Everyone’s watching Jerome Powell as warnings flash for the U.S. economy

The Federal Open Market Committee (FOMC) had previously left unchanged rates at 4.25 % to 4.50 % at its meeting in July, despite internal differences, increasing signs that economic conditions justify a more occurrence of an incidental approach, and the escalating pressure from president Donald Trump on the Federal Reserve Chairman Jerome Powell to reduce it. Jobs Jobs report, of course, changes the image quickly.

The Ministry of Labor has reported a profit of 73,000 jobs in non -agricultural salary statements in July, much less than the expectations of consensus. The most anxious thing was the important review of May and June, which reduced 258,000 combined jobs from previous estimates and reduced the average gains for those months to less than 20,000 jobs per month. Although the July issue alone will not spent the crisis, the successive weakness and huge reviews have raised investor concerns about possible cracks in the labor market in the United States. Powell repeatedly emphasized the balance between employment and demand, and said that the unemployment rate is the “main indicator of viewing”. The unemployment rate in July increased to 4.2 %, just shy of 12 months height, providing more evidence of softening conditions.

The market reaction was quickly. Stephen Brown, Vice President of Economists in North America, was called Capital Economs, “Salary shock.” He pointed out an immediate change in the markets, which re -reduced the interest rate in September by 85 %, less than 50 % before job data, as future traders are betting that the Federal Open Market Committee will need to respond to the increasing evidence of economic softening.

“The July report is going a long way towards providing evidence of evidence of the existence of a working market that the Federal Reserve is to justify the reduction in interest rates in the face of inflation above the goal,” Brian Rose, UBS Global Management, said in a statement. luck intelligence. Rose noted that GDP data showed the growth of the economy slowing down to an annual pace of 1.2 % in the first half of 2025, much lower than the long -term direction rate of 2.0 %. He added: “We expect soft data in the second half of 2025 as well. This should help compensate for some of the inflationary pressure moved by the high tariff.”

Other modern data enhances the image of the economy under pressure. Survey indicators, such as the ISM manufacturing index, decreased in July, while spending measures on commercial capital were raised only modestly after disturbances after “Liberation Day” in April. Meanwhile, President Trump’s new tariff measures prompted high import costs, which increased inflation.

Mixed signs of evil

Other data indicates that the decline in salary statements in July, which comes in the wake of the subversive “liberation day” in April, may not spark deeper jobs yet. Brown pointed out that the initial unemployed claims fell to 218,000 last week, and continuous claims fell steadily since its peak in early June.

Analysts expect that Powell will use the next Jackson Hall’s economic symposium, which will be held from 21 to 23 August, as an opportunity to indicate the central bank’s readiness to work in the event of continued weakness of the labor market and the effects of larger inflation of customs tariffs and the customs tariffs are not achieved.

Rose’s basic scenario now believes that the appeal price discounts in the Federal Reserve at its meeting in September and continued to reduce 25 basis points for each meeting until January, which reduces the rate of federal funds by a full percentage point to restore borrowing costs to the “neutral” level.

“Given this morning data, Powell may be ready to drop a hint that the Federal Reserve tends to a discount in September,” Rose said.

For this story, luck The artificial intelligence is used to help with a preliminary draft. Check an editor of the accuracy of the information before publishing.