Banking giant Goldman Sachs believes that last month’s weak jobs report has guaranteed that the Fed will step in and cut rates.
Data from the Bureau of Labor Statistics shows that the US economy added just 22,000 jobs in August, well below the consensus expectation of 75,000.
[adinserter block="1"]Meanwhile, the unemployment rate ticked up from 4.2% in July to 4.3% last month.
In a CNBC Television interview, Goldman Sachs chief economist Jan Hatzius predicts that the Fed will cut rates this month and in other meetings this year in an effort to shore up the job market.
“It was a little bit weaker than we had expected, but we’ve been looking for a somewhat soft report with an increase in the unemployment rate, with a sort of subconsensus job gain. I think the implication is that the labor market continues to be pretty slow. Hiring is very slow. Layoffs are still low, but the labor market’s softening.
And my main takeaway is that this seals the case for the cut in September that we’ve been looking for a while, and probably additional cuts beyond that. We have cuts in October and December as well, and I think that looks quite likely.
Obviously, that’s going to depend on the data. But I feel very good about the forecast.”
Hatzius says the bank has put the odds of a US recession at 30%.
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