• The IRS fired probationary workers this week, claiming they weren't critical to tax filing season.
• The agency had already been struggling in recent years to keep up with tax return processing.
• One expert said there's no way to cut a large number of workers without affecting filing season.

Your tax return may languish on an empty desk at the Internal Revenue Service this season after the agency began firing workers this week.

An internal IRS email viewed by Business Insider said the agency would terminate probationary workers — typically employees who have been at the agency for less than a year — who were not "critical" to tax filing season.

Tax experts and IRS employees told BI they expected the terminations to result in delayed tax refunds, slower customer service, and a backlog in paperwork processing. Some spoke with BI under the condition of anonymity.

Natasha Sarin, a professor at Yale Law School, said there's "no way, in the middle of filing season, to cut a substantial number of IRS employees without having an impact on filing season," adding that it's an "all hands on deck" time at the agency.

Many Americans still file paper tax returns, a human resources worker at the IRS said, adding: "If there's not anyone there to process them, it's just going to be sitting."

A former Treasury official likened the situation to a business "eliminating your entire accounts receivable department," adding: "No business would say we have no interest in collecting the revenue that's due to us."

The IRS did not immediately respond to a request for comment. Kevin Hassett, the director of the White House National Economic Council, told reporters on Thursday that the estimated 3,500 firings "is a small number and probably you can get bigger, especially as we improve the IT at the IRS." He added that not all IRS employees working on taxes were "fully occupied."

In the wake of the pandemic, the IRS struggled with a backlog of millions of returns, taking months to process them, which caused economic hardship for some taxpayers.

Sarin, who served as a counselor to Janet Yellen when Yellen was the Treasury secretary, said that the terminations could throw the IRS back into the "dark ages." Taxpayers should be concerned about whether they'll be able to get in touch with the IRS, whether refunds will be processed in a timely manner, and whether the IRS website will malfunction during tax season.

A fired IRS worker said: "The long-term ramifications of this will be felt for decades."

They added: "There will continue to be processing delays due to incredibly outdated systems, and there will not be supported free filing for Americans due to budget cuts and lobbying by major tax software players."

"It's just going to slow the IRS down," one IRS worker who still has a job at the agency said, adding: "It's a shame that all the progress is going to reverse."

They were referencing increased funding from the Biden administration's Inflation Reduction Act, which was meant to mitigate staffing issues. Bolstered by the funding, hiring at the IRS in recent months focused on tax-evasion and fraud-detection staff.

Vanessa Williamson, a senior fellow in governance studies at the Brookings Institution and the Urban-Brookings Tax Policy Center, said during a press call on Thursday that the expected terminations could "disproportionately affect enforcement."

"When you underpay and understaff the IRS, the agency doesn't have the power or the resources it needs to go after wealthy tax evaders with their high-priced lawyers," Williamson said.

"It's going to be incredibly harmful to efficiency at the IRS," the former Treasury official told BI. If the agency can't keep up with existing efficiency programs — like using artificial intelligence to target audits better — compliance will be less effective, they said.

Over the past couple of weeks, various federal agencies have fired their probationary employees as part of President Donald Trump's efforts to slash government spending by reducing the federal workforce. BI previously spoke with over half a dozen fired workers at agencies, including the US Department of Agriculture and the Department of Energy, who said they're planning to fight their terminations.

"We're not going to take this lying down," Melanie Mattox Green, a fired US Forest Service worker, told BI. "We all love our work, and we're planning on fighting and getting our jobs back."

The IRS HR employee said that these terminations, coupled with the federal hiring freeze, could put the IRS behind on its functions into next year.

"If you have filed, or will file a tax return, you are going to feel an impact," they said.

Are you a federal worker with a story or information to share? Contact these reporters via Signal at madisonhoff.06, julianakaplan.33, and asheffey.97, or via email at [email protected], [email protected] and [email protected].

Spread across NASA's headquarters and 10 field centers, which dot the United States from sea to sea, the space agency has had a workforce of nearly 18,000 civil servants.

However, by the end of today, that number will have shrunk by about 10 percent since the beginning of the second Trump administration four weeks ago. And the world's preeminent space agency may still face significant additional cuts.

According to sources, about 750 employees at NASA accepted the "fork in the road" offer to take deferred resignation from the space agency later this year. This sounds like a lot of people, but generally about 1,000 people leave the agency every year, so effectively, many of these people might just be getting paid to leave jobs they were already planning to exit from.

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• Meta has begun to cut thousands of jobs to focus on AI investment and efficiency.
• Mark Zuckerberg is targeting low performers, part of a broader industry move toward leaner operations.
• Some employees told Business Insider they're anxious about the changes.

Meta has begun to cut thousands of jobs as the social media giant takes a tougher stance on underperforming employees and readies its finances for another year of heavy AI investment. Affected employees in Europe, Asia, and the US have started to be notified, per an internal post viewed by Business Insider.

The company has said it will eliminate roughly 5% of its workforce, which could mean almost 4,000 employees lose their jobs.

CEO Mark Zuckerberg told staff in January he would "raise the bar" and move quickly to remove low performers, according to an internal memo seen by BI.

This is part of a broader push by Big Tech companies to make themselves leaner after a hiring spree during the pandemic. Microsoft, Amazon, Salesforce, and others are collectively eliminating thousands of employees.

Zuckerberg has been at the forefront of this, announcing a "year of efficiency" in 2023 that has continued through last year and into 2025. Wall Street has rewarded Meta for this new focus, sending the company's shares soaring since the start of 2023 — a run that's added more than $1 trillion to Meta's market valuation. 

While Meta remained profitable through recent periods of heavy hiring and big spending, the company is now racing to keep up with rivals in the generative-AI race. This requires billions of dollars in infrastructure and related investment. That's likely putting pressure on Zuckerberg to seek cost savings elsewhere. 

A Meta spokesperson declined to comment.

Impact on some employees

Meta is offering impacted workers in the US a severance package that includes 16 weeks of pay and an additional two weeks for every year of service, according to two people familiar with the matter.

For some Meta employees, the efficiency drive is causing anxiety. These staffers asked not to be identified discussing sensitive topics.

"Mark is creating fear," a Meta employee told BI. "He's creating a culture where you have to be loyal to him or else."

Another employee said that working at Meta right now "feels like living in a George Orwell novel."

Even colleagues who have performed well "have been disappearing all year, and when you ask about it, you're just told, 'They're no longer with the company,'" this person said. "Self-censorship is rampant. At a company supposedly dedicated to connecting people, the human side of our work is disappearing, and everyone is acting more robotic."

Another Meta employee said reductions shouldn't be branded as performance-based cuts because this could damage people's reputations as they seek other opportunities.

"Now people have to go back out into the job market with a label that is incredibly unfair," this person added.

They expressed concern that good employees would be cut just to meet quotas and that this could have a negative impact on morale.

