What the Latest JOLTS Report, December FOMC Meeting & Jobless Claims Signal for the Economy Copy

Weekly Economic Review: Dec 19, 2025

This week’s economic data includes: (1) job creation and employment situation for
November, (2) retail sales for October, (3) Consumer Price Index (CPI) for November, (4) existing home sales for November, and (5) weekly initial jobless and continuing claims.

KEY SUMMARY:

November’s jobs report revealed a modest rebound in hiring but highlighted labor market fragility, with unemployment rising faster than labor force growth, wage gains slowing, and job creation concentrated in health care—factors that reinforce the Fed’s recent rate cut aimed at stimulating employment while mitigating other risks to economic stability.

The November jobs report showed a modest rebound after October’s sharp decline, with employ-ers adding 64,000 jobs compared to a 105,000 drop the previous month. The October weakness was driven primarily by a 162,000 reduction in federal government jobs as workers who accepted deferred buyouts earlier in the year rolled off payrolls at the end of September. The unemployment rate rose to 4.6%, its highest since 2021, because unemployment growth (+3.0%) outpaced labor force growth (+0.19%) as more individuals re-entered the job market and temporary layoffs in-creased. While the overall trend suggests resilience, underlying volatility remains a concern.

Private sector hiring outpaced expectations, driven largely by health care, construction, and pro-fessional services, while government employment continued to contract. Notably, the concentra-tion of private sector gains in health care (+64,000) raises concerns about the breadth of recov-ery, as other service segments such as transportation and leisure/hospitality posted losses. Con-struction gains were particularly strong in nonresidential building and specialty trades, reflecting demand tied to AI data center projects.

Wage growth slowed significantly, with hourly earnings rising just 0.1% month-over-month and 3.5% year-over-year, while weekly hours edged higher. Part-time employment for economic rea-sons surged, and temporary layoffs increased, signaling ongoing labor market fragility. The soft la-bor market data, including the higher unemployment rate, supports the recent rate cut by the Fed-eral Reserve, indicating that policymakers acted to mitigate upside risks to labor market weak-ness.

Despite October’s flat headline retail sales, strong growth in core categories and the con-trol group—driven by early holiday shopping and high-income spending—signals resilient consumer demand heading into the holiday season, even as lower-income households remain cautious.

Retail sales were flat in October, missing expectations for a slight increase and marking a slow-down from September’s revised 0.1% gain. The weakness was driven by a sharp decline in auto sales, partly due to the expiration of federal EV tax incentives, while lower gasoline prices also weighed on gas station receipts. These declines were largely offset by stronger online sales and gains in categories such as furniture, sporting goods, and clothing. Department stores posted a notable 4.9% rebound after a prior decline, but food services and drinking places—a key indicator of household financial health—fell, signaling caution among consumers. Year-over-year retail sales growth eased to 3.5%, the weakest pace since May.

Excluding autos and gasoline, retail sales rose 0.5% month-over-month, beating expectations, while the control group used for GDP calculations (which excludes food services, autos, building materials, and gasoline stations) surged 0.8%, its strongest gain since June, driven by early holi-day shopping and aggressive promotions. On an annual basis, control group sales climbed 5.1%, supported by high-income households, while lower-income consumers remained constrained by tighter budgets. Despite October’s softness, strong Black Friday performance in November points to resilient demand heading into the holiday season.

The November CPI report signals a slowdown in inflation, with headline CPI at 2.7% and core at 2.6%, reinforcing disinflationary momentum and supporting the Fed’s recent rate cut, though data distortions from the shutdown mean December figures will be critical for confirmation.

The November CPI report showed inflation easing, although data distortions from the October government shutdown and delayed price sampling complicate interpretation. Headline CPI slowed to 2.7% year-over-year, down from 3.0% in September and below expectations of 3.1%. Core CPI, excluding food and energy, rose just 0.1% on average for October–November and 2.6% annual-ly—the lowest since March 2021—suggesting disinflationary momentum, although Black Friday discounts may have skewed results downward.

Category trends were broadly softer. Food prices were nearly flat, averaging +0.03% monthly, with grocery costs declining and notable annual drops in eggs (-13.2%) offset by sharp increases in beef (+15.8%) and coffee (+18.8%). Energy prices rose modestly, averaging +0.5% monthly, while gasoline jumped 3.0% in November after falling in October. Goods prices excluding food and ener-gy increased slightly (+0.1%), with new and used vehicles posting small gains, while tariff-sensitive items like apparel and electronics declined. Services inflation also cooled, led by shelter (+0.1% monthly) and continued drops in hotel rates and airline fares.

