Delayed September Jobs Report Expected to Show Continued Weak Growth

Website: https://www.morningstar.com/economy/delayed-september-jobs-report-expected-show-continued-weak-growth

The September jobs report was delayed because of the government shutdown, but economists forecast it will show only about 50,000 new jobs added and the unemployment rate holding steady at around 4.2%. A majority of these jobs were in the healthcare sector. This data suggests that although the labour market is not collapsing, its strength is clearly diminishing and growth remains weak.

Using the IS-LM framework, this weaker job growth and stable unemployment rate imply a leftward shift of the IS curve. Lower job creation means less income and consumption, reducing aggregate demand. Meanwhile, if the central bank reacts by easing monetary policy, the LM curve shifts right. This puts the new equilibrium at lower output. This framework aligns with the article's predictions. 

Why the Fed May Pause Rate Cuts: Hammack Warns Inflation Is Still Too High

This week, Cleveland Federal Reserve President Beth Hammack suggested that the Fed may slow or pause its plans to cut interest rates because inflation is still too high. In a recent report from Reuters, she said that current interest rates are only “barely restrictive,” meaning they may not be high enough to keep inflation moving toward the Fed’s two percent goal.

Hammack warned that lowering rates too quickly could undo the progress made so far. Her comments go against what many in the financial markets were expecting, since some investors thought the Fed might cut rates again soon, possibly in December. Her message suggests the Fed wants to be more careful and avoid making inflation rise again.

If the Fed decides to wait before cutting rates further, borrowing costs like mortgage rates, car loans, and credit-card interest may stay high for a bit longer. Inflation is still a major concern, and the Fed wants to make sure prices continue to cool down before taking big steps.

Hammack’s comments do not guarantee that the Fed will pause rate cuts, but they show that future decisions will depend on stronger proof that inflation is easing. For now, the path toward lower interest rates remains uncertain.

Fed's Hammack leans against more rate cuts because of high inflation