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This week brings the final US jobs report of 2019, buttoning up a solid year for jobs growth as consumer spending stayed strong and concerns about a recession abated.
But it’s an open question how long substantial jobs growth can continue. Heading into 2020, momentum is poised to weaken.
“We’re likely to see a slower pace of job creation in December, and there is a risk that we see a broader slowdown in hiring over the coming months,” James Smith, developed markets economist at ING, said in a note to clients. “As ever though, a lot depends on trade.”
The outlook: Economists polled by Reuters believe the US economy added 160,000 jobs in December. That’s a very good number, but well below the 266,000 jobs created in November.
Commerzbank, however, thinks the November number was partially inflated by the end of the General Motors strike. Its economists think that the December rise, though less dramatic, “should create the conditions for the consumer to remain in a buying mood.”
“[The] US economy is still a job machine,” Commerzbank economists told clients. They expect an increase of 190,000 jobs.
Why it’s worth monitoring: Investors read the jobs report closely for a check on the health of the US economy. Should jobs growth falter, the consumer spending that’s supported America’s economy could take a hit.
How high could oil prices go if Iran retaliates against the US?
A sharp escalation of tensions between the United States and Iran has caused crude oil prices to surge. They may not stay elevated for long, my CNN Business colleague Charles Riley writes.
Tehran has promised retaliation for the killing of top general Qasem Soleimani on President Donald Trump’s orders. But analysts expect a limited response that won’t significantly disrupt crude supplies, keeping a lid on oil price rises.
What retaliation looks like: Analysts at Eurasia Group, a risk consultancy, say Iran’s retaliation will be carefully calibrated and likely stop short of what would be considered a major, or even limited, armed conflict.
Eurasia Group expects roughly a month of low-level clashes between US forces and Iranian-backed militias in Iraq, where the airstrike on Soleimani occurred. Tehran is also likely to resume harassment of commercial shipping in the Persian Gulf.
Another obvious target: Oil industry infrastructure belonging to Iran’s regional foes. The United States blamed Iran for a missile strike on Saudi Arabia in September that briefly took out roughly half of the kingdom’s oil production.
But Iran denied responsibility for that attack, and analysts say it’s unlikely to try something similar right now for fear of triggering an even bigger military backlash.
“In the near term, we’re not expecting any supply outages,” said Amrita Sen, chief oil analyst at Energy Aspects. “Iran is not irrational. They’re not going to react quickly — they are going to take their time.”
Market update: Brent crude, the global benchmark, on Friday traded near $69 a barrel. The Dow fell more than 230 points, or 0.8%, while the S&P 500 slid 0.7%.
Sunday: Consumer Electronics Show kicks off in Las Vegas Tuesday: US trade balance; UK Parliament returns to debate Brexit withdrawal bill
Wednesday: Europe business confidence; Constellation Brands (STZ), Walgreens (WBA) and Bed Bath & Beyond (BBBY) earnings
Thursday: China inflation
Friday: US jobs report