Powell, Jerome H

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For the Fed, a Sign That the Job Market Is Cooling but Not Cracking

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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

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    Powell Faces Economic Crossroads as He Prepares to Speak at Jackson Hole

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    Jerome Powell, the Federal Reserve chair, will deliver remarks as inflation cools and growth holds up — but as labor market weakening threatens to interrupt the soft landing.Two years ago, Jerome H. Powell took the podium at the Federal Reserve Bank of Kansas City’s annual conference at Jackson Hole in Wyoming and warned America that lowering inflation would require some pain.On Friday, Mr. Powell, the Federal Reserve chair, will again deliver his most important policy speech of the year from that closely watched stage. But this time, he is much more likely to focus on how the Fed is trying to pull off what many onlookers once thought was unlikely, and maybe even impossible: a relatively painless soft landing.Both the Fed and the American economy are approaching a crossroads. Inflation has come down sharply since its 2022 peak of 9.1 percent, with the year-over-year increase in the Consumer Price Index falling to 2.9 percent in July. Given the progress, the critical question facing Fed officials is no longer how much economic damage it will take to wrestle price increases back under control. It is whether they can finish the job without inflicting much damage at all.That remains a big if.Consumer spending and overall economic growth have held up in the face of high interest rates, which are meant to cool demand and eventually weigh down inflation. But the job market is beginning to weaken. Revisions released this week showed that employers hired fewer workers in 2023 and early 2024 than was previously reported. The unemployment rate rose to 4.3 percent in July, up from 4.1 percent in June and 3.5 percent a year earlier. The latest jump could be a fluke — a hurricane messed with the data — but it could also be an early warning that the economy is hurtling toward the brink of a recession.That makes this a critical moment for the Fed. Officials have held interest rates at a two-decade high of 5.3 percent for a full year. Now, as they try to secure a soft and gentle economic landing, they are preparing to take their foot off the brake. Policymakers are widely expected to begin lowering rates at their meeting in September.Mr. Powell could use his speech to confirm that a rate cut is imminent. But most economists think that he will avoid detailing just how much and how quickly rates are likely to drop. Fed officials will receive a fresh jobs report on Sept. 6, providing a clearer idea of how the economy is shaping up before their Sept. 17-18 meeting.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

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    Americans Growing Worried About Losing Their Jobs, Labor Survey Shows

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    The New York Fed’s labor market survey showed cracks just as Jerome H. Powell, the Fed chair, prepares for a closely watched Friday speech.Americans are increasingly worried about losing their jobs, a new survey from the Federal Reserve Bank of New York released on Monday showed, a worrying sign at a moment when economists and central bankers are warily monitoring for cracks in the job market.The New York Fed’s July survey of labor market expectations showed that the expected likelihood of becoming unemployed rose to 4.4 percent on average, up from 3.9 percent a year earlier and the highest in data going back to 2014.In fact, the new data showed signs of the labor market cracking across a range of metrics. People reported leaving or losing jobs, marked down their salary expectations and increasingly thought that they would need to work past traditional retirement ages. The share of workers who reported searching for a job in the past four weeks jumped to 28.4 percent — the highest level since the data started — up from 19.4 percent in July 2023.The survey, which quizzes a nationally representative sample of people on their recent economic experience, suggested that meaningful fissures may be forming in the labor market. While it is just one report, it comes at a tense moment, as economists and central bankers watch nervously for signs that the job market is taking a turn for the worse.The unemployment rate has moved up notably over the past year, climbing to 4.3 percent in July. That has put many economy watchers on edge. The jobless rate rarely moves up as sharply as it has recently outside of an economic recession.But the slowdown in the labor market has not been widely backed up by other data. Jobless claims have moved up but remain relatively low. Consumer spending remains robust, with both overall retail sales data and company earnings reports suggesting that shoppers continue to open their wallets.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

  • 138 Shares169 Views

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    Trump Suggests that President Should Have a ‘Say’ in Interest Rates

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    Donald J. Trump suggested presidents should have input on interest rates, a comment likely to stoke fears that he could try to limit the Federal Reserve’s political independence.Donald J. Trump suggested on Thursday that the president should have a say in setting interest rates — a comment that could rekindle fears that the Republican nominee might try to influence the politically independent Federal Reserve if he is re-elected to the White House.“I feel that the president should have at least say in there, yeah, I feel that strongly,” Mr. Trump said at a news conference Thursday at his Mar-a-Lago club in Palm Beach, referring to the rate-setting process. “I think I have a better instinct than, in many cases, people that would be on the Federal Reserve, or the chairman.”Mr. Trump made a habit of loudly criticizing Fed policy while he was in office, often personally attacking Jerome H. Powell, the Fed chair.Mr. Trump elevated Mr. Powell to his leadership position, to which President Biden has since reappointed him. But Mr. Powell angered Mr. Trump by keeping interest rates higher than he would have preferred. Mr. Trump responded by calling the Fed chair and his colleagues “boneheads” and at another point asking in a social media post who was a bigger “enemy,” Mr. Powell or Xi Jinping, China’s president.Mr. Trump acknowledged that history of animosity on Thursday, saying that he “used to have it out with him.”While Mr. Trump flirted with the idea of firing Mr. Powell during his time in the Oval Office, it is not clear whether it would be legal to dismiss or demote a sitting Fed chair. In the end, Mr. Trump never tried it. Still, there have been big questions about what might await the Fed if Mr. Trump were to win re-election. Mr. Powell’s term as chair runs to mid-2026.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

