U.S. economy shows mixed signals ahead of likely Fed cut

Key takeaways

• U.S. services sector remains robust  
• UK budget includes expected fiscal tightening
• Global equities edge higher

This week’s data presented a mixed picture of the U.S. economy as investors look ahead to the Federal Reserve (Fed) meeting next week.

On the softer side, ADP employment data suggested a potential decline in November private-sector jobs, especially among smaller firms. While the headline appeared negative, a broader look at recent ADP trends points to a plateauing labor market rather than the start of a deeper slowdown.

Several U.S. economic indicators also came in on the positive side. For instance, the ISM Services Index for November pointed to steady, healthy activity in the services sector as the year draws to a close. In addition, initial jobless claims also remained near historically low levels, indicating little evidence of rising layoffs.

Moreover, early insights into the holiday shopping season, including Black Friday and Cyber Monday results, suggest U.S. consumers remain engaged. Retail spending trends also look solid heading into year-end.

Taken together, these developments help shape expectations for next week’s Fed meeting. Following supportive comments from Vice Chair John Williams before the start of the blackout period, we now anticipate a 25-basis-point rate cut in December. Looking ahead, we expect the central bank to be closer to the end than the beginning of the rate-cutting cycle as the new year approaches.

Markets also digested details from last week’s UK government budget, released shortly before the U.S. Thanksgiving holiday.

The plan included approximately £26 billion in tax increases through 2030—broadly in line with consensus expectations. However, updated growth forecasts from the Office for Budget Responsibility showed a downward revision to the medium-term outlook. These weaker projections reinforced expectations for Bank of England rate cuts, contributing to a modest decline in gilt yields last week.

Global equities advanced modestly this week, with the MSCI All Country World Index up about 0.4% through Thursday’s close. With most major markets entering December on solid footing, investors are continuing to balance resilient economic conditions with evolving monetary-policy expectations.

For a deeper look at themes shaping 2026 and beyond, please check out our newly released 2026 Global Market Outlook, which outlines the opportunities and risks our strategist team sees across asset classes.