Federal Reserve Chairman Powell: US economic conditions are good, job market remains a key issue
Federal Reserve Chairman Powell stated that the US economy is in good condition, but it is still uncertain whether the labor market has returned to normal recruitment levels. The increase in non-farm payrolls in the US in July was weak, with the unemployment rate rising for the fourth consecutive month to 4.3%. Powell believes that there are still issues with the labor market bubble, and whether it is entering a stable period or if the unemployment rate will rise is crucial. Futures contracts for September imply a possible rate cut of 25 basis points, or even 50 basis points. Powell stated that inflation is normalizing, but it is uncertain whether the environment of low hiring and low layoffs will continue. Business perceptions of opportunities may strengthen or weaken
According to the Wisdom Financial APP, Richmond Federal Reserve Chairman Barkin stated that the US economy is in good condition, but it is still unclear whether the labor market is returning to normal recruitment rates or deteriorating more severely.
Before Barkin's speech, the US July employment report showed an increase of 114,000 non-farm jobs, one of the weakest increases since the pandemic, and the unemployment rate unexpectedly rose for the fourth consecutive month to 4.3%. Subsequently, US stocks fell, bond prices rose, and futures traders believed that there might be a round of aggressive rate cuts before the end of the year.
Barkin stated in an interview: "We have been experiencing a labor market bubble for two and a half years." "The question, of course, is whether we are normalizing or weakening?"
He said that this difference is meaningful and added, "This involves whether we are entering a plateau period or whether the unemployment rate will start to rise from now."
The September federal funds futures contract implies a rate cut of at least 25 basis points, with a high possibility of a 50 basis point cut.
Barkin is a voting member of the Federal Open Market Committee (FOMC) this year. He stated that he will not retract his vote to keep rates unchanged this week. He said that inflation is "normalizing," and the question is what will happen to the labor market from now on.
"We see job growth, but the question you have to ask is, how long will the environment of low hiring and low firing continue?" He said that this situation is not normal. "It doesn't need to weaken. If companies start to think, hey, there are huge opportunities there, it could also strengthen."