"What's the incentive to help a new hire ramp up if they're just going to stack rank us and probably do this all again next year?" this person added.

How Meta's latest job cuts may work

The job cuts are designed to target employees who receive "met some" or "did not meet" ratings, the bottom two categories in Meta's assessment system, in their performance reviews.

Internal guidance obtained by BI last month says managers must identify 12% to 15% of employees eligible for these ratings. Meta aims to reach 10% "nonregrettable attrition" by combining these cuts with previous departures. For example, if a team had 5% attrition in 2024, managers would need to identify another 7% to 10% of their employees for the bottom ratings to meet the target.

One Meta employee told BI that forcing managers to place team members into bottom categories for job cuts had spread anxiety through the management ranks as well as the rank and file.

On Friday, employees received a memo from Janelle Gale, Meta's vice president of human resources, detailing how the process should work. The memo, which was obtained by BI, said affected employees would be notified through their work and personal email addresses and lose access to company systems within an hour of being informed. They'll receive information on their severance packages in the same email, it added.

The notifications will be staggered across time zones, with employees in the Asia Pacific region being notified first, followed by those in Europe, the Middle East, and Africa, and then, finally, North and Latin America, the memo said.

Employees in European countries such as Germany, France, Italy, and the Netherlands will be exempt from this process because of local regulations and will instead follow local performance management processes, the memo said. Meta intends to backfill these roles, it added, but plans and timelines "may vary."

How Meta is reorganizing itself

Amid the cuts, the social media giant is also reorganizing some of its businesses and divisions.

The company is merging its Facebook and Messenger teams under Facebook's chief, Tom Alison, while Messenger's head, Loredana Crisan, is set to move to the generative-AI group, The Information said.

Meta's Reality Labs division, which has lost nearly $60 billion since 2020, is being more tightly integrated with Meta's main business, reversing some of Zuckerberg's 2021 reorganization. In an internal memo obtained by BI, Reality Labs' chief technology officer, Andrew Bosworth, said Reality Labs had "become a positive driver for Meta's overall brand."

• Treasury Secretary Scott Bessent said he's on the same page as Elon Musk when it comes to cutting waste.
• Bessent told Bloomberg the Musk-led Department of Government Efficiency can make "gigantic savings."
• He also dismissed concerns about DOGE staff's access to the Treasury's payment systems.

Treasury Secretary Scott Bessent told Bloomberg Podcasts on Thursday that he and Elon Musk were "completely aligned" when it came to waste.

"Elon and I are completely aligned in terms of cutting waste and increasing accountability and transparency for the American people," he said.

"I believe that this DOGE program in my adult life is one of the most important audits of government, changes to the government structure we have seen," Bessent added. "I think there are gigantic savings for the American people here."

Since President Donald Trump created the Department of Government Efficiency and brought it inside the White House by executive order, his administration has taken swift actions to roll back regulations and cut spending.

Trump's administration has implemented a hiring freeze across federal agencies. It has also canceled multiple government contracts, including those related to Diversity, Equity, and Inclusion initiatives, and is moving forward with plans to dismantle the US Agency for International Development.

The policies have sparked a slew of lawsuits, legal challenges, unions opposition, and public protests outside federal offices.

Federal worker unions sued the Treasury Department on Monday, accusing the agency of granting Musk access to private sensitive data.

On Tuesday, Trump said he gave DOGE staff "read-only" access to the Treasury's payment systems. These systems control trillions of dollars worth of payments, including Social Security benefits, tax refunds, and veterans' benefits.

In his interview with Bloomberg, Bessent dismissed concerns, saying that DOGE staff had "read-only" access and could make "no changes."

He described the group as an "operational program to suggest improvements."

"These are highly trained professionals, this is not some roving band running around doing things," he said.

Bessent spoke shortly after Musk wrote in an X post that "Billions of taxpayer dollars to known FRAUDULENT entities are STILL being APPROVED by Treasury."

Musk added, "This needs to STOP NOW!"

Bessent also referred to the Grace Commission Report, a study conducted during the Reagan administration that proposed major reforms across various departments and agencies in order to reduce the US national debt in 1984.

"There were some great suggestions that came out of that," he said, but "nothing happened."

• There are signals coming from employers that hint that layoffs could accelerate this year.
• Layoff announcements rose 28% in January from the prior month, according to Challenger data.
• Business filings of mass layoff plans have also been elevated in recent months.

The resilient US job market could weaken this year, with employers showing early signs that they're readying more job cuts in 2025.

Job cut announcements continued to rise in January, even as the labor market remained on solid footing overall. Layoff announcements swelled to 49,795 over the month of January, according to data from Challenger, Gray and Christmas. That marks a 28% increase from the prior month, though it was the quietest January for layoff announcements since 2022, the career outplacement firm said in a report.

That number looks poised to increase in the coming months, given recent mass layoff announcements, the firm added. Since the start of February, ADM has said it was planning to cut up to 700 workers in its latest cost-cutting measures, while Salesforce and Workday also made plans to cut 1,000 and 1,750 workers, respectively.

"January was relatively quiet in terms of job cut announcements. However, we've already seen major announcements in the early days of February, so it seems this quiet is unlikely to last," Andrew Challenger, the senior vice president of Challenger, wrote in a note.

Meanwhile, WARN filings — regulatory filings businesses with more than 100 workers must submit if they're planning to lay off more than 50 people at a worksite — have also increased in recent months. Companies filed 253 layoff notices in December, with plans to cut 21,873 jobs, according to public records accessed by WARNTracker.com. That's up from the prior month, when firms filed 217 notices, with plans to cut 20,105 workers.

"The number of positions covered by a WARN filing jumped in November and remained relatively high in December. As a result, we still think the trend in claims will rise to about 250K by the end of Q1, reflecting a fading drag from residual seasonability and deterioration in the underlying trend," Samuel Tombs, a chief US economist at Pantheon Macroeconomics, wrote.

Hiring was robust in December. The economy added 256,000 jobs that month, well above the expected 164,000. The jobless rate, meanwhile, remained near a record low, slipping to 4.1%.

Economic forecasters, though, have been observing weaker labor market conditions in the past year, with the unemployment rate climbing 30 basis points throughout 2024.

Friday's jobs report is expected to show that hiring decelerated but continued to grow in January. Economists expect US employers to have added 170,000 jobs, according to FactSet.

• Microsoft has started performance-based job cuts, according to termination letters seen by BI.
• The letters state benefits stop immediately. Ex-employees also say they won't receive severance.
• As BI reported earlier this month, Microsoft is taking a stronger stance on performance management.

Microsoft has started performance-based job cuts, according to termination letters viewed by Business Insider.

Employees losing their jobs will see healthcare benefits end immediately, the letters state. In three specific cases, employees were told by Microsoft they're not getting severance, according to people familiar with the situation. These people asked not to be identified discussing sensitive topics.

"The reason(s) for the termination of your employment include your job performance has not met minimum performance standards and expectations for your position," the letters viewed by BI state. "You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft."

