November’s labor market report highlighted a recovery from October’s weather-affected downturn, with “a rebound expected after hurricanes and work stoppages biased the October data downward.” Despite this, Dr. Vince Malanga, president of LaSalle Economics, noted, “employment as measured by the Household survey fell in November and was at the same level recorded in May.” This mixed signal raises questions about the overall strength of the labor market.
Malanga also discussed potential economic activity drivers in the coming months, emphasizing the influence of inventory adjustments ahead of possible tariff implementations. “If tariffs bring about reciprocal agreements, they could even be deflationary,” he remarked, balancing this against his expectation of declining oil prices. “Our bet is that inflation will head lower during 2025,” he added.
Turning to fiscal policy, Malanga highlighted the ambitious goals of DOGE, calling it “a presumed attack on the administrative state.” He contrasted these efforts with past approaches like the Gramm-Rudman-Hollings Act, noting that this time, “the whole of government and the regulatory state” are targeted while Medicare and Social Security remain untouched. Public sentiment, he observed, might support such measures, pointing to “a general revulsion to fiscal excess gaining steam globally.”
Finally, Dr. Malanga identified deregulation and its impact on public sector payrolls as a critical indicator. “Reversing steady public sector growth since Covid would be a firm straw in the wind,” he concluded.
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