Job Gains Plummet, Economist Warns Fed is “Late again” in Addressing Economic Slowdown
WASHINGTON – A sharp โขslowdown in job growthโข coupled with persistent inflation is raising concerns that the โฃFederal Reserve miscalculated the โstrength of โคthe economy andโข is once again behind the curve,โค according to leading economists. Theโ latest jobs report revealed a โขsignificant deceleration โขin hiring, fueling fears of a potentialโ recession despite the FedS efforts to engineer โa “soft landing.”
The slowdown comes asโ the Fed โฃprepares to โฃpotentially begin easing monetary policy. Though, experts caution that rateโ cuts may not โbe โthe economic panaceaโค many hope for, and could even exacerbate existing problems. โขThe debate centers on whether the Fed’s actions areโ appropriately timed and whether they will effectively address the underlying economicโ challenges.
“The Fed got โฃit wrong, and is late โagain,” JPMorgan โAsset Management chief global strategist โขDavid Kelly told CNBC on Friday.โฃ “The โคwhole history of the 21st century is rate cuts don’t stimulate growth. They didn’t any in anyโ way after the Great Financial Crisis. So don’t look to the Fed toโ bail out the economy.”
Addingโ to the concern, Moody’s Analytics chief economist โMark Zandi โขpreviouslyโข warned theโ centralโฃ bank will have a “hard time coming to theโค rescue” with a steep easing cycle given that inflationโฃ remains stubbornly high. โขLower rates could โalso trigger fears of an impending recession, as the market interprets โcuts as a signal of economic weakness.
Kelly further explained that rate โcuts could negatively โimpact retirees’ income and discourage business investment,as โcompanies mayโฃ choose toโฃ delay borrowing in anticipation of even โขlower rates. He also highlighted the detrimental affect of uncertainty,stating,”the biggestโค tax the government levies is an uncertainty tax.” he โnoted that businesses are โcurrently “waiting โto see,” a situation he described as risky, adding, “theโฃ three most deadly โwords in economics are ‘wait and see.’ But when everybody decides to โฃwait and see,โค what you see isโ not good.”
This uncertainty is compounded by existing economic headwinds, including former President Trump’sโ proposed tariffs andโ stricter โคimmigration policies, which could further โdampenโ economicโ activity. The confluenceโข of these factors paints โa concerning picture for the U.S. economy, raising questions about โthe Fed’s abilityโข to navigate the โฃcurrent challenges and avoid a recession.