The letters do not mention severance, but note that medical, prescription, and dental benefits end on the last day of employment. The letters also say that Microsoft will consider past performance and termination if the person applies for other jobs at the company in the future.

As BI reported earlier this month, Microsoft is taking a stronger stance on performance management like its competitors and managers at the company have spent the past few months evaluating employees all the way up to level 80, one of its highest levels. A company spokesperson declined to comment on Thursday.

A Microsoft spokesperson previously confirmed the job cuts, stating that when people leave for performance reasons, Microsoft often backfills the roles, so there may be little change to the company's overall headcount. At the end of June, Microsoft had roughly 228,000 full-time employees.

"At Microsoft we focus on high performance talent," the spokesperson said. "We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."

Microsoft also this month started cutting jobs across organizations including Security, Experiences and Devices, sales, and gaming, according to two people familiar with the matter. At the time, a spokesperson said those layoffs were separate from the performance-based cuts.

Read an excerpt from Microsoft's performance-based termination letters:

"The reason(s) for the termination of your employment include your job performance has not met minimum performance standards and expectations for your position. You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft.

Note: If you apply for employment at Microsoft in the future, your past performance and basis of termination will be considered.

You must immediately return your Microsoft cardkey, corporate American Express card, phone card, and any other Microsoft property, including but not limited to hardware, software, email files, source code, customer contact information, financial data, status reports, or any other proprietary or confidential data or trade secret information that you have in your possession to me.

You are bound by the terms of your Microsoft Employee Agreement to return such materials and to protect Microsoft confidential information after termination of your employment. If any such materials are stored on any personal device (including, without limitation, computers, mobile phones, tablets, storage devices) you are required to permanently delete them."

Are you a Microsoft employee, or do you have insight to share? Contact the reporter Ashley Stewart via the encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]). Use a nonwork device.

• Amazon wants fewer managers.
• Internal guidelines for a big sales team at AWS give a glimpse into its plans.
• Amazon's reorg reflects a broader trend in corporate America to trim middle managers.

Amazon's effort to whittle down middle-management is taking shape.

The company recently told some managers to increase their direct reports, make fewer senior hires, and down-level or cut pay for some employees, according to people familiar with the matter and internal guidelines shared with a large sales team at Amazon Web Services.

In September, Amazon CEO Andy Jassy announced a plan to increase the ratio of individual contributors to managers by 15% by the end of March. By reducing management layers, the company hopes to "decrease bureaucracy" and "move fast," Jassy said at the time.

The internal guidelines give an early glimpse into how Amazon intends to complete a management shake-up that could impact thousands of corporate employees. Amazon hasn't shared anything publicly since unveiling plans to have fewer managers last year.

In an email to BI, Amazon's spokesperson said the internal guidance document might be true for a specific team but not for the whole company. Individual units communicate directly with employees as they make changes to their structures under the broad mandate of creating "customer-centric, agile organizations that empower fast decision-making," the spokesperson added.

Minimum 8 direct reports

One key point in the AWS team guidelines document obtained by BI is to put at least 8 direct reports under each manager. The new "span of control" directive is an increase from a minimum of 6 direct reports each manager had in the past, according to the guidelines said.

It's not the first time Amazon has made changes like this. In 2017, Amazon founder and former CEO Jeff Bezos asked every manager to have at least 6 direct reports as part of a plan to "de-layer" the company.

The latest mandate has made some employees concerned enough to ask questions about it. At an internal all-hands meeting in November, Jassy addressed the issue, saying Amazon went on a massive hiring spree during the pandemic, which "stretched" the company and led to slower decision-making, BI previously reported.

"I hate bureaucracy," Jassy said during the meeting.

Amazon's spokesperson told BI that the ideal team size will vary, and no companywide mandate requires all managers to have a certain number of direct reports. The spokesperson added that a full-time employee with one or more direct reports is considered a manager "in title," regardless of the number of direct reports they have.

Pause hiring new managers

The guidelines for the AWS sales team also require pausing new manager hires. This is temporary until the team understands the full ramifications of the organizational change, the guidelines said.

This particular AWS team has discussed hiring fewer middle managers since at least April of last year, according to another internal document obtained by BI. The team found that the hiring pace of middle managers had outpaced entry-level employees in recent years, resulting in increased costs. The document recommended hiring more early-career professionals to shift the team's structure from a "diamond"-shaped organization to a "pyramid" shape where more than half the team is concentrated in lower-level positions.

This trend is happening in other parts of corporate America. Besides Amazon, companies including Meta, Citi, and UPS have made changes to trim supervisory roles. Data from last year showed that companies are cutting middle managers and not backfilling those positions.

Another Amazon internal guideline from September, previously obtained by BI, said the manager reduction plan could result in role eliminations as "organizations may identify roles that are no longer required." In a note published last week, Bank of America analysts estimated that Amazon could save roughly $1.5 billion in annual costs from the manager cuts.

Amazon's spokesperson said the company adjusts hiring based on business needs, and it continues to have open manager roles available. The spokesperson added that there are many ways to reduce the number of managers without terminating them, such as by reconfiguring teams or reassigning employees.

Down leveling

Another aspect of the plan is to down-level some of the managers to individual contributor roles, according to the recent guidelines for the AWS sales team. Two current AWS employees told BI that several managers have been pushed down a level due to the new approach. That meant being moved to a smaller pay band, one of the people said.

One former employee who left recently said the promotion criteria are changing. This person said some AWS teams now require managers to have more people under them to qualify for a promotion.

Amazon's spokesperson told BI that moving from an individual contributor to a manager role, or vice versa, can happen without changing levels. There's no companywide requirement for team size to get promoted as the promotion criteria involve many factors, the spokesperson added.

For several Amazon employees who spoke to BI, the reorganization is creating a bigger problem: a culture of fear. They said managers seem to shy away from taking risks or making hard decisions because they don't want to be held accountable for failures, which could make them a target of the cuts.

"No one wants to be the one that failed," one of the people said.

Do you work at Amazon? Got a tip?

Contact the reporter Eugene Kim via the encrypted-messaging apps Signal or Telegram (+1-650-942-3061) or email ([email protected]). Reach out using a nonwork device. Check out Insider's source guide for other tips on sharing information securely.

• Trump's administration is warning government workers about a "fork in the road" in a memo offering buyouts.
• It's the same subject line Musk used in an email telling Twitter staff they had to be "extremely hardcore" or quit.
• But can Musk's playbook for Twitter, now X, work for the US government?

This is all feeling a lot like Twitter circa 2022.

President Donald Trump's administration has launched a sweeping overhaul of the federal workforce, starting with a blunt offer this week: Take a buyout and leave, or commit to a new era of in-office mandates and performance that "exceeds expectations."

The move, detailed in an email to federal workers, follows a return-to-office order issued during Trump's first week in office — a directive requiring most federal employees report to physical offices five days a week.

