+34
Source of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
It looks like the market is finally going to get what it has wanted for over a year—that the labor market was on much weaker footing than previously thought. Economists had forecast a cooling of demand for workers to bring monthly payroll growth down to 180,000.
Instead, thePerhaps even more importantly, the unemployment rate unexpectedly surged higher. Defying expectations for the rate to match the prior month’s 4.1 percent, it jumped to 4.3 percent. That’s, when the economy was still rebuilding itself after the pandemic and lockdowns.the risks to the two sides of its dual mandate —by law the Fed is required to pursue maximum employment and stable prices—to be roughly in balance. That meant that in the Fed’s view there were roughly equal risks that the labor market might weaken or that inflation might accelerate or become stuck at too high of a level.. While 114,000 jobs is not really all that bad—it would have been considered a decent report in the not-so-distant past—and a 4.3 percent unemployment rate is still low by historical standards, the sudden and unanticipated slump in hiring and rise in joblessness indicates a fragility to the economy that was only hazily glimpsed in earlier economic data.made it clear that they expect to cut this year . The big difference among Fed officials appeared to be that some would have preferred to cut earlier than others, reflecting different views of the risks to employment and inflation. Powell, at his press conference on Wednesday, seemed to clearly lean toward a preference to cutting in September—so long as the data could plausibly justify a cut.. As a result, we think it locks in a September rate cut. Even those at the Fed who might still worry about inflationary risks are likely to be persuaded to go along with cutting now.shows that there is very good reason for the Fed to worry about a sudden rise in the unemployment rate. Sahm’s research shows that when the three-month moving average of the unemployment rate moves a half percentage point above the lowest three-month average hit in the past 12 months, the economy is typically already in a recession. This has become known as. A slow drive up in the unemployment rate is not necessarily a recession indicator. Neither is a temporary spike in unemployment. And coming close to the threshold tells us nothing about the economy. You need the near-term average to rise by a half percentage point above the lowest average over the past year to trigger the recession signal.the threshold in July. According to the the real time Sahm Rule measure maintained by the Federal Reserve Bank of St. Louis,Sahm herself told the financial press on Friday that she does not think we’re in a recession but thatOne reason to think that we might not be in a recession is that even though we’ve seen a rapid increase, the unemployment rate is still very low by historical standards. Prior the the Trump presidency, the unemployment rate had not been as low as 4.3 percent since 2001.over our southern border and the Biden administration’s likely lawless grant of work permits. This has. What’s more, the post-pandemic economy has triggered a host of once reliable recession indicators—the inverted yield curve, plunging leading economic indicators, depressed consumer confidence—that turned out to be false alarms. One way of thinking about the Sahm Rule is not as a foolproof way of detecting a recession, the definition of which is subjective and open to debate, but as. Sahm advocates automatic fiscal stabilizers, such as stimulus checks, when the half-point threshold is crossed. Fed officials, however, are likely to see the threshold as a reason to start cutting rates—if only because that is the economic tool they’ve been given.Ironically, the market got what it wanted—and then immediately threw a fit. Thefollowing the release of the jobs numbers, reversing the recent pattern in which bad news for the economy was good news for stocks. The reason the reaction is different this time is that the market was already assuming a rate cut. So it no longer sees bad news as necessary to produce a cut., a soft-landing cut that would indicate an end to the risk of higher inflation but not concerns over a sharp slump. What it didn’t want was, a cut needed to fend off or ameliorate a recession. Bad news is bad news again. Federal Reserve Chair Jerome Powell answers reporters’ questions at the Federal Open Market Committee press conference on July 31, 2024. . The Democrats were desperately seeking a “good news” Fed cut, one that would allow them to declare that they had vanquished the beast of inflation, presumably by lecturing us nonstop about the evils of corporate greed. The trouble for the Fed was that a voluntary, good news cut ahead of the election would smack of partisan politics. If the economy was not in danger, why not wait until after the election? Now the Fed can justify its cut based on economic fundamentals. But those economic fundamentals—a deteriorating job market and risk of recession—will make itto try to convince Americans that the Biden-Harris administration’s economic stewardship has not been the catastrophe public opinion polls show so many believe it to be.. We do not think that the Fed is likely to heed calls for an emergency rate cut before the September meeting or super-size the cut to a half point, which some Wall Street analysts are now predicting. Instead, the Fed will likely proceed gradually, cutting at a measured pace, with an eye still toward an inflation rate that remains above the two percent target.
Scratch the next story
United States Latest News, United States Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
Breitbart Business Digest: Tariffs Are Not Taxes on American ConsumersSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Breitbart Business Digest: Depressed Consumers Are Bad News for Kamala HarrisSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Breitbart Business Digest: Will the Fed Push Back on Expectations for a September Cut?Source of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Breitbart Business Digest: Kamala Harris Was the Biggest Cheerleader for BidenomicsSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Breitbart Business Digest: Trump Proposes an End to the Stealth Social Security Tax on RetireesSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Breitbart Business Digest: Manufacturing’s Slump Undermines Key Kamala Harris ClaimSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »