cars. Exports grew 2.7% to $273.4 billion, driven by shipments of crude oil, autos, and pharmaceuticals. The goods deficit with China reached $25.4 billion, while that with the European Union stood at $20.5 billion. Analysts suggested the trade data indicates stronger-than-expected economic activity, which could lift fourth-quarter GDP projections. Import volumes may rise further due to labor negotiations at U.S. ports and potential tariff-related uncertainty under the incoming administration.3
AI Drives Holiday Sales Growth: AI-powered chatbots boosted U.S. online holiday sales by nearly 4% year-over-year to $282 billion in 2024, exceeding Salesforce’s forecast of 2% growth. Shoppers used chatbot services 42% more than in 2023, with global AI-influenced sales rising to $229 billion, up from $199 billion the prior year. Retailers also leveraged targeted promotions and social media platforms, with mobile devices accounting for 79% of holiday orders. However, product return rates climbed to 28%, up from 20% in 2023, raising concerns about profitability.4
Goldman Forecasts Global Growth: Goldman Sachs projects global GDP growth of 2.7% in 2025, with significant regional variations. India is expected to lead growth at 6.3%, followed by China at 4.5%, while Germany’s GDP is forecast to rise by just 0.3%. The U.S. economy is predicted to grow steadily at 2.5%, with minimal impact from potential trade policies under President-elect Donald Trump. However, tariffs are expected to reduce China’s growth by 0.7 percentage points and lower euro area growth by 0.5 points. Goldman expects U.S. productivity gains to drive growth and forecasts global inflation to ease to 2.5% as labor markets and interest rates normalize.5
Dollar, Yuan Weakens Amid Market Shift: The U.S. dollar fell 0.48% on Monday, reversing its recent rally, as traders anticipated key economic data and improved foreign exchange liquidity. The euro rose 0.55% to $1.0368, while sterling gained 0.52% to $1.2488, recovering from multi-month lows. Meanwhile, China’s yuan weakened to a 16-month low of 7.3301 per dollar, driven by widening U.S.-China yield spreads and concerns over potential tariff increases under President-elect Donald Trump. Markets await the U.S. December 2024 jobs report and Federal Reserve statements for clarity on economic conditions and inflation management. Global markets, particularly in Europe and China, remain subdued, reflecting concerns about global growth and geopolitical risks.6
2025 Markets Face Volatility: U.S. financial markets are expected to experience significant volatility in 2025, driven by Federal Reserve policy, persistent inflation, and uncertainty surrounding President-elect Donald Trump’s economic agenda. Potential new tariffs could elevate inflationary pressures, complicating the Fed’s efforts to balance price stability and growth. Investors are increasingly shifting toward defensive sectors like energy, utilities, and healthcare, while technology stocks may face greater sensitivity to interest rate changes. Advisors anticipate strong market gains but predict at least one correction, prompting diversified strategies to mitigate risks, per
.7Big Tech Dominates AI Talent: In 2024, major tech firms like Google, Microsoft, and Amazon engaged in unconventional “licensing deals” to acquire top AI talent without fully acquiring companies, raising regulatory scrutiny. Google paid billions to strip Character.AI of key personnel, while Microsoft and Amazon executed similar moves with Inflection and Adept. Concurrently, these firms heavily invested in AI startups, with Amazon contributing $6.25 billion to Anthropic and Microsoft investing nearly $14 billion in OpenAI. The Federal Trade Commission is investigating whether these deals circumvent acquisition regulations. This consolidation trend underscores Big Tech’s increasing dominance in AI development, sparking debates about competition and innovation, per
.8Meta Ends Fact-Checking Program: Meta announced the end of its third-party fact-checking program, replacing it with a user-driven “community notes” model across Facebook, Instagram, and Threads. CEO Mark Zuckerberg cited excessive censorship and political bias as reasons for the shift, acknowledging the tradeoff of allowing more controversial content on the platform. Critics, including advocacy groups, called the move political pandering, as the company seeks to improve relations with President-elect Donald Trump and his administration. Supporters, including X CEO Elon Musk, praised it as a win for free speech. Meta will also reduce automated content moderation to focus only on severe policy violations, relocating its trust and safety teams to U.S. regions with perceived less bias.9
U.S. Politics, Policies, and Geopolitics
Congress Certifies Trump’s Victory: Congress certified President-elect Donald Trump’s 312-226 electoral victory over Vice President Kamala Harris on Monday, finalizing his return to the White House ahead of the Jan. 20 inauguration. The proceedings, presided over by Harris, occurred without objections and concluded peacefully, marking a stark contrast to the Capitol riots four years ago. Security around the Capitol was heightened due to memories of the 2021 unrest, and weather challenges complicated lawmakers’ return to Washington for the session. Trump called the certification a “big moment in history” and pledged to fulfill campaign promises, including pardons for Jan. 6-related offenses.10
Biden Signs Social Security Expansion: President Joe Biden signed the Social Security Fairness Act into law, repealing provisions that reduced benefits for retirees with public sector pensions and their surviving spouses. The legislation, passed with bipartisan support, will increase monthly benefits for over 2.5 million Americans, including firefighters, teachers, and police officers. Biden called the act a step toward ensuring economic security and dignity for retirees, marking one of his administration’s final legislative achievements. Lawmakers across party lines praised the law for addressing longstanding inequities in benefit distribution, while critics note the $196 billion cost over the next decade could strain the Social Security trust fund, potentially accelerating its depletion.11
Tencent, CATL Among U.S. Blacklisted Firms: The U.S. Defense Department added Tencent, CATL, and dozens of other Chinese companies to a blacklist over alleged ties to China’s military, barring them from working with the Pentagon. CATL, the world’s largest EV battery maker, and Tencent, known for WeChat and gaming platforms, denied the claims, calling the designations mistakes. Both companies stated the restrictions would not significantly impact their businesses and pledged to challenge the decisions. The blacklist also includes Autel Robotics and DJI, amid heightened scrutiny over Chinese drones and national security concerns. The move is part of escalating U.S.-China tensions, with each country imposing restrictions on the other’s companies in recent months.12
India Protests China’s Creation of New Counties: India lodged a formal protest against China’s creation of two counties in Hotan Prefecture, which includes parts of Ladakh claimed by India. The Ministry of External Affairs reiterated that India does not recognize China’s “illegal occupation” and maintains its sovereignty over the disputed territory. India also raised concerns over China’s plans to build a $137 billion mega dam on the Yarlung Tsangpo (Brahmaputra), citing potential impacts on downstream states. The protest follows a recent meeting between Indian and Chinese officials aimed at resolving border tensions from the 2020 Galwan clashes. India emphasized the need for transparency and consultation on shared water resources to safeguard its interests.13
Trudeau Resigns as Canada’s PM: Canadian Prime Minister Justin Trudeau announced his resignation, ending a nearly decade-long tenure marked by progressive policies and growing unpopularity. Trudeau cited internal party struggles and voter fatigue as key factors behind his decision, leaving his Liberal Party trailing the Conservatives, led by populist Pierre Poilievre, in polls. His resignation follows a series of controversies, including an ethics scandal, rising costs of living, and backlash over his Covid-era policies. Chrystia Freeland and Mark Carney are seen as potential successors as the party searches for a new leader ahead of elections. Trudeau’s departure marks the fall of another global progressive leader amid rising right-wing populism and economic challenges.14