The parallels to Elon Musk's tumultuous takeover of Twitter, now X, are impossible to ignore. In 2022, the tech billionaire sent a similar email to Twitter employees asking them to commit to an "extremely hardcore" schedule or leave. The subject line was "A fork in the road" — the same metaphor referenced by the Trump administration on Tuesday.

These are bets that aggressive workforce cuts, relentless productivity demands, and a culture of loyalty and long hours can reshape institutions. The question is whether Musk's playbook, which left Twitter financially shaky and culturally fractured, can work for the US government.

The White House didn't respond to a request for comment on Tuesday evening. 

Similar blueprints

The US Office of Personnel Management, which is sending out the email to federal workers, vowed to reward top performers and swiftly address underperformers. That mirrors Musk's midnight missive to Twitter staff, which demanded "exceptional performance" as the "only passing grade" and presaged job cuts that eliminated about 80% of the company's workforce.  

OPM also promised a leaner workforce, saying that while defense and security agencies might grow, most federal departments would face downsizing through layoffs, furloughs, and reclassifying roles as "at-will" employment, eroding civil-service protections that have shielded workers for decades. Federal employees must also meet heightened standards of reliability, loyalty, and trustworthiness, the OPM said.

The blueprint echoes Musk's rapid-fire restructuring of Twitter. Soon after acquiring the platform, Musk told employees they had 40 hours to commit to an "extremely hardcore" work environment or accept severance. More than 6,000 Twitter staff eventually left or were laid off, including engineers and content moderators. Musk also issued RTO mandates.

Risks and rising debt

The risks of Musk's approach are well documented. Twitter's user growth stalled post-takeover, and its brand reputation tanked as advertisers fled after controversial policy shifts.

For Trump, the gamble is potentially riskier. Twitter had about 7,800 employees pre-Musk; the federal government employs roughly 2.3 million. Mass layoffs or attrition could destabilize everything from Social Security processing to disaster response.

Yet the administration is charging ahead, framing the overhaul as an effort to reign in government spending and control the national debt.

When Musk acquired Twitter in 2022, he said he'd overpaid after being forced to close the $44 billion transaction by a judge. It was a highly leveraged deal that left the company with a lot of debt and large interest payments. That partly drove Musk's drastic job cuts as he rushed to save money and prevent Twitter from defaulting.

By 2023, he'd cut more than 6,000 employees. He described the layoffs as "painful" and "one of the hardest things" he'd had to do as Twitter's boss.

The US government has also taken on a lot of debt in recent years. While no one expects a US default anytime soon, the national debt soared from about $3.4 trillion in 1980 to more than $35 trillion last year. Roughly $10 trillion in debt piled up from 2017 to 2024, according to Treasury Department data.

Rising rates have increased the cost of paying interest on this massive debt load. In 2023, these annual payments topped $1 trillion, stoking concern among some economists about government spending.

This is partly what's driving the Trump administration to try to make the US government more efficient. Trump has also pledged to pursue tax cuts, putting even more pressure on his administration to find other ways of controlling the ballooning national debt.

Trump's efficiency drive has already caused turmoil. Some government workers said his federal grant freeze had thrown agencies into disarray, creating confusion.

When Musk eliminated thousands of Twitter jobs, some employees at the company were concerned that the social-media platform might stop working because the cuts were so deep and fast. There were some outages, but the company's technical underpinnings have been running relatively smoothly over the past year or so.

• The Federal Reserve is likely to hold interest rates steady in its first meeting of 2025.
• Trump has said that he'll "demand" the Fed continue cutting rates.
• Trump's tariff plans could complicate the Fed's decision-making this year.

The nation's central bank is likely to hold interest rates steady this week following President Donald Trump's return to the White House.

On Wednesday, the Federal Open Market Committee will announce its next interest rate decision. After a series of rate cuts to close out 2024, markets expect the Federal Reserve to hit pause. CME FedWatch, which estimates interest-rate changes based on market predictions, forecasts a nearly 100% chance as of Monday afternoon the Fed will hold rates where they are.

If the central bank holds this week, it could set up a conflict with Trump, who has repeatedly stated his desire for interest rates to continue falling.

"I'll demand that interest rates drop immediately, and likewise, they should be dropping all over the world," Trump said at the World Economic Forum's annual event in Davos this past week.

Fed Chair Jerome Powell has reiterated that the central bank makes its decisions independently of politics and acts primarily based on data.

The Fed meeting follows data showing a robust US job market in late 2024. The economy added 256,000 jobs in December, well above economists' expectations, and unemployment dropped to 4.1%.

"In the first half of 2024, we saw unemployment start rising, and it was a pretty good cause for concern," Cory Stahle, an economist at the Indeed Hiring Lab, said. "But then in the back half of the year, we've seen that the unemployment rate has really stabilized."

That still-healthy labor market means the Fed likely won't feel pressure to rush more rate cuts to boost economic activity. Stahle told Business Insider after the jobs report was published earlier this month that "as long as the labor market is solid, it gives the Federal Reserve some time to work."

Inflation largely slowed in 2024 but closed out the year showing mixed signals, which may also give the Fed a reason to pause rate cuts. Overall CPI increased 2.9% over the year in December, higher than the 2.7% rate in November. Core CPI, which excludes volatile food and energy prices, increased 3.2% over the year in December, a slowdown from the 3.3% rate the previous three months.

"The Fed is going to need to see a succession of inflation data that would make them feel that the progress toward the 2% target has resumed," Greg McBride, the chief financial analyst for Bankrate, told BI after the release of CPI data earlier this month. "There isn't a whole lot to latch onto to feel that way at this point."

It's unclear how the Fed will act on interest rates over the course of the year, and Trump's trade plans could complicate the central bank's decision-making. The president has threatened tariffs on China, Mexico, Canada, Colombia, Russia, and the BRICS nations, and while he has so far used those threats as leverage to achieve policy goals, Trump indicated he is considering placing a 25% tariff on Canada and Mexico as soon as February 1.

Many economists have argued that large and broad tariff increases could fuel a new round of price increases.

The Fed's latest Summary of Economic Projections released in December penciled in two interest-rate cuts for 2025, but Powell said during a press conference that month that Trump's trade policies present too much uncertainty to clearly forecast what the Fed will do.

"We just don't know really very much at all about the actual policy, so it's very premature to try to make any kind of conclusion," Powell said in December. "We don't know what will be tariffed, from what countries, for how long, in what size. We don't know whether there'll be retaliatory tariffs. We don't know what the transmission of any of that will be into consumer prices."

• Scott Bessent's confirmation hearing this week held a number of clues as to what markets can expect from Trump 2.0.
• The long-time investor and hedge fund exec is Trump's pick to lead the US Treasury.
• Bessent said Trump would "unleash a new economic golden age" during his testimony.

Scott Bessent's nomination hearing gave markets a handful of hints as to what the next four years could look like.