Overall, the report points to softer inflation across major components, reinforcing a disinflationary trend. However, given imputed October data and potential downward bias from late-month dis-counting, these figures should be viewed cautiously. December data will be critical to confirm whether this slowdown reflects genuine easing or statistical noise.

Easing mortgage rates and tighter inventory helped lift existing home sales to their highest level since February, but affordability remains constrained, suggesting demand could strengthen further in early 2026 if rates continue to decline and supply improves.

Existing home sales in November edged up 0.5% to an annualized rate of 4.13 million units, slightly below expectations but the highest level since February, supported by easing mortgage rates and moderating price growth. Regional performance was mixed, with gains in the Northeast (+4.1%) and South (+1.1%), a decline in the Midwest (-2.0%), and no change in the West. Year-over-year sales fell 1.0%, reversing October’s growth, while single-family transactions rose modestly (+0.8% MoM) and condo/co-op sales declined (-2.6% MoM). The median home price increased 1.2% YoY to $409,200, marking the 29th consecutive month of annual gains, although growth remains well below 2024 averages.

Inventory tightened, dropping 5.9% month-over-month to 1.43 million units, as sellers delayed list-ings ahead of the spring season, although supply remains up 7.5% from last year. Months’ supply fell to 4.2, its lowest since March, while time on market lengthened to 36 days. Buyer composition shifted slightly, with first-time buyers at 30%, all-cash sales at 27%, and investor purchases rising to 18%. Mortgage rates continued to ease, averaging 6.24% in November and trending lower into December, providing some relief for affordability and supporting expectations for a stronger hous-ing market in early 2026.

Initial jobless claims fell to 224,000 and continuing claims rose to 1.897 million, both re-flecting holiday-related volatility but signaling overall labor market stability.

Initial jobless claims fell by 13,000 to 224,000 for the week ending December 13, slightly below ex-pectations and reflecting typical holiday-related volatility. The four-week average edged up to 217,500, signaling a stable labor market; continuing claims rose to 1.897 million but remained below forecasts. The four-week average declined to 1.902 million, indicating underlying labor market resilience despite seasonal fluctuations.
Equity markets closed mixed as early losses from AI valuation concerns and weak labor data were offset by late-week gains on strong AI earnings, major tech investments, and softer inflation, while falling Treasury yields reflected expectations for two rate cuts in 2026.

Equity markets posted mixed results for the week. Early declines were driven by concerns over stretched AI valuations, rising debt tied to AI infrastructure, and signs of labor market weakness, in-cluding higher unemployment and flat retail sales. However, sentiment improved later in the week on Micron’s strong earnings and upbeat AI outlook, Oracle’s major investment in a TikTok joint venture, and softer-than-expected November inflation data, which fueled hopes for additional rate cuts. For the week, the Nasdaq gained 0.48%, the S&P 500 rose 0.10%, while the Dow (-0.67%) and Russell 2000 (-0.86%) posted declines.

Treasury yields fell across most maturities as weak labor and inflation data reinforced expectations for further monetary easing. The 2-year yield dropped to 3.48%, the 5-year to 3.70%, and the 10-year to 4.16%. Markets have fully priced in two 25-basis-point cuts in 2026—expected in April and September—which would bring the federal funds rate upper bound to 3.25% from 3.75%, with no cuts currently anticipated for 2027.

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DETAILED ANALYSIS:
Job Creation and Employment Situation – November Update:

The Bureau of Labor Statistics (BLS) released its November jobs report on December 16, 2025, after canceling the October report due to the government shutdown. The release included revised nonfarm payrolls for October and November and the unemployment rate for November only, as the household survey could not be conducted retroactively. Payroll figures are based on the sur-vey of business establishments.

Job Growth
The labor market rebounded more than expected in November, following a sharp decline in Octo-ber. Employers added 64,000 jobs in November, compared to a 105,000 decline in October – the largest drop since December 2020. October’s weakness was driven by a 162,000 decrease in federal government jobs as workers who accepted deferred buyouts earlier in the year rolled off payrolls at the end of September. November’s gain exceeded market expectations of 50,000.

Sector Performance
• Private Sector: Added 69,000 jobs in November (forecast: 50,000), up from 52,000 in Oct-ober. Gains were concentrated in health care and social assistance, construction, and pro-fessional/business services.
• Government: Employment fell by 5,000, including a 6,000 decline in federal jobs.
• Three-Month Averages:
o Nonfarm payrolls: +22,000 (vs. -8,000 in October)
o Private payrolls: +75,000 (vs. 55,000 in October), though Fed Chair Powell noted po-tential overstatement of ~60,000 per month.

