A Goldman Sachs executive is warning that the US economy is losing momentum after a sharp downward revision in job creation over the past few months.
On Friday, the Bureau of Labor Statistics (BLS) revised down the job growth figures for June from 147,000 to 14,000, a 90% drop.
Figures for May were also revised down from 144,000 to 19,000, bringing the combined two-month downward revision to 258,000 jobs.
In a new CNBC interview, Goldman Sachs chief economist Jan Hatzius says the jobs data suggest that the US economy is losing steam.
“Weeks ago, we wrote a report with the title ‘Stall Speed.’ We have only a little more than 1% growth in GDP in the first half and with this jobs number, I think that brings the picture to clearly stall speed image.
I’m looking at an economy that is still growing but is growing very slowly. And the unemployment rate is drifting higher, gradually. But I do think that the downside risks in the labor market…. are definitely there.”
According to Hatzius, the Fed now has the green light to cut rates in the coming months to support the labor market.
“I think it makes it even more likely that they’re going to cut in September. We have had a series of 25 basis point cuts in September, October, December and to me that seems very likely.
And it could be more.
It’s certainly a reasonable idea that we’re in the restrictive territory, but this sort of data suggests that maybe we should get back to neutral a little bit more quickly. We have that happening over a longer period of time, but you could accelerate the process.”
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