Economic Data Tracker – 
Ringing in the New Year, but it sounds a lot like 2024 at least initially

Trend watch

It was a light couple weeks for economic data as most of the key releases occurred prior to December 23^rd. Some of the activity-based data (slides 5 and 6) continued to jostle about in the final two weeks of the year.

Air passenger traffic remains robust. For all of 2024, nearly 900 million (897.6M) were processed through TSA checkpoints, which is a new annual record. That’s 6.9% more than 2023 and 5.4% more than 2019. And two days into the New Year, 2025 is running 1.5% ahead of the same period in 2024 and 16.5% above 2019.

New charts this week

• New year, new minimum wage in nearly half of all states (slide 7).
• ISM manufacturing index inched upward but still contracted, while price paid climbed for fifth time in six months (slide 8).

Our take

Today’s title alludes to the amount of political dysfunction in Washington, D.C. Despite all the talk about a “red wave” following the November elections, there are razor-thin majorities in both chambers of Congress. For example, House Speaker Mike Johnson squeaked through to be re-elected as Speaker of the House with a single vote. It wasn’t without some drama as two Republican members switched their votes after some last-minute arm-twisting.

Furthermore, Speaker Mike Johnson’s re-election wasn’t assured, despite a strong endorsement by President-elect Trump. There were similar signs of rebelliousness in the final weeks of last year. A revised spending proposal to avoid a government shutdown was rejected by 38 Republican House members (and almost all Democrats) because it included lifting the federal debt ceiling – undeterred by Trump threatening primary challenges in their next elections for any Republicans who dared defy him. That punted dealing with the debt ceiling into the current Congress and the President-elect.

This is very likely to be the norm at least for awhile. A party needs 217 seats of the 435 total to control the U.S. House of Representatives. The Republicans hold 219 seats – the slimmest margin of control either party has held following any election since the 1930s – compared to 215 for the Democrats. There are also six vacancies currently (four Democrats and two Republicans).

Similarly, the U.S. Senate has a narrow majority with 53 Republicans and 47 Democrats. The razor-thin majorities mean it only takes a few members in either chamber to upend the passage of legislation. This likely means it will be difficult to push through transformational changes without some bipartisan support.

While we typically focus on economic happenings and avoid political discussions here, the two are intertwined, especially in the near term. Moreover, there is growing uncertainty for potential fiscal policy changes by the new administration and Congress, which is complicated by the razor-thin majorities. Alas, the political dysfunction on Capitol Hill will remain a continued topic of conversation.

Bottom line

With many policies expected to change with the incoming presidential administration and new Congress, uncertainty abounds for the economy. That is complicated by the razor-thin majorities Congress and continued political dysfunction on Capitol Hill. That has contributed to the recent bouts of volatility in financial markets, which we expect will continue for the foreseeable future. Yet, the U.S. economy remains resilient, and we believe solid growth will endure. At this point, we expect the Federal Reserve to pause to digest incoming data and reassess conditions, which we feel is warranted given the uncertainty.