Fed Chair Jerome Powell says the US labor market may be beginning to show signs of weakness.
In a speech at the National Association for Business Economics Global Economy conference in Philadelphia, Powell says that the latest economic data is suggesting growing downside risk to the labor markets, despite the economy being on a “firmer” footing.
[adinserter block="1"]Says Powell,
“Based on the data we do have, it’s fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago. Data available prior to the shutdown however, show that growth and economic activity may be on a somewhat firmer trajectory than expected.
While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labor force growth due to lower immigration and lower labor force participation. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen. While official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low and that both households’ perception of job availability and firms’ perception of hiring difficulties continue their downward trajectories.”
Powell’s comments are in line with increasing bets on another cut in the Fed Funds Rate at the next Federal Open Market Committee (FOMC).
According to the Chicago Mercantile Exchange’s (CME) Fed Watch, there is a 96% chance of a quarter-point rate cut.
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