A surprisingly weak July employment report has intensified expectations that the Federal Reserve will resume cutting interest rates as soon as September, with mounting evidence of a slowing U.S. economy and faltering labor market offsetting persistent inflation worries driven by new tariff hikes.<\/p>\n
The Federal Open Market Committee (FOMC) had previously left rates unchanged at a range of 4.25% to 4.50% at its July meeting, despite internal disagreements, growing signs that economic conditions warranted a more dovish approach, and mounting pressure<\/a> from President Donald Trump<\/a> on Fed Chair Jerome Powell to cut<\/a>. The July jobs report, of course, is changing the picture rapidly.<\/p>\n The Labor Department reported a gain of just 73,000 nonfarm payroll jobs in July, well below consensus forecasts. More troubling were the significant downward revisions<\/a> for May and June, which cut a combined 258,000 jobs from the previous estimates and reduced those months\u2019 average gains to less than 20,000 jobs per month. While July\u2019s number alone would not spell crisis, the back-to-back weakness and hefty revisions roused investor concerns about potential cracks forming in the U.S. labor market. Powell has repeatedly emphasized the balance between labor supply and demand, and said the unemployment rate is the \u201ckey indicator to watch.\u201d<\/a> July\u2019s unemployment rate ticked up to 4.2%, just shy of a 12-month high, providing further evidence of softening conditions.<\/p>\n