Evelyn Reynolds

Federal Reserve officials are moving toward their first rate cut since the 2020 pandemic downturn as they try to keep the economy from cooling too much. Friday’s fresh jobs data gave them reasons for both comfort and concern.Unemployment eased slightly to 4.2 percent in August, from 4.3 percent in July — a sign that joblessness has not started a relentless march upward, which is welcome news for both American workers and Fed officials. But hiring was weaker than economists had expected, with 142,000 jobs added in August.Altogether, the report suggested that the job market was slowing, but not imploding, more than two years into the Fed’s campaign to slow the economy with higher interest rates. That has kept Fed officials noncommittal and investors guessing about just how much the Fed will cut rates this month.Fed policymakers raised interest rates starting in 2022 to tap the brakes on a hot economy. At the time, hiring was rapid and wage growth robust, and officials worried that a burst of rapid inflation would not fade on its own against that backdrop. They ultimately lifted borrowing costs to a more-than-two-decade high of 5.3 percent, where they remain.But inflation has been cooling notably and wage gains have been steadily moderating, so Fed officials have become increasingly wary of overdoing it. They wanted to return the job market and economy to a sustainable pace, but they do not want to cause either to crash.That is why the Fed is poised to lower interest rates. The question has been whether policymakers will cut rates by a quarter percentage point or a half percentage point at their Sept. 17-18 gathering. That was one reason that Wall Street was intently focused on Friday’s jobs report: If it showed clear cracks in the labor market, investors expected it to prod the Fed toward a bigger rate cut.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Employers added 142,000 jobs in August, fewer than economists had expected, and previous months were revised downward.The labor market appears to be treading water, with employers’ desire to hire staying just ahead of the supply of workers looking for jobs.That’s the picture that emerges from the August jobs report, released on Friday, which offered evidence that while softer than it has been in years, the landscape for employment remains healthy, with wages still growing and Americans still eager to work.“This report does not indicate that we’re taking another step toward a recession, but we’re still seeing further signs of cooling,” said Sam Kuhn, an economist with the recruitment software company Appcast. “We’re trending more closely to a 2019 labor market, than the labor market in 2010 or 2011.”Employers added 142,000 positions last month, the Labor Department reported. That was somewhat fewer than forecast, bringing the three-month average to 116,000 jobs after the two prior summer months were revised down significantly. Over the year before June, the monthly average was 220,000, although that number is expected to shrink when annual revisions are finalized next year.The unemployment rate edged down to 4.2 percent, alleviating concerns that it was on a steep upward trajectory after July’s jump to 4.3 percent, which appears to have been driven by weather-related temporary layoffs.In other signs of stability, the average workweek ticked up to 34.3 hours and wages grew 0.4 percent over the month, slightly more than economists had expected but not enough to add significant fuel to inflation.Wages Are Outpacing InflationYear-over-year percentage change in earnings vs. inflation More

The unemployment rate for Black workers fell to 6.1% in August from 6.3% in July.
The jobless rate slipped for both Black men and Hispanic women.
The labor force participation rate held steady for white workers but decreased for Black and Asian workers.

An attendee takes information about a California State job at a City Career Fair hiring event in Sacramento, California, on June 5, 2024.
David Paul Morris | Bloomberg | Getty Images

The unemployment rate for Black workers fell in August, according to data released Friday by the Department of Labor.
In August, Black workers saw their jobless rate fall to 6.1% from 6.3% in the month prior. This trend was in line with the overall unemployment rate for the country, which ticked down to 4.2% in August from July.

On the other hand, unemployment for white workers held steady at 3.8%. The jobless rate also rose for Asian and Hispanic workers. For the former, it increased to 4.1% from 3.7%. For the latter, it crept higher to 5.5% from 5.3%.
Black men experienced a big month-to-month drop in unemployment, with their jobless rates falling to 5.9% from 6.6%. On the other hand, the unemployment rate held steady at 5.5% for Black women.

While Hispanic women saw their jobless rate fall to 5% from 5.4%, unemployment rates for their male counterparts climbed to 4.8% from 4.4%. The unemployment rate for white men also ticked higher to 3.6% from 3.5%, while it was unchanged at 3.4% for white women.
Diving into the employment-to-population ratio for female prime-age workers, or those ages 25 to 54, paints a very optimistic view of the labor market, according to Elise Gould, senior economist at the Economic Policy Institute.
“The employment-to-population ratio for women’s prime-age workers remains at a quarter-century high,” she told CNBC. “This remains very strong, even if there is still a little bit of softening in other measures.”