  • 113 Shares159 Views

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    Fed Will Scour Jobs Report for Signs of Weakness

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    Federal Reserve officials held off on cutting interest rates this week because they want slightly more data to feel confident that inflation is truly coming under control. But while that approach is cautious when it comes to price increases, it could prove to be risky when it comes to the labor market.High Fed interest rates help to cool inflation by slowing demand in the economy. When it costs more to borrow to buy a house or expand a business, people make fewer big purchases and companies hire fewer workers. As economic activity pulls back, businesses struggle to raise prices as quickly, and inflation moderates.But that chain reaction can come at a serious cost to the job market. And as inflation comes down, Fed policymakers are increasingly attuned to the risk that they might overdo it, tipping the economy into a severe enough slowdown that it pushes unemployment higher and leaves Americans out of work.Those concerns were not enough to prod central bankers to cut interest rates at their meeting this week. For now, Fed officials think that the ongoing slowdown in hiring and a recent tick up in joblessness signal that labor market conditions are returning to normal after a few years of booming hiring. But policymakers are sure to carefully watch the July jobs report set for release on Friday for any sign that labor conditions are cracking — and have been clear that they will be quick to react if they see evidence that the job market is taking a sudden and unexpected turn for the worse.“A broad set of indicators suggests that conditions in the labor market have returned to about where they stood on the eve of the pandemic,” Jerome H. Powell, the Fed chair, said during a news conference this week. He later added that “I would not like to see material further cooling in the labor market.”Mr. Powell said the Fed stood prepared to react if the labor market weakened more than expected.While the central bank is already widely expected to lower rates in September, economists think that officials could move them down faster than they otherwise might if the job market is cooling notably. In fact, investors expect the central bank to cut rates by three-quarters of a point — equivalent to three normal sized rate cuts — by the end of the year.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

  • 138 Shares199 Views

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    Trump Promises Lower Interest Rates, but the President Doesn’t Control Those

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    The Federal Reserve sets interest rates, and it operates independently of the White House. But rates could come down as inflation cools.Former President Donald J. Trump, the Republican candidate for the 2024 presidential race, promised lower interest rates — which a president does not actually control — if he is elected.Asked on Wednesday what he would do on “Day 1” of a new presidency during a panel at the National Association of Black Journalists convention in Chicago, Mr. Trump said one priority would be to “drill, baby, drill,” the shorthand tagline he has adopted for promoting oil and gas production in the United States.“I bring energy way down, I bring, interest rates are down, I bring inflation way down,” Mr. Trump expanded.The president exerts no direct control over interest rates. The Federal Reserve sets a key policy rate, which then trickles out to influence borrowing costs across the economy, and the Fed is independent from the White House.Mr. Trump has at times implied that the Fed will lower rates because inflation is likely to be lower on his watch, which could have been what he meant on Wednesday. Economists have suggested that some of his proposed policies may in fact speed up inflation.Still, the candidate’s comments underscore how politically salient both price increases and high interest rates remain as the Nov. 5 election nears, even after years in which inflation has been gradually cooling. And they make it clear that the coming months are likely to be politically fraught for the Fed as the technocratic institution tries to stay outside the political fray.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

  • 150 Shares169 Views

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    Fed’s Powell Welcomes Cooler Inflation but Steers Clear of Rate Cut Timing

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    Jerome H. Powell, the chair of the Federal Reserve, avoided signaling when the Fed would cut rates at a time when some economists are wondering why officials would wait.Jerome H. Powell, the chair of the Federal Reserve, avoided sending a clear signal about when the central bank would begin to cut interest rates even as he welcomed a recent cool-down in inflation.“Today I’m not going to be sending any signals one way or the other on any particular meeting,” Mr. Powell said while speaking at the Economic Club of Washington on Monday. “Just to ruin the fun right at the beginning.”The Fed’s chair was speaking after several inflation reports in a row suggested that price increases were moderating in earnest, a development that had spurred some economists to think that it could make sense for officials to cut interest rates sooner rather than later. The Fed meets at the end of July and then again in September, and investors have been largely expecting that officials will begin to lower borrowing costs at the September meeting.Economists at Goldman Sachs wrote in a research note on Monday that cutting rates this month could be appropriate, given how much inflation had come down.“If the case for a cut is clear, why wait another seven weeks before delivering it?” Jan Hatzius, Goldman’s chief economist, wrote in the note, explaining that while his team still thinks that a rate cut in September is more likely, there is a “solid rationale” for an earlier move.But Mr. Powell did little to open the door to an earlier move during his Monday remarks. While he said recent inflation reports had added to central bankers’ confidence that price increases were coming down, he avoided giving a clear signal about when officials would have enough confidence to lower borrowing costs.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