EddieJayonCrypto
17 Oct 25
Federal Reserve Chair Jerome Powell highlights growing concerns about a weakening labor market, citing slowing payroll growth and reduced immigration, while markets price in a near-certainty of upcoming rate cuts.
**Fed Chair Powell Signals Waning Strength in Labor Market Amid Rate Cut Hopes** Federal Reserve Chair Jerome Powell has signaled growing concerns about the U.S. labor market, suggesting it may be showing early signs of weakness despite broader economic resilience. In a speech at the National Association for Business Economics Global Economy conference in Philadelphia, Powell highlighted rising risks to employment and inflation, even as the economy appears to be on a “firmer” footing. Powell’s remarks come amid mixed economic data, with the unemployment rate remaining low through August but payroll gains slowing sharply. He attributed the decline in labor force growth to reduced immigration and lower labor force participation, which have contributed to a less dynamic job market. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen,” Powell stated. While official employment data for September remains delayed, preliminary evidence suggests that both layoffs and hiring have remained subdued. Additionally, surveys indicate a continued decline in households’ perceptions of job availability and firms’ assessments of hiring difficulties. Powell emphasized that these trends, combined with the slowdown in payroll growth, point to a labor market under increasing pressure. The comments align with mounting expectations for another Federal Reserve rate cut. According to the Chicago Mercantile Exchange’s (CME) Fed Watch tool, there is a 96% probability of a quarter-point reduction in the Fed Funds Rate at the next Federal Open Market Committee (FOMC) meeting. This reflects market confidence that the central bank may ease monetary policy to support economic growth amid the labor market’s perceived vulnerabilities. Powell’s remarks underscore the Fed’s cautious approach as it balances inflation control with the need to prevent a sharper economic slowdown. While the economy has shown resilience, the evolving labor market dynamics could prompt the central bank to adjust its stance further. Investors and policymakers will closely watch upcoming data for clearer signals on the path forward. As the Fed navigates these challenges, the interplay between labor market trends, inflation pressures, and monetary policy will remain central to the nation’s economic outlook.