The unemployment rate edged higher to 4.3%, its highest since October 2021, triggering an economic rule on recessions.
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I think you’re going to need a 75 basis point interest rate cut in September to right the ship. Powell waited too long before cutting rates.
intercst
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If so then it would be the mirror image of waiting too long to raise rates.
DB2
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You guys are great back seat drivers. It’s to bad you didn’t get a job driving this bus.
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Here’s what I posted two and a half years ago here on METAR:
Larry Summers warned 11 months ago that the third stimulus was too large and that a “macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation…”
And here we are.
DB2
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Powell is not done with whipping the labor market and the September rate cut more than likely will be 25 basis points:
In reality, nothing Powell has set as a criteria seems to mean anything. In the last FOMC Powell pointed to the robust labor market and the 2% inflation target as reasons not to drop rates. Now, 10-year Treasury note yield (TNX) fell to 3.79% and unemployment moving near four and a half percent there’s talk about cutting rates in September half a point even though inflation persists at 3.3%. Probably the only focus for Powell is getting unemployment over 4.5% and stifling wages. Wage stagnation has long been the Federal Reserve’s tool to control inflation. Between 1979 and 2020, workers’ wages grew by 17% while productivity grew by 60%. Powell was late controlling inflation because he didn’t react until there was pressure on wage inflation.
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