The investor and hedge fund executive sat this week for his confirmation hearing as Donald Trump's pick to lead the US Treasury Department. Economists at Deutsche Bank noted that his remarks held a few important clues for investors.

In his testimony, Bessent said he believed Trump's presidency would help "unleash a new economic golden age," which could include more jobs and increased wealth for Americans. He also suggested the US was "barreling towards an economic crisis" at the end of the year.

If confirmed, Bessent will be in charge of Trump's plan to create the "Greatest Economic Boom," and will oversee the President-elect's plans to cut taxes, deploy tariffs, and curtail the national debt.

Here's what Deutsche Bank economists think were the top takeaways of Bessent's testimony.

1. Nothing has been taken off the table in Trump's tariff plan

Bessent didn't have firm guidance on what Trump's tariff plan could look like. In his testimony, the Treasury Secretary nominee said the tariffs would aim to even out unfair trade practices by other countries, raise federal revenue, and potentially give the US more bargaining power in negotiations. He didn't specify if the tariffs would be slowly implemented over time.

Bessent also pushed back against the idea that Trump's tariff plan was inflationary. Trump levied tariffs during his first term as president without a significant inflation increase, but economists say that his plan this time around is more expansive, explaining the difference in inflation outlooks for the coming years.

"Besesnt's comments on tariffs were notable in that they left everything on the table," the Deutsche Bank economists said.

2. Trump's 2017 tax cuts could be extended

Bessent doubled-down on his support for extending Trump's 2017 tax cuts. If the US doesn't extend the tax cuts, Americans could face $4 trillion tax hike when the 2017 package expires this year, he said.

"We must make permanent the 2017 Tax Cuts and Jobs Act and implement new pro-growth policies to reduce the tax burden on American manufacturers, service workers, and seniors. I have already spoken with several members of this Committee, as well as leaders in the House about the best approach to achieving these important goals together," he added.

3. Bessent could crack down on government spending

Bessent emphasized his resolve to get the national debt and the widening deficit under control. He's been a vocal proponent of reducing the federal debt balance in the past, attributing rising debt levels to the government's "significant spending problem" in his testimony.

The total federal debt balance clocked in at $36.17 trillion as of Friday, according to US Treasury data.

"On the debt limit, Bessent provided reassurance that the US would not default on its debt if he were to be confirmed as Treasury Secretary," Deutsche Bank wrote.

Bessent also appeared "hesitant" to support removing the national debt limit, the Deutsche Bank economists noted, referring to an idea that Trump floated late last year. But, when questioned, Bessent said he would work with Trump to remove the debt limit, if Trump wished to do so

4. Trump will support the Fed's independence

Bessent pushed back against the notion that Trump would try to exert power over the Federal Reserve. Media reports that have suggested Trump would infringe on the independence of the Fed are "highly inaccurate," he added.

Bessent also did not speak about the potential for a "shadow Fed Chair," something he spoke about last year.

"Trump would make his views on monetary policy known, as Bessent noted Senators often do, but he does not support undermining Fed independence," the economists said.

5. Sanctions could get stronger

Bessent voiced support for intensifying sanctions on Russia and Iran. Sanctions on Russia, in particular, have not been "fulsome," Bessent said, suggesting he would tolerate higher oil prices in favor of increasing restrictions on Russia.

"If any officials in the Russian Federation are watching this confirmation hearing, they should know that if I'm confirmed and if President Trump requests it as part of his strategy to end the Ukraine war, I will be 100% on board from taking sanctions up, especially on the Russian oil majors to levels that would bring the Russian Federation to the table," Bessent said during the hearing.

"This statement could indicate that such sanctions may be near-term priorities for the Trump administration," Deutsche added.

• Amazon is cutting jobs in its Fashion and Fitness group, according to internal messages seen by BI.
• A spokesperson said the cuts affect about 200 employees.
• Amazon has been trying to expand in the apparel and fashion categories for years.

Amazon is cutting jobs in its Fashion and Fitness group, according to internal messages seen by Business Insider.

One of the internal messages, posted on an internal Amazon Slack channel, said San Diego employees in this group, known as F2, were let go recently.

An Amazon spokesperson said the role eliminations affect roughly 200 employees across the country.

"We're always looking at our team structures to ensure we're best set up to move fast as we innovate for customers," the spokesperson said. "We've adjusted parts of our North America Stores team because we believe this structure will better enable us to deliver on our priorities. As part of these changes, we've made the difficult decision to eliminate a small number of roles, and we're committed to supporting affected employees through their transition." ­

The job cuts are likely unrelated to Amazon's plans to shut down Try Before You Buy, previously known as Prime Wardrobe. This service lets consumers order clothing, try it on, and either send it back or buy it.

Amazon has tried several times to expand in the apparel and fashion categories. This part of the retail industry can be more challenging for e-commerce businesses because consumers often prefer to try on items before buying them. When online clothing orders don't fit, and customers send products back, that can be expensive and cut into profit margins.

Are you a tech-industry employee or someone else with insight to share?

Contact the reporter, Ashley Stewart, via the encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]). Use a nonwork device.

• Meta plans to cut more low-performing employees, calling the move "nonregrettable attrition."
• Companies often use euphemistic language for job cuts to avoid alarming investors and employees.
• Yet such phrasing often doesn't soften the impact of cuts on affected workers.

Allow for a quick riff on RIFs.

Many companies go out of their way to avoid calling job cuts what they are. Whether it's a "reduction in force," "rightsizing," or "streamlining," the fancy language doesn't soften the blow for workers — or hide the reality of lost jobs.

One recent example: Meta said this week it would push out an additional 5% of what Mark Zuckerberg called "low-performers." Clear enough. Yet in a subsequent memo from Hillary Champion, Meta's director of people development growth programs, the focus became "non-regrettable attrition."

At Amazon, a phrase often used for such cuts is "unregretted attrition."

It's the type of language that can draw snark online. Following Meta's announcement, one person wrote on X: "'Non-regrettable attrition' lmao.'"

A Meta spokesperson declined to comment beyond saying the company plans to fill the vacated positions in 2025.

Steve McClatchy, who consults on leadership and is the author of the book "Leading Relationships," told BI that public companies often use euphemistic language around job cuts to try to avoid spooking investors and raising concerns that the business is in trouble. But, he said, that effort often falls flat when they use terms like nonregrettable attrition.

"How sad is that language? It's trying to say to the ownership group, we're headed in the right direction, not the wrong one," McClatchy said.

There are numerous other ways to frame offboarding, err, cutbacks, err, workforce adjustments, and the need to do so.

For example, the news site TechCrunch told BI on Tuesday it's reducing staff because of "evolving needs."

It's possible that for many employers, workforce optimization, organizational realignment, and — shout out to ChatGPT for this one — internal mobility challenges just sound better than job cuts.

Yet, workplace experts told BI, the fallout is the same.

