Is the U.S. economy slowing enough to push the Federal Reserve to finally cut rates? As the spotlight shifts to Friday’s jobs report and mid-September Fed meeting, both markets and Main Street are laser-focused on key indicators. Economists expect August job gains of just 75,000 and an unemployment rate rising to 4.3%—a near four-year high and a fourth consecutive month of sub-100,000 payroll growth. That’s the weakest streak since early in the pandemic. Meanwhile, core PCE inflation ticked up to 2.9% in July—an eight-month peak but in line with expectations—ratcheting up the tension between persistent price pressure and a cooling labor market.
Consumer sentiment isn’t helping matters: The University of Michigan index slumped another 5.7% in August, as Americans braced for more inflation, and spending on durable goods hit a one-year low. Which risk will ultimately drive the Fed—stubborn inflation, or faltering job growth?