“It makes sense we’ll see some weakness now that we’re approaching full employment,” Gould added.
Last month, the labor force participation rate — the percentage of the population that is either employed or actively seeking work — remained unchanged at 62.7%.

Among white workers, the rate steadied, while it fell to 62.7% from 63.2% for Black workers. Within Asian workers, the participation slipped to 65.4% from 65.7%, and rose among Hispanic workers to 67.8% from 67.3%.
— CNBC’s Gabriel Cortes contributed to this report.
Correction: The unemployment rate for Black women held steady at 5.5%. A previous version misstated the percentage.

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“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Fed Governor Christopher Waller said.
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to belief that the pace of hiring is weakening.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, DC, US, on Friday, March 22, 2024. A trio of central bank decisions this week sent a clear message to markets that officials are preparing to loosen monetary policy, reigniting investor appetite for risk.
Bloomberg | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller on Friday backed an interest rate cut at the upcoming central bank policy meeting in less than two weeks, and indicated he’d be open to a substantial reduction if necessary.
“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Waller said in remarks prepared for the Council on Foreign Relations in New York.

Other policymakers recently have advocated easing policy soon, but this is one of the clearest indications it will happen at the Sept. 17-18 Federal Open Market Committee meeting. Waller repeated verbiage that Fed Chair Jerome Powell used in late August — that the “time has come” for adjustments to monetary policy.
“Determining the pace of rate cuts and ultimately the total reduction in the policy rate are decisions that lie in the future,” Waller added. He noted that he is “open-minded about the size and pace of cuts” and said, “If the data suggests the need for larger cuts, then I will support that as well.”
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to the belief that the pace of hiring is weakening. The Labor Department reported job growth of 142,000, higher than July but still below the 161,000 Dow Jones forecast.
Waller did not specify how much he thinks the Fed should cut or how frequently. But he said he is open to the possibility that it may need to be aggressive in keeping the labor market afloat as inflation moderates toward the central bank’s 2% goal.
He noted that if the labor market deteriorates more quickly than expected, the Fed should react with larger cuts, which he said would lead to “a greater likelihood of achieving a soft landing.”

“Furthermore, I do not expect this first cut to be the last. With inflation and employment near our longer-run goals and the labor market moderating, it is likely that a series of reductions will be appropriate,” he said.
Futures market pricing following the jobs report tilted toward a greater likelihood of a quarter percentage point rate reduction this month. But it also indicated more aggressive moves later in the year, with a half-point move in November and possibly another in December, according to the CME Group’s FedWatch measure.

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The August jobs report came in weaker than expected.
Employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance.

Getty Images

The August jobs report came in weaker than expected, and employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance, with each category adding more than 40,000 jobs, according to data from the Bureau of Labor Statistics.

If private education is included with the health-care group, as some economists do, that category would have grown by 47,000 jobs.
Elsewhere in the report, related categories of jobs saw conflicting data. Construction was a bright spot, growing by 34,000 jobs, but manufacturing shed 24,000 jobs. Professional and business services ticked up by 8,000 jobs, but information lost 7,000.
“The job growth is coming really from only three places right now: leisure and hospitality, health and education services, and government. … We’re just not seeing a lot of growth in business and professional services, and I think that is indicative of an economy that’s slowing down,” former Department of Labor chief economist Betsey Stevenson said on CNBC’s “Squawk Box.”
Even some of the stronger categories showed a slowdown, at least temporarily. The health-care subsector added 31,000 jobs, or about half its average over the prior 12 months, according to the Bureau of Labor Statistics.

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The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labor market while also clearing the way for the Federal Reserve to lower interest rates later this month.
Nonfarm payrolls expanded by 142,000 during the month, up from 89,000 in July and below the 161,000 consensus forecast from Dow Jones, according to a report Friday from the Labor Department’s Bureau of Labor Statistics.

At the same time, the unemployment rate ticked down to 4.2%, as expected.
The labor force expanded by 120,000 for the month, helping push the jobless level down by 0.1 percentage point, though the labor force participation rate held at 62.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021.
The household survey, which is used to calculate the unemployment rate and is often more volatile than the survey of establishments, showed employment growth of 168,000.The balance, though, tilted towards part-time employment, which increased by 527,000, while full-time fell by 438,000.

Markets showed little initial reaction to the data, with stock futures holding negative and Treasury yields also lower.
While the August numbers were close to expectations, the previous two months saw substantial downward revisions. The BLS cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000.

