A Late Summer Reflection on Growth, Inflation & Jobs

Economic Overview - The Federal Open Market Committee (FOMC) has reduced the Fed funds rate by 25 basis points to a range of 4.00-4.25%, marking the first cut of 2025 with expectations for two more cuts by year-end [4][11] - The current economic environment shows a weakening jobs market, with an average of only +36K new jobs filled over the past four months, significantly lower than previous averages [6][7] Labor Market Insights - The unemployment rate stands at +4.3%, the highest since October 2021, with potential underreporting due to immigration crackdowns and uncounted new graduates [7][8] - The labor market struggles are compounded by the new FOMC member, Stephen Miran, advocating for aggressive rate cuts, which may influence future employment dynamics [8][11] Inflation and Economic Policy - Inflation rates are currently above the Fed's target, with the August CPI and July's core PCE at +2.9%, raising concerns about future monetary policy effectiveness [5][12] - The potential for lower interest rates could stimulate spending and economic growth, but uncertainties remain regarding job creation due to technological advancements and immigration policies [12][13]