December’s employment number was a blockbuster. The U.S. economy added 312,000 new jobs during the month and the figures for the prior two months were revised upward by 58,000. And while the unemployment rate did tick up to 3.9%, the increase was primarily caused by workers re-entering the workforce as the labor force participation rate matched a multiyear high of 63.1%.

The employment report helped to counter other concerns of a slowing economy. The widely followed purchasing managers’ report on manufacturing fell sharply in December to 54.1 from 59.3 in November, but still remained well above the 50 mark, which indicates continued expansion.

Equity and fixed income markets continued to exhibit increased volatility as investors tried to gauge the underlying economic strength both domestically and around the globe. The Federal Reserve (the “Fed”) took note of these conditions and Chairman Jerome Powell went out of his way to emphasize that the Fed’s forecasts of future rate increases are just that, forecasts, and that all monetary policy decisions would be based on economic and financial conditions at the time of the meeting. This caused many economists to dial back their expectations for rate increases during 2019.

The year 2019 began with an immense amount of uncertainty. While the strong employment report diminished concerns over an immediate downturn, clouds do seem to be gathering on the horizon. The trade tensions between China and the U.S. continue and have seeped into corporate executives’ explanations of factors in below-target profits. The outcome of Brexit remains a major question mark facing Europe as do leadership changes, fiscal policy and political unrest. Here in the U.S., the era of divided government has not started well, with an ongoing partial government shutdown and little hope for meaningful bipartisan cooperation. Putting aside political pressure, Fed officials will be watching how all this unfolds. With no real signs of rising inflation, it is likely they will err on the side of caution.