“I don’t like this a whole lot. It’s not disaster, but it’s below expectations on the headline, and what really bothers me is the revisions,” said Dan North, senior economist for North America at Allianz Trade. “This is certainly going the wrong way.”
From a sector standpoint, construction led with 34,000 additional jobs. Other substantial gainers included health care, with 31,000, and social assistance, which saw growth of 13,000. Manufacturing lost 24,000 on the month.
On wages, average hourly earnings increased by 0.4% on the month and 3.8% from a year ago, both higher than the respective estimates for 0.3% and 3.7%. Hours worked edged higher to 34.3.

The report comes with markets on edge over the next step for the Fed, which has been on hold with rates since July 2023 after having enacted a series of sharp increases to bring down inflation.
Heading into the release, markets had been pricing in a 100% probability that the Fed will start cutting rates when it meets Sept. 17-18. The only question was how much.
Following the payrolls release, futures market pricing tilted towards a half percentage point cut, according to the CME Group’s FedWatch gauge.
“For the Fed, the decision comes down to deciding which is the bigger risk: reigniting inflation pressures if they cut by 50 [basis points] or threatening recession if they only cut by 25 [basis points],” said Seema Shah, chief global strategist at Principal Asset Management. “On balance, with inflation pressures subdued, there is no reason for the Fed not to err on the side of caution and frontload rate cuts.”
The recent narrative for the economic data has indicated continuing growth but a slowdown for the labor market. Payrolls processing firm ADP reported Thursday that private companies added just 99,000 jobs in August, while outplacement firm Challenger, Gray & Christmas reported that layoffs surged in August and hiring had hit its slowest year-to-date pace going back to at least 2005.
The BLS report indicated that the private sector added 118,000 jobs for the month, up from 74,000 in July. Government jobs increased by 24,000.
Most Fed officials have indicated that they also see rates coming down. In his pivotal annual speech at the Fed’s Jackson Hole, Wyoming conclave, Chair Jerome Powell proclaimed that “the time has come” to adjust policy, though he provided no specifics for what that meant.
In a speech Friday morning, New York Fed President John Williams endorsed rate cuts.
“With the economy now in equipoise and inflation on a path to 2 percent, it is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” Williams said in remarks before the Council on Foreign Relations in New York.
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Japanese chip companies are tapping billions of dollars and collaborating with foreign firms as part of new government policies that look outward.China’s envy-inducing success in using industrial policy to expand its economy and finance green manufacturing has helped kick off a fevered scrimmage among nations to develop and protect their own hometown businesses.It has been 40 years since such competitive anxieties about a rising Asian power prompted this kind of embrace of government intervention among the biggest free-market economies.Only then it was Japan, not China, that was the source of unease.Michael Crichton’s 1992 thriller, “Rising Sun,” with its dark depiction of Japan’s ruthless economic warriors, ruled the best-seller lists, alongside nonfiction titles that warned of the financial and technology juggernaut created by Japan’s powerful government trade ministry.In a 1990 survey, nearly two-thirds of Americans said Japanese investment in the United States posed a threat to American economic independence.It turned out that the anxiety about Japan Inc. peaked just as the country began a long economic slide after the collapse of real estate and stock market bubbles.Now, after a period of stagnation that Japan’s economy ministry refers to as “the lost three decades,” Tokyo is engaged in a multibillion-dollar industrial policy to jump-start the lackluster economy and recapture its position as a tech innovator.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Former President Donald J. Trump called for the creation of a government efficiency commission in an economic speech in New York on Thursday, adopting a policy idea that was pitched to him by the billionaire businessman Elon Musk.Mr. Trump said that Mr. Musk would also lead the commission, which would conduct a sweeping audit of the federal government and recommend “drastic reforms” for cutting waste. He said the commission would save “trillions of dollars.”In a wide-ranging and sometimes meandering speech that lasted more than an hour, Mr. Trump recast his first-term record as an economic miracle and renewed his pitch for lowering taxes and raising tariffs on imports, often disregarding some of the potential implications of his new proposals.The trade wars that Mr. Trump started had painful consequences for American farmers, and the new tariffs that he called for would also likely trigger backlash and retaliation from other countries. Mr. Trump claimed that his new tax cuts would be paid for by spurring economic growth, but the 2017 tax cuts he enacted increased the national debt and his growth projections never panned out.Mr. Trump’s embrace of the concept of a government efficiency commission — a favorite Washington solution for delaying dealing with hard problems — comes as he is trying to define how his stewardship of the economy would differ from that of his Democratic opponent, Vice President Kamala Harris. He has assailed her economic vision as one that would saddle the economy with wasteful spending and burdensome regulations.During his speech, Mr. Trump also vowed to eliminate 10 existing government regulations for every new regulation added under his potential new administration. Mr. Trump — who during his presidency issued an executive order vowing a similar two-for-one rule — argued that the cost of regulations was being passed onto consumers.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More