Fed interest rates

US Job Growth Stalls,Raising Recession⁤ Fears

WASHINGTON – America’s job growth has flatlined,and economist⁤ Mark Zandi believes June may have marked the ‌beginning of a recession.New data reveals a⁤ cooling labour market alongside cautious business⁢ behaviour, fueling concerns about a potential economic downturn despite ⁢continued, albeit slowing, growth in output and incomes.

Zandi, ⁤chief ‍economist at Moody’s ‍Analytics, described ⁢the‌ current economic situation as delicately balanced, with businesses exhibiting caution‍ in hiring⁤ acting as ​a “firewall” preventing a deeper recession.‍ “businesses haven’t panicked yet,” he said. ⁣”It’s just that ⁤they’ve turned more cautious in their hiring.That firewall between a stalling economy and ‍a recession hasn’t been breached,but ⁢it’s very,very close.”

The cracks in the labor market are becoming increasingly‍ visible.Long-term unemployment has⁢ risen ​over the past year, and more than‍ 6 million people‍ outside the labor force now indicate they are actively seeking​ employment – an increase from approximately 5.7 million a year ago, according⁢ to data from the Bureau of labor Statistics (BLS). ⁤

“This really feels like a jobs recession,” Zandi stated. “Employment is flat ‌to down. Output and incomes⁤ are still‌ growing, but the economy is incredibly vulnerable. Nothing else can⁤ go wrong, or it could tip us into a full ⁤downturn.”

Investors are anticipating the slowdown will prompt action from the Federal Reserve. Following the ‌release of the ‍latest economic data, the yield on the 10-year ⁤Treasury note​ fell to a five-month ‌low as traders priced in multiple interest rate cuts before the end of ⁣the year. Zandi concurs with this assessment, predicting rate cuts‍ are highly probable.

“We’ll definitely get a cut,” he said, anticipating quarter-point reductions in September, October, and December. “Rate cuts will help cushion things, but they won’t save the ‌economy. The ​die has ⁣been cast.”

Beyond managing inflation and ⁤economic growth, Zandi warned the Federal Reserve has important stakes in​ avoiding a recession, citing concerns ‍about maintaining its independence. He believes a ‌recession would invite increased ⁣political scrutiny⁣ of the central bank, notably ‍given recent attempts by the White ‍House to influence the Federal Reserve,‌ such as the effort to fire Fed governor Lisa​ Cook, which prompted a Department of justice ⁢probe into allegations of mortgage fraud.

“That’s their number one priority now: keep the economy out of recession,”‌ Zandi said.​ “It argues for lower‍ rates despite the higher‍ inflation⁤ that’s here​ and likely to come.”