AUGUST 26, 2024 – HUGE JOBS REVISION CREATES URGENCY FOR A RATE CUT
The non-farm payroll numbers were revised down by 30 percent from what was initially reported in the 12-month period from March 2023-2024. The US economy created 818,000 fewer jobs, which averages to 174,000 monthly gains versus the reported 242,000. More than 2 million jobs were created in that period, which is solid, but not as strong as was initially reported. It is widely believed this weaker labor market will push the Fed to act next month.
Following the data, Fed Chair Jerome Powell spoke at the Fed’s annual gathering at Jackson Hole and declared the “time has come” for rate cuts. Powell said, “the cooling in the labor market conditions is unmistakable.” Now the question is the magnitude of the first rate cut in over four years; investors are split between 25 and 50 basis points. Based on Powell’s lack of specifics, there seems to be leeway for greater rate reductions later this year, if the labor market continues to weaken.
The Fed will meet September 17-18 and will have in hand another monthly jobs report as well as more inflation data. The Fed has set meetings in November and December.