Industry Details:
• Services: +50,000 jobs, led by health care (+64,000) and professional/business services (+12,000). Losses in transportation (-17,700) and leisure/hospitality (-12,000).
• Goods-Producing: +19,000 jobs, driven by construction (+28,000), especially specialty trade contractors (+15,000) and non-residential building (+5,100), likely tied to AI data cen-ter demand.

Unemployment & Labor Force Participation
• Unemployment Rate: Rose to 4.6% in November (vs. 4.4% in September), above expecta-tions of 4.5%, highest since September 2021.
o Labor force expanded by 323,000 (denominator – 0.19% growth), while unemployment increased by 228,000 (numerator – 3.00% growth), driven by reentrants (+293,000) and temporary layoffs (+171,000).
o A total of 96,000 individuals gained employment in November.
• Participation Rate: Edged up to 62.5%, highest since April.
• Long-Term Unemployment: Increased to 1.91 million; average duration fell slightly to 23 weeks.

Layoffs & Job Dynamics
• Layoffs: +34,000 in November, mainly temporary (+171,000), offset by fewer permanent layoffs (-136,000).
• Temporary Help Services: Fell by 5,000, continuing a seven-month decline.
• Part-Time for Economic Reasons: Jumped by 909,000 to 5.49 million.
o Reduced business activity: +321,000.
o Those who could only find part-time work: +589,000.

Wages and Hours
• Average Hourly Earnings: +0.1% MoM (below 0.3% forecast), +3.5% YoY (lowest since May 2021).
• Average Weekly Hours: Increased to 34.3, boosting weekly earnings by 0.4%, matching Oc-tober’s pace.

Retail Sales – October Update: :

Overview:
Retail sales were flat in October, following September’s revised gain of 0.1% (down from the initial estimate of 0.2%), according to the U.S. Census Bureau. The October figure fell short of market expectations for a 0.1% increase. The muted performance was primarily driven by a decline in au-to sales (-0.31% contribution), largely offset by stronger online sales (+0.32% contribution). On a year-over-year basis, retail sales rose 3.5%, down from 4.2% in September – the weakest pace since May.

Category Performance:
Of the 13 retail categories tracked, 8 posted gains in October, including:
• Furniture & home furnishings: +2.3%
• Sporting goods: +1.9%
• Non-store retailers (online): +1.8%
• Miscellaneous store retailers: +1.5%
• Clothing & accessories: +0.9%

Other categories showing growth included electronics & appliances, food & beverage stores, and general merchandise stores. Notably, department stores within the general merchandise category surged 4.9% in October, reversing September’s 0.3% decline.

Conversely, 5 categories declined:
• Motor vehicles & parts: -1.6%
• Building material & supplies: -0.9%
• Gasoline stations: -0.8%
• Health & personal care stores: -0.6%
• Food services & drinking places: -0.4%

Food services & drinking places—a key gauge of household financial health and the only services component in the report—fell in October, reversing September’s 0.2% increase. The drop in motor vehicles & parts was partly linked to the expiration of federal EV tax incentives, while lower gaso-line prices reduced gas station sales values.

Core Retails & Control Group:
Retail sales excluding autos and gasoline rose 0.5% month-over-month, up from flat growth in September and beating expectations of 0.4%. Year-over-year, these sales were up 4.2%.
The control group – which excludes food services, autos, building materials, and gasoline stations and is used to calculate GDP – jumped 0.8%, surpassing the 0.4% forecast and rebounding from September’s 0.1% decline. This marks the strongest monthly gain since June and was driven by early holiday shopping and aggressive retailer promotions. On an annual basis, control group sales climbed 5.1%.

High-income households fueled much of the spending, while lower-income consumers remained cautious amid tighter budgets. Strong Black Friday sales in November suggest resilient demand heading into the holiday season.

CPI – November Update:

Overview:
The BLS did not collect survey data for October 2025 due to the government shutdown (October 1–November 12). Data collection resumed on November 14, covering the latter part of November and early December. Because BLS typically samples prices throughout the month, the delayed survey may have skewed prices downward due to Black Friday discounts. Since BLS could not retroactively collect October data, most month-over-month figures and key categories are una-vailable for November.

To fill gaps, BLS provided monthly price changes for select categories—new and used vehicles, gasoline, postage, wireless services, and leased cars/trucks—using third-party data. These items represent 11% of the CPI basket. Missing October data were imputed by carrying forward Sep-tember index values, assuming no price change, which could introduce a downward bias for Octo-ber and November inflation.