"We're seeing a lot of companies now do everything not to use the actual word layoff, even though that's exactly what they're doing," Peter Rahbar, an employment attorney who founded the boutique law firm the Rahbar Group, told BI.

A spokesperson for the food giant Cargill previously told BI that job cuts were designed to "realign our talent and resources to align with our strategy."

Last year, Bumble said it would cut about 30% of its workforce "to better align its operating model with future strategic priorities."

The hidden messages behind layoff language

Cutting jobs is often bad for morale and can hurt productivity when workers become consumed with worrying they're next. That can be true even with a case like that of Meta, which said it planned to "backfill" roles in 2025. Translation: hire better people — though not you.

Yet, McClatchy said, to imply that a worker who gets pushed out for poor performance is solely at fault misses the responsibility that employers have to make good hires and that managers have to help those under their tutelage perform their best.

"It's 100% an attack on the employee that has to go then find a job. And what a shame that is," he said.

Sandra Sucher, a professor of management practice at Harvard Business School who has studied layoffs, told BI that most terms for layoffs are designed to make an otherwise negative act appear more positive.

She said companies often use the term regrettable attrition for good workers they're sorry to see leave. So a term like nonregrettable attrition is a way of "sugarcoating" the fact that an employer is letting people go. Connecting it to attrition is meant, Sucher said, to imply that employers have a handle on the outflow. Yet, she said, attrition isn't always something companies can control.

"The point of attrition is that you're not managing it. It's something that, by and large, happens to you," she said.

'It's not going to soften the blow'

Rahbar, the attorney, said employers' choice of wording when it comes to culling workers isn't about protecting themselves legally. Instead, he said, it's mostly a public-relations dance and, ultimately, one that does little good.

"If you're an employee who is impacted by this, the language they're using to describe it is irrelevant. It's not going to soften the blow," Rahbar said.

Ravin Jesuthasan, a coauthor of the book "The Skills-Powered Organization" and the global leader for transformation services at the consulting firm Mercer, told BI that employers have been cutting jobs for more than a century when business falters.

"I don't know why there was a need to introduce new language," he said.

In some cases, the words aren't new; they're just redeployed, reassigned, or transitioned to a new role. In Champion's memo at Meta, she wrote that the company was "aiming to exit" an additional 5% of its workers who'd been around long enough to get a performance rating.

"'Exit' as in GTFO!" one X user posted.

Not all euphemisms might be as likely to whip up worker cynicism, of course. The practice of scoring workers based on various metrics and getting rid of the worst performers sometimes goes by the human-resources shorthand "rank and yank."

Corporatespeak can also be a handy way to add levity in uncertain times. One social media user wrote on X about what might happen when artificial intelligence shows up to make cutbacks, oblique language in tow.

"Humans will become 'Non-Regrettable Attrition' for AI," the person wrote.

Do you have something to share about job cuts or something else at work? Business Insider would like to hear from you. Email our workplace team from a nonwork device at [email protected] with your story, or ask for one of our reporters' Signal numbers.

• Donald Trump champions the working class but his policies are bad news for them, Paul Krugman says.
• The Nobel-winning economist says tariffs and deportations will hurt instead of help the poor.
• "A lot of people are going to get brutally scammed," Krugman said.

Donald Trump rode to victory in the US presidential race by pledging to put America first and fight for blue-collar workers. Paul Krugman says he'll only make their lives harder.

The economist, who won the Nobel Memorial Prize in Economic Sciences in 2008, criticized the president-elect's plans to raise tariffs and cut taxes during Tuesday's episode of "The Daily Blast with Greg Sargent" podcast.

He told The New Republic show that those and other policies would lead to the working class paying higher prices while high earners keep more of their money.

"Even more than usual for a Republican, he appears to have an extremely regressive economic program in mind, one that really will effectively redistribute income away from working-class voters to the top," Krugman said.

American households are already being pinched by inflation, which spiked to a 40-year high of more than 9% in the summer of 2022 and remains above the Federal Reserve's 2% target.

On top of higher prices for food, fuel, rent, and other basics, many consumers are also paying more toward their credit cards, car loans, and mortgages.

That's because the Fed, in a bid to curb inflation, increased its benchmark rate from zero to north of 5.25% in under 17 months, and has kept it as high as 4.5% for now.

The battle over groceries

Krugman, a former MIT and Princeton University professor and New York Times columnist, zeroed in on grocery prices. Trump said during his campaign that he would reduce them, but he's walked that claim back in recent weeks.

Yet recent surveys show that his supporters still expect him to do so, Krugman said, despite the fact that broader prices are still rising and deflation is almost universally regarded as undesirable for an economy.

A CBS News/YouGov survey, conducted in late December with a nationally representative group of 2,244 US adults, found that 40% of Americans expect Trump to make food and grocery prices go down, exceeding the 36% who expect him to make them increase.

"A lot of people are going to get brutally scammed," Krugman said. Trump isn't just misleading people by saying they'll be better off once he's in office, he also doesn't appear to know how he'll deliver on his promises, Krugman continued. "So the scam is there is no plan."

Trump said last year that lowering grocery prices would be tricky, but improving supply chains and boosting domestic energy production could lower costs for farmers, who could then pass those savings onto consumers.

Tariffs and immigration

Separately, Krugman nodded to the fact that tariffs are a tax on imports, and businesses usually pass on their increased costs by charging higher prices to consumers.

He described their impact as "really bad," and said the fallout from Trump's proposed mass deportations would be "much, much worse." They'd be hugely disruptive and drive up prices in industries like agriculture, food processing, and construction, Krugman said, leaving the US with a shortage of workers for large-scale programs like rebuilding Florida after a hurricane.

The author and blogger also rang the alarm on Trump and his allies' fierce criticism of colleges and skepticism of higher education.

"We've been pulling ahead on technology, but an administration that's extremely hostile to universities and education is going to undermine that source of advantage as well," Krugman said.

"Trump wants to turn the clock back to 1896, and that's not good for the US economy."

• Meta plans to cut 5% of low-performing employees.
• The cuts are part of a strategy to improve performance.
• Meta aims for 10% "non-regrettable attrition," combining last year's and this year's targets.

A memo from one of Meta's human-resources executives explained to managers on Tuesday how the company's performance-based job cuts would work in the coming weeks.

Hillary Champion, Meta's director of people development growth programs, instructed managers to categorize employees into performance tiers based on their contributions over the past year, according to the memo, a copy of which was obtained by Business Insider.

Champion wrote in the memo that Meta aimed to reach 10% "non-regrettable attrition" by the end of this performance cycle, combining last year's 5% with an additional 5% this year. These are employees that the company wouldn't consider a loss if they left.

She signaled that Meta was ramping up pressure on underperformers and trying to more quickly decide who stays and who goes.

"We have really ambitious goals, so we need to manage our workforce in a way that ensures we have the strongest talent working here and can move faster in managing out low performers so that we can bring new people in," Champion said.

