Last year's robust jobs growth in the U.S. probably continued apace in December, even amid signs that the economy is slowing as President Donald Trump's trade war with China takes a toll on both countries and the stimulus fades from the late-2017 tax cuts.

A report on Friday, Jan. 4, from the Labor Department's Bureau of Labor Statistics is expected to show that the economy added about 180,000 jobs last month, based on a survey of analysts by the data provider FactSet. Such a level would represent an increase from the 155,000 jobs added in November, but would be lower than the average 206,000 jobs per month added during all of 2018.

A slowdown in jobs growth could reinforce traders' perceptions that economic growth is slowing. A computer-based economic forecast from the Federal Reserve Bank of Atlanta suggests that U.S. gross domestic product probably fell to 2.7% in last year's fourth quarter, from 3.4% in the third quarter.

With the U.S. budget deficit set to swell by about 25% this year to almost $1 trillion, pushing the national debt past an unprecedented $22 trillion, there's little hope of further economic stimulus from lawmakers. And the Federal Reserve's recent string of increases in short-term borrowing costs, designed to keep inflation at bay, only serves as an additional brake on consumer and business activity.

Trump has criticized the Fed for raising interest rates too quickly, while making jobs growth a centerpiece of his economic talking points. 

The Institute of Supply Management, a business association of purchasing managers, said Thursday, Jan. 3, that its index of economic activity in the manufacturing sector fell to 54.1 in December from 59.3 the previous month, the biggest drop in a decade. The latest reading was also well below the average 57.8 projection of economists in a FactSet survey. 

"The story here is that the trade war, coupled with China's underlying slowdown, is wreaking havoc in both countries," Ian Shepherdson, chief economist at the forecasting firm Pantheon Macroeconomics, wrote in a report. 

Robert Kaplan, president of the Federal Reserve Bank of Dallas, said Thursday in a television interview with Bloomberg that economic and financial conditions have become so worrisome that Federal Reserve monetary-policy officials should halt the series of interest-rate increases they've been undertaking since late 2015. Kaplan isn't a voting member of the Fed's monetary-policy panel, though he's allowed to attend its meetings as head of one of the central bank's regional branches. 

To prevent inflation from spiking as the economy expands, the Federal Reserve raised rates by a full percentage point last year, to the current range between 2.25% and 2.5%. But such rate increases can also put the brakes on the economy, since they push up borrowing costs for households and businesses.  

According to Kaplan, global growth is slowing, there is weakness in interest-sensitive and economically-
sensitive industries, and tighter financial conditions -- especially signals from the bond market -- could themselves put added downward pressure on the economy. 

The Standard & Poor's 500 Index fell 6.2% last year, the most since 2008, and is off to a sluggish start in this year's first two trading days. 

"Some of these market forces, including financial conditions, can spill over and tighten the economy and cause
growth to slow, and it's critical that we are very attuned to it," Kaplan told the channel. 

Yet even with increasing risks of a slowdown, jobs growth has remained unusually robust. The unemployment rate fell to 3.7% last year, the lowest in nearly half a century. 

A report on Thursday from payroll-servicer Automatic Data Processing Inc. showed that private-sector employment rose by 271,000 jobs in December, well above the 180,000 projected by economists in a FactSet survey. 

"It might reflect a catch-up after months of distortions caused by hurricanes Florence and Michael, the California wildfires and the unseasonable cold November weather," according to Pantheon's Shepherdson. "But this report comes as a welcome jolt to the market's favored narrative that the economy is slowing sharply."

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