According to the latest jobs report, the US added 199,000 jobs in the month of November while unemployment fell to 3.7%, both data points contrary to economists' expectations.

RSM Chief Economist Joe Brusuelas likens this labor print as "just another in a steady drumbeat of positive economic news," while Wolfe Research Chief Economist Stephanie Roth believes markets could re-adjust after running with the Federal Reserve's previous employment narrative.

"By the time we get to the second half of next year, the Fed will be well-positioned to cut rates because we're going to be headed towards 2.5% on core and top-line inflation by the end of next year," Brusuelas tells Yahoo Finance, elaborating on the Fed's inflation and recession outlooks for 2024.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

This post was written by Luke Carberry Mogan.

Video Transcript

- Well, we're going to go to our panel here.

I'm lucky to be joined by a former Bloomberg here with me, Joe, RSM chief economist.

And Stephanie Roth, Wolff's research chief economist to discuss this jobs report.

Joe, I want to go to you first.

What is the big thing sticking out to you here?

JOE BRUSUELAS: This is what a soft landing looks like.

This is what full employment looks like.

You should like full employment.

I like full employment.

We all should like full employment.

This is just another in a steady drumbeat of very positive economic news.

BRAD SMITH: If you're a Fed Chair Jay Powell, Stephanie, and dusting off your slippers this morning or the pouring out your cup of coffee or whatever tea he might like to drink, what's your read on this at the end of the day?

STEPHANIE ROTH: He probably doesn't feel great about it.

I hear you full employment is good, but this isn't exactly the kind of print they were probably hoping for.

I mean, especially the household survey, that was pretty hot.

It was saw over 700,000 gains in employed workers there.

Granted it's a volatile survey, but that took the unemployment rate down 2/10.

So.

BRAD SMITH: Does it take us so tremendously off trend that it's going to have the Fed, kind of, realigning or changing their tenor in these meetings right now?

STEPHANIE ROTH: Not necessarily, but I think the market took the Fed's kind of ran with this narrative.

And I think that's going to have to get reversed to some extent, at least, after this print.

Granted the data are really volatile, this is a very seasonal month for payrolls.

But it's just not exactly what the Fed was hoping for.

JOE BRUSUELAS: Fixed income markets a bit overbought.

The appropriate or fair value should be around 4 and 1/2 percent on the 10 year.

Look, once you lop off the 35,000 that we saw come back into the market, you've got a much better number, in terms of Fed centric view, they're not going to do anything next week.

They're on hold.

Now, we think there will be rate cuts, but in the second half of the year, primarily, because we've got a maturity wall of debt coming due in 2025 and a huge tax cliff coming on the policy side.

Best central banking policy is always forward looking.

I think by the time we get to the second half of next year, the Fed will be well-positioned to cut rates because we're going to be headed towards 2 and 1/2 percent on core and top line inflation by the end of next year.

- But if it's forward looking, how do you continue to have the soft landing narrative when average hourly earnings are still a beat, we're seeing the market reacting to that.

How do we get to 2% inflation with this strong labor market?

JOE BRUSUELAS: Because we can look at the Cleveland Fed's new tenant rent index.

And we can see the dragging down of top line inflation that's in front of us because of the easing in rents.

Moreover, when you take a look at the trend in underlying wage growth, we're moving towards three, 3 and 1/2, which is what the Fed wants to see and what's stable.

Look, one era ended.

The era of zero interest rates is over.

All of that data is very nice to talk about, but it's in the rear view mirror.

And I think going forward, 3 to 3 and 1/2 percent on wages is what we should expect.

Look, the economy is going to continue to expand.

We think there's a 25% probability of a recession, 75% probability that we just continue to grow.

Yes, things are going to slow.

Hiring is going to slow.

But it doesn't mean things are going to turn over.

And I think one of the big takeaways about all of the data.

Slowing doesn't mean stalling.