The Federal Reserve did something it had not done since the onset of the coronavirus pandemic. The head of North America’s largest union of maritime workers threatened to “cripple” the economy by hitting the picket lines. Inflation had a resurgence, then faded, and then resurfaced.

It was a busy 2024 for corporate America and the U.S. and world economies.

What happened?

Fed Cuts Interest Rates

For the first time in more than four years, the Federal Reserve cut interest rates, which were at their highest level in 23 years. At the September Federal Open Market Committee (FOMC) policy meeting, the U.S. central bank launched its long-awaited easing cycle with a jumbo half-point rate cut. Officials followed it up with two more quarter-point cuts, finishing the year by lowering the benchmark federal funds rate by 1 percent to a range of 4.25 and 4.5 percent.

Financial markets widely expected the move to happen when Fed Chair Jerome Powell delivered his keynote speech at the annual Jackson Hole economic symposium event in August.

“The time has come for policy to adjust,” he said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

800,000 Fewer Jobs

In August, the Bureau of Labor Statistics (BLS) published the annual benchmark revisions for the 12 months ending in March. The report showed that the economy added 818,000 fewer jobs than initially reported, the largest negative adjustment since the global financial crisis. The adjustment meant the country created about 2.1 million positions, compared with the approximately 2.9 million new jobs.

The U.S. administration shrugged off the data. White House Chief Economic Adviser Jared Bernstein told reporters that the estimate “doesn’t change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business creation.”

The BLS will release the next set of employment revisions in February.

Stock Market Records

This year will be one of the best in Wall Street’s history as the leading benchmark indexes, from the blue-chip Dow Jones Industrial Average to the tech-heavy Nasdaq Composite Index, have registered dozens of all-time highs in 2024.

Various factors have fueled the ultra-bullish run: President-elect Donald Trump’s victory, the Fed’s interest rate cuts, the resilience of the U.S. economy, the artificial intelligence craze, and the stock market’s broadening beyond tech.

Trials and Tribulations of Inflation

Inflation kicked off the first three months of 2024 by trending higher. In the following months, price pressures again eased, giving the monetary authorities a sigh of relief. However, the inflation flame may have been rekindled in the year’s home stretch. All three key inflation reports—the consumer price index (CPI), the producer price index (PPI), and the Fed’s preferred personal consumption expenditure (PCE) price index—have ticked up since the central bank started cutting interest rates in September.

While Fed policymakers are optimistic that this is merely a bump in the road toward achieving the institution’s 2 percent inflation target, a chorus of economists fears that inflation could be sticky and stubborn and remain elevated heading into 2025.

Spirit Airlines Bankruptcy

Spirit Airlines sought Chapter 11 bankruptcy protection in November due to rising debts and declining revenues. The airline also could not finalize mergers with Frontier Airlines and JetBlue Airways.

Despite its bankruptcy, the company will continue operating. During the bankruptcy proceedings, Spirit secured $300 million in debtor-in-possession financing and $350 million in equity investment.

Labor Strife in America

It’s fair to conclude that 2024 continued the labor unrest seen in 2023. The United States has experienced its most severe labor turmoil in decades.

The two most notable events occurred at East Coast ports and factories.

First, more than 50,000 dock and port workers walked off the job on Oct. 1 over wages, retirement benefits, and automation fears. The International Longshoremen’s Association (ILA), North America’s largest union of maritime workers, shut down the Atlantic and Gulf Coast ports for the first time in 47 years. However, the port strike lasted three days after the union leadership and the United States Maritime Alliance reached a tentative deal to return to the bargaining table.

If the strike lasted more than a week, economists warned that it would have caused severe economic damage as it would have impacted billions of dollars in daily trade volumes.

Second, Boeing factory workers went on strike in September after more than 33,000 machinists rejected a contract offer of a 25 percent pay increase over four years. The strike lasted for seven weeks and ended on Nov. 4 when the company proposed a new contract with a 38 percent pay raise over four years and enhanced benefits. Still, it had lasting damage to both the aerospace giant and the broader economy.

The year 2025 may see more labor actions, with numerous Amazon workers, Las Vegas hospitality staff, and Starbucks baristas already on picket lines as the holiday season approaches.

Volatility of Oil Prices

West Texas Intermediate (WTI), the U.S. benchmark for oil prices, had an exceptional start in the first four months of 2024, rising from $69 to $87 per barrel on the New York Mercantile Exchange. However, oil prices trended downward in the following months and erased all their gains.

Crude prices spiked multiple times throughout the year, buoyed by Middle East tensions. These short-lived rallies led to a significant selloff when geopolitical risks eased.

Oil has faced pressure on supply-demand dynamics.

On the supply front, U.S. crude production is at record levels, above 13 million barrels per day. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, have continually postponed output hikes to support prices.

Regarding demand, the Chinese economy has come to a screeching halt, which is bearish news for energy markets since it is the world’s largest petroleum importer.

Trump Tariffs 2.0

Within weeks of winning the November election, Trump threatened to impose 25 percent tariffs on Canada and Mexico on the first day of his administration unless they curbed the flow of drugs and migrants across their borders. Trump also warned he would slap an extra 10 percent levy, “above any additional tariffs,” on China until Beijing clamped down on fentanyl smuggling.

The president-elect did not stop there. He also vowed to implement tariffs on countries participating in the global de-dollarization campaign, a threat targeting the BRICS coalition. This is a group of countries made up of Brazil, Russia, India, China, and South Africa—Egypt, Ethiopia, Iran, and the United Arab Emirates recently joined—that has engaged in anti-dollar efforts.

During the election campaign, Trump spoke fondly of the negotiating tactic.

“To me, the world’s most beautiful word in the dictionary is tariffs. It’s my favorite word. It needs a public relations firm. If I’m going to be president of this country, I’m going to put a 100, 200, 2,000 percent tariff,” Trump said in October at the Economic Club of Chicago.

Crowdstrike Global IT System Outage

This past summer, a faulty update to CrowdStrike’s Falcon Sensor security software resulted in an international outage, affecting 8.5 million computers and approximately $10 billion in financial damage. The update caused issues with Microsoft Windows systems, impacting various sectors, including air travel, finance, government services, and health care.

CrowdStrike remedied the situation within hours, though many systems needed manual updates that extended the disruption.

China’s Slowing Economy

China’s economy is growing, but below target. The slowdown has caused deflation, indicating decreasing domestic demand.

“Almost all China observers agree that the economy is on a structural growth downtrend, citing ageing demographics, diminishing returns to capital, and rising risks of geopolitical tensions that threaten to compound China’s longer-term productivity challenges,” economists at Oxford Economics wrote in an analysis.

Beijing’s lackluster growth prospects forced officials to loosen fiscal and monetary policy.

For the first time in 14 years, China’s top leaders instituted a “moderately loose” monetary policy. Looking to the new year, fiscal policy is poised to be more proactive. With the Chinese leadership set to grapple with an abrasive incoming administration, the world’s second-largest economy could be in a challenging situation.