Her guidance for managers came shortly after Meta told employees it was preparing to cut about 5% of its lowest-performing staffers as part of an effort to "raise the bar." Meta said it intended to backfill these roles in 2025.

Meta's performance ratings, and who will be cut

BI also obtained a copy of Meta's internal performance guidance on Tuesday. This document describes several categories, one of which is "met most expectations." Other ratings include "met some" and "did not meet."

"Anyone who receives a rating of 'Met Some' or 'Did Not Meet' will be automatically added to the performance termination list," Champion told Meta managers.

"The number of people in the 'Met Most' category to be terminated will vary," she added.

This depends partly on whether Meta's target of 10% non-regrettable attrition is met. Champion shared a theoretical example: If a team had 5% non-regrettable attrition in 2024 and then put 3% of employees in the "met some" rating, an extra 2% of workers from the "met most" group would need to be cut to hit the 10% total.

The coming job cuts are part of a broader strategy to reshape Meta's workforce and become more efficient amid huge investments in AI, virtual reality, and the future of social media.

Last week the company rolled back diversity, equity, and inclusion initiatives and disbanded its third-party fact-checking program.

Here's the memo from Champion:

Manager Update for the Performance@ Process

Following up on Mark's announcement today, I want to share some details about the role you will need to play through this performance cycle, and offer some guidance on how to lead through this.

What's Happening

• We have really ambitious goals, so we need to manage our workforce in a way that ensures we have the strongest talent working here and can move faster in managing out low performers so that we can bring new people in. As a result, we are exiting approximately 5% of our lowest performers.
• Calibrations continue to be our process for differentiating performance, recognizing impact, and making promotion decisions. In addition to the process overview shared in December, we will be using the calibration window to identify the lowest performers for performance termination.
• Company-wide, we expect to reach 10% non-regrettable attrition by the end of this Performance cycle, inclusive of ~5% non-regrettable attrition from 2024. This means we are aiming to exit approximately another 5% of our current employees who have been with the company long enough to receive a performance rating. The exact percentage will vary by org depending on their non-regrettable attrition in 2024.
• Those who are terminated for performance will receive generous severance packages, in line with previous cuts.
• Org leaders will share more on the the specific backfill process for your Org.

How Performance Calibrations will Work

Below is a topline view of what to expect. HRBPs will guide teams through this and provide more details during calibrations.

- This will be a normal calibration process and we will use the time to identify our strongest performers in addition to our lowest. We will discuss all ratings, flags, edge cases and promotions as usual.

• Consistent with our distribution guidance, teams will need to identify 12-15% of employees who are eligible to receive a performance rating as Met Most and Below ("MMB"). This includes any 2024 non-regrettable attrition, which will be visible in the performance tool and shared with team leaders during calibrations.
  • Example: If your org's 2024 NR attrition was 5%, then your team will need to identify 7-10% to receive MMB ratings in order to meet the 12-15% total.
• As you go through calibrations, your HRBP will also help you differentiate performance by utilizing the Met Some rating more than we have in the past.
• Anyone who receives a rating of "Met Some" or "Did Not Meet" will be automatically added to the performance termination list.
• Later in the calibration process, your Director and VP will review those with a "Met Most" rating to determine who will be terminated to meet the required 10% target. The number of people in the "Met Most" category to be terminated will vary, depending on your org's 2024 non-regrettable attrition rate and how many people are rated "Met Some" or "Did Not Meet"
  • Example: If your org had 5% non-regrettable attrition in 2024, and through calibrations put 3% in the "Met Some" rating, Directors and above will need to select an additional 2% from the "Met Most" group in order to reach the 10% total.
• You should use the flag and notes features within the performance tool to make any recommendations about whether someone with a "Met Most" rating should be included in the performance terminations or not.

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• Microsoft plans job cuts targeting underperforming employees.
• The reductions are happening across the company, including in its important Security division.
• Performance-based cuts are often backfilled by Microsoft, so total headcount may not change much.

Microsoft is planning job cuts soon and the company is taking a harder look at underperforming employees as part of the reductions, according to two people familiar with the plans.

A Microsoft spokesperson confirmed cuts, but declined to share details on the number of employees being let go.

"At Microsoft we focus on high performance talent," the spokesperson said. "We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."

When people leave for performance reasons, Microsoft often backfills the roles, so there may be little change to the company's overall headcount, the spokesperson added. At the end of June, Microsoft had roughly 228,000 full-time employees.

Microsoft is taking a stronger stance on performance management like its competitors, the people familiar said, and managers at the company have spent the last few months evaluating employees all the way up to level 80, one of its highest levels. The people asked not to be identified discussing sensitive matters.

The cuts are happening across the company, including in its important Security division, the people said.

Are you a Microsoft employee or do you have insight to share? Contact reporter Ashley Stewart via the encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]). Use a nonwork device.

• Trump's 2017 tax cuts are set to expire this year, which could impact Americans' wallets.
• Trump's Tax Cuts and Jobs Act lowered individual rates and doubled the child tax credit.
• Experts shared how individual taxes, along with tax breaks for parents and EVs, could change.

President-elect Donald Trump and the incoming Republican congressional majorities could have a big impact on your taxes next year.

Many provisions from President-elect Donald Trump's 2017 Tax Cuts and Jobs Act are set to expire by the end of this year unless Congress renews the tax bill. On the campaign trail, Trump proposed extending many of the law's provisions and adding more.

"We refer to this next year as the Tax Super Bowl. It's a big one," said Mark Baran, the managing director at the financial and professional services firm CBIZ's National Tax Office in Washington, DC.

If the TCJA is extended, and Trump's new provisions — such as eliminating taxes on tips — are added, many Americans could see their individual tax rates drop, or at least stay low. Additionally, Republicans are eyeing an even bigger increase to the original child tax credit from the TCJA while Biden-era tax provisions like the electric-vehicle credit are on the chopping block.

Trump's 2017 tax package had an immediate effect on many Americans — it brought down individual tax rates for almost all filers, doubled the child tax credit to $2,000 per child from $1,000, and doubled the standard deduction that Americans could claim, among other measures. If the Tax Cuts and Jobs Act isn't extended, more than 62% of filers would face a tax increase in 2026, per an analysis from the Tax Foundation.

"President Trump is committed to lowering the tax burden on the American people who elected him in November with an overwhelming mandate to Make America Wealthy Again," Trump spokesperson Karoline Leavitt said in a statement to BI. "The Trump Administration will be dedicated to ensuring that American workers keep more of their hard earned dollars in their pockets while growing the strongest and most resilient economy the world has ever seen."

"From a planning standpoint, I would love to see the Tax Cuts and Jobs Act extended," said Brian Kearns, a CPA and the founder of the financial planning and tax consulting firm Haddam Road.

Kearns said an extension would mean easier planning and lower rates for clients. "Will it happen? I honestly have no idea."