For analysis, we estimate the average monthly percentage change for October and November (calculated as the change between November and September index levels, divided by two) for certain categories.

Headline CPI:
On a year-over-year basis, CPI eased to 2.7% in November, down from 3.0% in September and below market expectations of 3.1%.

 
Category Details:
Food Prices
• Average monthly increase: +0.03% (Oct–Nov), down from +0.3% in September.
• Grocery prices: -0.1% per month (vs. +0.3% previously), driven by declines in bakery, eggs, dairy, and produce, partially offset by gains in meat, poultry, fish, and seafood.
• Annual changes:
o Food overall: +2.6%
o Grocery: +1.9%
o Food away from home: +3.7%
o Notable YoY moves: Beef +15.8%, Coffee +18.8%, Eggs -13.2%

Energy Prices
• Average monthly increase: +0.5% (Oct–Nov), down from +1.5% in September.
• Gasoline (reported monthly): +3.0% MoM in November (vs. -2.1% in October).
• Annual changes: +4.1%, led by fuel oil (+11.3%), electricity (+6.9%), and utility gas (+9.1%).

Goods Prices (Excluding Food and Energy)
• Average monthly increase: +0.1% (Oct–Nov), down from +0.2% in September.
• Highlights:
o New vehicles: +0.2% MoM in November (vs. +0.1% in October).
o Used vehicles: +0.3% MoM in November (vs. +0.7% in October).
• Tariff-sensitive goods (apparel, computers, toys, sporting goods) declined on average.

Services Prices (Excluding Energy)
• Average monthly increase: +0.1% (Oct–Nov), down from +0.24% in September.
• Shelter (30–40% of CPI): +0.1% per month (vs. +0.2% in September).
o Rent of primary residence: +0.06% (vs. +0.2%).
o Owners’ Equivalent Rent: +0.1% (unchanged).
o Hotels/motels: -0.6% (vs. -1.3%).
• Other services:
o Airline fares: -3.7% (vs. -2.7%).
o Recreation: -0.3% (vs. -0.4%).
o Postage/delivery: +1.8% (vs. -0.5%).

Core CPI:
Excluding food and energy:
• Average monthly increase: +0.1% (Oct–Nov), down from +0.2% in September.
• Annual: +2.6%, vs. +3.0% in September and expectations of +3.0% – lowest since March 2021.

 
Commentary:
The November CPI report suggests that inflation slowed. However, given data distortions from the shutdown and sampling bias, these figures should be interpreted cautiously. Confirmation will de-pend on December data, which will clarify whether this is statistical noise or genuine disinflation.

Existing Home Sales – November Update:
Overview:
According to the National Association of Realtors, existing home sales edged up 0.5% in Novem-ber to a seasonally adjusted annual rate of 4.13 million units, slightly below expectations of 4.15 million but the highest level since February (4.27 million). Gains were supported by moderate price growth and easing mortgage rates.

Regional monthly breakdown (MoM):
• Northeast: +4.1%
• Midwest: -2.0%
• South: +1.1%
• West: Unchanged

Year-over-year growth:
• National: -1.0% (vs. +1.99% in October)
• Northeast: Unchanged; Midwest: +3.0%; South: Unchanged; West: -1.3%

Single-Family & Condo/Co-Ops Sales:
• Single-family homes: +0.8% MoM to 3.75 million units (-0.8% YoY)
• Condominiums & co-ops: -2.6% MoM to 380,000 units (-2.6% YoY)

Home Prices:
Median price modestly rose 1.2% YoY to $409,200, marking the 29th consecutive month of annual gains but well below the 2024 average growth of 4.5%. All regions posted increases, except the West (-0.9% to $618,900).

Inventory & Supply:
• Unsold inventory fell 5.9% MoM to 1.43 million units, as many sellers chose to delist and wait for the spring selling season rather than rush to sell.
• Inventory remains below pre-pandemic levels (1.9 million) but is up 7.5% YoY from Novem-ber 2024 (1.33 million).
• Months’ Supply of Inventory (MSI): 4.2 months, down from 4.4 months in October and up from 3.8 months a year ago, marking the lowest level since March.

Buyer Composition:
• First-time buyers: 30% (down from 32% MoM; unchanged from YoY)
• All-cash sales: 27% (down from 29% MoM; up from 25% YoY)
• Investor purchases: 18% (up from 16% MoM; up from 13% YoY)
• Distressed sales (foreclosures/short sales): 2% (unchanged)
• Median time on market: 36 days (up from 34 days MoM; 32 days YoY)

Mortgage Rates:
• Freddie Mac reported the average 30-year fixed-rate mortgage at 6.24% in November (down from 6.25% in October and 6.81% YoY).
• Weekly average ending December 18: 6.21%.

