(NewsNation) — The Federal Reserve didn’t need official jobs data to justify another rate cut, as other indicators continue to point to a cooling labor market.
The Fed announced another quarter-point cut Wednesday — the second in six weeks — bringing the central bank’s benchmark interest rate to its lowest level since November 2022.
“Job gains have slowed significantly since earlier in the year,” Fed Chair Jerome Powell said Wednesday, also noting the outlook has hardly changed since September’s meeting.
Powell added that while labor demand has “clearly softened,” the available evidence suggests “both layoffs and hiring remain low.”
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The rate cut came despite an ongoing data blackout caused by the government shutdown, which has made it harder for officials to gauge the economy’s direction.
September’s inflation report was eventually released nine days late and showed consumer prices accelerated 3% from a year earlier — the fastest annual pace since January. But the September jobs report hasn’t come out, and the White House has warned that October’s inflation data may not be issued at all.
The unemployment rate edged up to 4.3% in August — still low by historic standards — though it’s unclear how that may have changed due to the data drought.
Instead, economists have had to rely on private-sector reports to fill the gaps. According to payroll-processing firm ADP, the U.S. shed 32,000 private-sector jobs in September — a sign the labor market is cooling.
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Recent headlines have added to the concern, with major U.S. companies moving to cut thousands of jobs.
Amazon said Tuesday that it will cut about 14,000 corporate jobs — roughly 4% of its workforce — as the online retail giant ramps up spending on AI. Last week, Target announced that it would eliminate about 1,800 corporate positions, mostly affecting employees at its Minneapolis headquarters. United Parcel Service has disclosed about 48,000 job cuts this year as part of its turnaround efforts.
Together, those layoffs may signal the job market is shifting from a “no-hire, no-fire” phase to one where job losses start to mount.
When asked about major corporate layoffs Wednesday, Powell said officials are watching the trend closely but noted that initial jobless claims haven’t spiked yet.
Still, the Fed’s latest rate cut is aimed at bolstering the labor market — a move that also risks reigniting inflation, which remains above policymakers’ 2% target. That dynamic leaves officials facing a potential lose-lose scenario: rising unemployment and sticky inflation.
“The Fed’s dual mandate — stable prices and maximum employment — looks more complicated than ever,” Bankrate analyst Sarah Foster wrote Wednesday.
Markets currently expect another rate cut in December, but Powell cautioned against jumping to conclusions, saying no decision has been made.
The Associated Press contributed to this report.