Here are the biggest changes that could be coming.

Tax rates for most Americans will probably stay low

Baran said that taxpayers could be cautiously optimistic about an extension on the TCJA's reduced individual tax rates.

"The election has created a little more certainty. However, the challenges are still there," he said.

The table below compares tax rates and brackets under the TCJA and if the TCJA expires.

A break for high-income filers in high-tax cities and states is a big question mark

Another provision from TCJA that could save taxpayers money is the State and Local Tax deduction, known as SALT. That provision allows taxpayers in areas with high local taxes — such as prominent blue states like New York and California — to claim those taxes as a deduction.

The deduction was unlimited before the TCJA capped it at $10,000, meaning some high-income residents of those high-tax jurisdictions ended up owing more to the federal government after the law went into effect. That's drawn the ire of strange legislative bedfellows, with Democrats and Republicans in those blue states calling to roll back the cap. But there's already Republican dissent over how to tackle the cap, if at all.

Some Republicans — and Trump advisors — proposed raising the amount to $20,000, giving some relief to Americans paying a lot in local taxes. Trump himself has said he would "get SALT back."

But the cap may end up staying where it is. "It would be great if they raised it because there's a lot of people that are needing relief, but I can't tell you where that's going to head," Scott Brillhart, a partner and the director of tax at Founder's CPA, said.

Promises to wipe out taxes on tips and Social Security could be difficult to keep

The tax experts BI spoke with questioned how feasible proposals like eliminating taxes on tips, overtime, Social Security, and auto loans would be — all of which were talking points for Trump on the campaign trail. Brillhart said eliminating taxes on tips could be a "logistical nightmare for employers."

"I think it would be more complicated than the benefit it would be for a lot of this stuff," he said.

But Kearns said that the impact of reducing those taxes could be felt among a big slice of Americans.

"This matters a lot for all different segments of the population. You're younger, you're waitering or waitressing — no tax on tips, that's a big deal," Kearns said. "If you are receiving Social Security, that's a really big deal to not be paying taxes on your Social Security."

The child tax credit is another wild card

Another provision that could impact many Americans is the child tax credit. Parents could lose out on a $1,000 tax break if the TCJA expires this year. However, at least one Republican lawmaker — Sen. Josh Hawley of Missouri — is pushing a potential increase from $2,000 to $5,000. Vice-president-elect JD Vance also floated a $5,000 child tax credit on the campaign trail.

"You, of course, have to work with Congress to see how possible and viable that is," Vance told CBS's "Face the Nation."

Brillhart said that a higher child tax credit would be "very helpful" for many families and should be seriously considered.

Tax breaks for electric cars are on the chopping block

Additionally, Americans interested in going electric may want to plug in now — at least if they want some tax benefits. Brillhart said that the tax credit of up to $7,500 for electric vehicles that President Joe Biden passed in 2022 could be on the chopping block.

"If that is a deciding factor for you to be purchasing an EV, I'm not telling them to go run out and purchase something, but it's something to consider," Brillhart said.

• There are a handful of bullish forces headed for markets and the economy next year.
• Goldman Sachs said there are five factors providing a tailwind for the market next year.
• Those include stronger growth, more rate cuts, and lower inflation.

Investors feeling nervous about markets and the economy have a number of reasons to cheer up, with several bullish factors set to keep the rally going next year, according to Goldman Sachs.

Economists at the bank made several predictions for markets and the economy in 2025, some of which buck current expectations.

Some investors are starting to sour on next year's outlook, with over 34% of traders saying they were bearish on stocks over the next six months, according to the AAII's latest investor Sentiment Survey.

Meanwhile, the Conference Board's Expectations Index, a measure of how consumers feel about various parts of the economy, dropped to near-recessionary levels in December.

Yet, a handful of factors could keep the economy going strong or even stronger in 2025.

Here are five bullish calls the bank has made for the coming year.

1. The economy could grow more than expected

The US economy could expand even faster than investors are currently expecting. Goldman Sachs forecast GDP to grow 2.4% year-over-year by the fourth quarter of 2025, above the consensus estimate of 2% growth.

That increase will largely be fueled by strong consumer spending. Americans, bolstered by a strong job market and increased wealth from holding stocks, will likely ramp up their spending by 2.3% on a yearly basis in 2025, Goldman predicted, on par with consumer spending growth seen over the last two years.

2. Business investment will take off

Investment by businesses will probably far surpass expectations, Goldman said. The bank predicted that private investment in the economy would climb 5% year-over-year in the fourth quarter, above consensus estimates of around 3% growth.

"While the factory-building boom subsidized by the Inflation Reduction Act and CHIPS Act will slow, spending on equipment for those new factories and for artificial intelligence, the reinstatement of tax incentives, rising confidence, and lower short-term borrowing rates for small businesses should fuel roughly 5% growth in business investment," economists said.

3. The job market will strengthen

The employment picture could look a lot stronger in 2025. Unemployment will likely fall back to around 4% by the end of 2025, Goldman predicted, slightly lower than the 4.2% jobless rate recorded in November.

"Job openings remain high and strong final demand growth should keep labor demand growing robustly. Meanwhile, the surge in immigrant labor supply that the labor market struggled to fully absorb this year has already slowed sharply and will fade further," the note added.

4. The Fed will cut rates more than expected

Goldman Sachs is expecting the Fed to cut rates three times next year, with decreases to the fed funds rate coming in March, June, and September. That reflects a slightly more aggressive pace of easing than what investors and Fed officials themselves are expecting, with the latest projections showing the central bank eyeing two rate cuts for 2025.

"Both our baseline and probability-weighted Fed forecasts are more dovish than market pricing, which reflects both our confidence that the underlying inflation trend will continue to decline and our view that the risks for interest rates from policy changes under the second Trump administration are more two-sided than widely assumed," the bank said.

Economists have said that some of Trump's proposed policies, like his plan to levy steep tariffs, could cause inflation to spike and interest rates to rise. Trump implemented tariffs during his first term as president without a significant price increase, but his tariff plan this time around is much broader, explaining the difference in inflation forecasts.

5. Inflation will keep cooling

Price growth, though, will likely continue to decline, Goldman predicted. The bank forecast core personal expenditures inflation —the Fed's preferred measure that excludes volatile food and energy prices — to fall to 2.1% by the end of next year, down from the 2.8% growth recorded in November.

The decline will be partly driven by "catch-up inflation" ending next year, the bank said, referring to how real inflation in the economy often lags behind the official statistics. Areas that typically lag, like car insurance and rent prices, have started to cool in recent months.

Wage growth, another factor that influences inflation, is also starting to cool, which should help lower price growth. Wages grew just 3.9% over the last year, down from the recorded 4.7% in 2023, according to Goldman Sachs data.

Goldman remains solidly bullish on stocks going into the new year. Previously, the bank's strategists predicted the S&P 500 could rise to 6,500 by the end of 2025, implying 10% upside from current levels.