Jobless Claims – Week Ending December 13:
The Labor Department reported that initial jobless claims fell by 13,000 to 224,000 for the week ending December 13, down from 237,000 the prior week (revised from 236,000). This was slightly below market expectations of 225,000 and followed typical volatility seen over the past two weeks. Weekly claims often fluctuate around the holidays and are likely to remain choppy through year-end. The four-week moving average, which smooths seasonal variations, edged up to 217,500 – an increase of 500 from the previous week – indicating a stable labor market with limited layoffs.

Continuing claims, which track the total number of individuals receiving unemployment benefits and are reported with a one-week lag, rose to 1.897 million for the week ending December 6—up 67,000 from 1.830 million (revised from 1.838 million) the prior week, but still below expectations of 1.920 million. Similar to initial claims, continuing claims reflected holiday-related volatility. The four-week moving average declined by 14,000 to 1.902 million from 1.916 million, signaling underlying stability in the labor market.

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MARKET ANALYSIS:
Equity Market Weekly Recap
Equity markets ended the week with mixed results. Early in the week, major indexes declined amid concerns over elevated AI stock valuations and rising debt levels tied to AI infrastructure, which dampened risk appetites. Additional pressure came from signs of labor market weakness, includ-ing higher unemployment and underemployment rates in November, along with flat retail sales in October. However, markets rebounded later in the week, driven by renewed optimism in the AI sector following Micron’s strong quarterly earnings and upbeat outlook for AI-driven demand. In-vestor sentiment was further supported by Oracle’s announcement of a major investment in a new TikTok joint venture and softer-than-expected November inflation data, which bolstered hopes for additional rate cuts.

Weekly and Year-To-Date (YTD) Performance Highlights:
• Nasdaq: +0.48% (weekly) & +20.70% (YTD), closing at 23,307
• S&P 500: +0.10% (weekly) & +16.20% (YTD), ending at 6,835
• Dow Jones Industrial Average: -0.67% (weekly) & +13.14% (YTD), closing at 48,135
• Russell 2000: -0.86% (weekly) & +13.42% (YTD), ending at 2,529

Treasury Market Update
Treasury yields declined across most maturities, driven primarily by soft labor market and inflation data that strengthened expectations for additional rate cuts for 2026:
• 2-year yield: 3.48% (-0.04%)
• 5-year yield: 3.70% (-0.05%)
• 10-year yield: 4.16% (-0.03%)

Rate Cut Expectations
Looking ahead to 2026 and 2027, markets have fully priced in two 25-basis-point cuts—expected in April and September 2026—while no cut is currently anticipated for 2027. These adjustments would lower the federal funds rate upper bound to 3.25%, down from the current 3.75%.

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NEXT WEEK’S ECONOMIC CALENDAR:
Key scheduled releases include:
• 12/23 (Tuesday):
o Q3 2025 GDP
o Conference Board Consumer Confidence (December)
o Capacity Utilization (November)
o Industrial Production (November)
• 12/24 (Wednesday):
o Weekly Initial and Continuing Jobless Claims

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Mark Yoon, CFA CPA
EVP & CFO of Commercial Bank of California

Thomas McCullough
EVP of Commercial Bank of California
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All content available on this material is general in nature, not directed or tailored to any particular person, and is for informational purposes only. Any of its content is not offered as investment ad-vice and should not be deemed as investment advice or a recommendation to purchase or sell any specific security.

The information contained herein reflects the opinions and projections of Commercial Bank of Cali-fornia (CBC) as of the date hereof, which are subject to change without notice at any time. CBC does not represent that any opinion or projection will be realized. The information contained herein has been obtained from sources considered reliable, but neither CBC nor any of its advisors, offic-ers, directors, or affiliates represents that the information presented on this material is accurate, current, or complete, and such information is subject to change without notice.

Mark Yoon, CFA CPA

EVP & CFO of Commercial Bank of California

Thomas McCullough

EVP of Commercial Bank of California

_______________________________________________________________________

All content available on this material is general in nature, not directed or tailored to any particular person, and is for informational purposes only. Any of its content is not offered as investment advice and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. The information contained herein reflects the opinions and projections of Commercial Bank of California (CBC) as of the date hereof, which are subject to change without notice at any time. CBC does not represent that any opinion or projection will be realized. The information contained herein has been obtained from sources considered reliable, but neither CBC nor any of its advisors, officers, directors, or affiliates represents that the information presented on this material is accurate, current, or complete, and such information is subject to change without notice.