Everyone who sees Jerome Powell as a flash of warning for the US economy

The Federal Open Market Committee (FOMC) previously left rates in the range of 4.25% to 4.50% at its July meeting. Mounting pressure from President Donald Trump Above Chairperson Jerome Powell for Cutting. Of course, the July employment report is changing the picture quickly.

The Labor Bureau reported profits of just 73,000 non-farm payroll employment in July. This is well below consensus forecasts. What’s even more troublesome was the serious downward revision. In May and June, we reduced a total of 258,000 jobs from previous estimates, reducing the average monthly profit to less than 20,000 people per month. Although the number in July alone does not spell out the crisis, the successive weakness and massive revisions have sparked investors’ concerns about the potential cracks forming in the US labor market. Powell has repeatedly emphasized the balance between labor demand and demand, and the unemployment rate is “An important indicator to look at.” The unemployment rate in July reached up to 4.2%, slightly shy at a height of 12 months, providing further evidence of softening conditions.

The market response was quick. Stephen Brownthe vice-director of North American economics at research firm Capital Economics, called it a “paying shocker.” He noted the immediate changes in the market that reduced the possibility of September rate cuts from less than 50% of employment data by 85% as futures traders bet that the Federal Open Market Committee needs to respond to mount evidence of economic softening.

“We’re committed to providing a range of services to our customers,” said Brian Rose, senior US economist at UBS Global Wealth Management. luck Intelligence. Rose shows GDP data show that the economy’s growth, which grows at a rate of 1.2% per year in the first half of 2025, is well below the long-term trend of 2.0%. “Soft data is expected in the second half of 2025, which should help offset some of the inflationary pressures driven by the tariff hike,” he added.

Other recent data bolsters photos of the tense economy. Research indicators such as the ISM Manufacturing Employment Index fell further in July, but business capital spending measures recovered conservatively following the “liberation date” in April. Meanwhile, President Trump’s new tariff measures have pushed up import costs and increased inflation outlook.

Awfully mixed signal

The July salary decline that comes soon after the devastating “liberation day” in April may not yet inform a deeper work slide, other data suggests. Brown noted that initial unemployment claims fell to 218,000 last week, and continued claims have been steadily declining since the peak in early June.

Analysts hope Powell will use future use Jackson Hole Economic Symposium will be held from August 21st to 23rd. As an opportunity to show that central banks are ready for action if the labor market continues to weaken and greater inflation effects from tariffs do not materialize.

Rose’s baseline scenario saw a Fed reopening rate cut at its September meeting, continuing its 25 basis points reductions per meeting through January, trimming federal funding rates at full points to bring borrowing costs back to “nearly neutral” levels.

“Given this morning’s data, Powell may be happy to drop the hint that the Fed is leaning towards a September cut,” Rose said.

For this story, luck Generated AI was used to assist with initial drafts. The editors checked the accuracy of the information prior to publication.