Job Losses Opens Door to Rate Cuts
The morning of Aug. 22, Fed chair Jerome Powell gave a speech at the annual Jackson Hole economic symposium signaling a possible September cut to interest rates. Powell stated that “the balance of risks appear to be shifting,” and he sees a “challenging situation” as tariffs drive up costs and the labor market appears to soften.
Key Takeaways:
Decisions for interest rate cuts are not preestablished, however, they may occur as early as September.
The July jobs report, published Aug. 1, showed that the U.S. economy added 73,000 jobs last month, while some 258,000 jobs were wiped away in revisions to May and June's data. Over the last three months, job gains have averaged just 35,000.
Direct quotes from Powell’s speech:
"While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers.”
"This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment."
Want to know more? See: Powell's Jackson Hole speech turns Fed's focus toward 'curious' labor market | Yahoo! Finance
Source: J.P.Morgan Wealth Management