The job market shows signs of further cooling, teeing up a potential Fed rate cut. Despite lower than expected jobs report, the Federal Reserve is expected to cut interest rates in September. Join Simply Economics as we analyze the implications of these developments on various sectors and explore the economic plans of key political figures. Stay informed about the state of the economy and its potential impact on businesses, consumers, and investors.
Sources:
https://finance.yahoo.com/news/job-market-shows-signs-further-231649497.html
https://www.nbcnews.com/meet-the-press/video/federal-reserve-expected-to-cut-interest-rates-in-september-despite-lower-than-expected-jobs-report-218785861885
https://finance.yahoo.com/news/job-market-shows-signs-further-231649497.html
https://bakersfieldnow.com/news/local/us-adds-jobs-but-some-economists-fear-recession-maybe-looming
Outline:
(00:00:00) Introduction
(00:00:43) Federal Reserve expected to cut interest rates in September despite lower than expected jobs report
(00:03:29) U.S. adds jobs but some economists fear 'recession' maybe looming
Simply Economics
Job Market Cooling, Fed Rate Cut Speculation, and Economic Impact
The job market shows signs of further cooling, teeing up a potential Fed rate cut. Despite lower than expected jobs report, the Federal Reserve is expected to cut interest rates in September. Join Simply Economics as we analyze the implications of these developments on various sectors and explore the economic plans of key political figures. Stay informed about the state of the economy and its potential impact on businesses, consumers, and investors.Sources:https://finance.yahoo.com/news/job-market-shows-signs-further-231649497.htmlhttps://www.nbcnews.com/meet-the-press/video/federal-reserve-expected-to-cut-interest-rates-in-september-despite-lower-than-expected-jobs-report-218785861885https://finance.yahoo.com/news/job-market-shows-signs-further-231649497.htmlhttps://bakersfieldnow.com/news/local/us-adds-jobs-but-some-economists-fear-recession-maybe-loomingOutline:(00:00:00) Introduction(00:00:43) Federal Reserve expected to cut interest rates in September despite lower than expected jobs report(00:03:29) U.S. adds jobs but some economists fear 'recession' maybe looming
- Duration:
- 6m
- Broadcast on:
- 07 Sep 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Saturday, September 7th. On today's show, the job market shows signs of further cooling, teeing up a Fed rate cut. The Federal Reserve is expected to cut interest rates in September, despite a lower-than-expected jobs report. Plus, the U.S. adds jobs, but some economists fear a recession may be looming. This coverage, and more, up next. I'm David, and you're listening to Simply Economics. I apologize for the confusion, but it appears that the closing and opening sentences you provided are incomplete or missing key information needed for me to generate a proper transition. However, shifting gears to the economy, the Federal Reserve is expected to cut interest rates in September, despite a lower-than-expected August jobs report. For more on this, let's bring in our economics correspondent. The jobs numbers fell short of expectations, but it seems the Fed was actually hoping for a cooling in the job market as it tries to get inflation under control. Can you explain the Fed's thinking here? That's right, David. The Fed has been aggressively raising interest rates for over a year now, in an effort to slow the economy and bring down persistently high inflation. One of the key things they look at is the labor market. When the job market is really tight with low unemployment and lots of job openings, it tends to put upward pressure on wages and prices. So even though fewer jobs were added in August than expected, the unemployment rate actually ticked down to 3.5 percent, tied for the lowest level in decades. Average hourly earnings also rose more than anticipated, so the Fed likely sees the labor market as still quite hot and inflationary pressure still strong. This probably keeps them on track for another interest rate hike in a few weeks, albeit perhaps a smaller one than the last couple of 0.75 percentage point increases. So in an interesting twist, bad news on the jobs front might actually be what the Fed wants to see right now. But what about concerns that the Fed could overdo it with the rate hikes and tip the economy into a recession? There's a delicate balance they need to strike here. No? Absolutely. It's a very tricky needle to thread for the Fed. Raise rates too much too fast and they risk slamming the brakes on the economy, causing a so-called hard landing recession, but move too slowly or timidly and inflation could become even more entrenched. Fed Chair Jerome Powell has acknowledged they are trying to achieve a soft landing where growth slows to a more sustainable pace and inflation comes down, but a painful recession is avoided. The problem is, historically, the Fed has often struggled to pull that off. More often than not, significant Fed rate hike cycles have ended in economic downturns. But policymakers still seem to think that a soft landing is possible here if they are sufficiently aggressive now. It's a high-stakes gamble, though, and there will likely be more economic pain to come in terms of higher unemployment and slower growth as they continue to tighten monetary policy. Thanks for helping us break down this challenging and uncertain economic environment, with a lot on the line for the Fed, businesses, and American households. We appreciate the insights. Speaking of economic challenges, the U.S. job market saw a 142,000 job increase in August, but economists warned the worst may be yet to come, especially for workers in California's Central Valley. For more on this, we turn to our economics correspondent. What are the main concerns here for the job market going forward? The key issue is that the job numbers in August came in lower than expected, which is concerning for the labor market outlook. This is especially worrisome for workers in the Central Valley region of California, which tends to be very vulnerable to economic downturns. Much depends on the Federal Reserve's next moves regarding interest rate hikes. If the Fed raises rates too aggressively in an effort to tame inflation, it could potentially tip the economy into a recession. And what would a recession mean for workers in this region of California in particular? A recession would likely lead to a slowdown in wage growth and a reduction in hours worked, especially for those employed by small local businesses. Small business owners facing an economic crunch may not be able to afford to keep as many people on the payroll or provide them with as many hours. So rather than outright layoffs, workers could see their incomes shrink due to cutbacks in hours. Any workers better positioned to weather a potential downturn. Workers with specialized skills and higher levels of education tend to fare better during recessions. Those who have in-demand skills, degrees, or vocational training are more likely to retain stable employment. Economists advise that gaining additional skills through a university, community college, or trade school can boost workers' resiliency and employability, even during challenging economic times. As one expert put it, "Education never hurts when it comes to weathering a tough job market." Thanks for the context and analysis on the potential recession. It's certainly been a while since the U.S. economy has faced this type of challenge, so we'll be sure to keep a close eye on the employment data and the Fed's moves in the coming months. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]