Powell acknowledges labor market slowdown but rejects fears of steep decline

Core Viewpoint - The Federal Reserve has cut interest rates for the third consecutive time, indicating concerns about a weakening labor market and potential risks to employment [1][5]. Labor Market Analysis - The unemployment rate has increased to 4.4%, with job gains significantly slowing earlier in the year [2]. - Factors contributing to the slowdown include a decline in labor force growth due to lower immigration and participation rates, alongside softened labor demand [2]. - Payroll growth has averaged about 40,000 per month since April, with an overstatement of approximately 60,000 in monthly job numbers, suggesting an average of -20,000 jobs over that period [7][8]. Economic Projections - The Fed's "dot plot" indicates an expected rise in the unemployment rate to 4.5% by the end of 2025, before slightly decreasing to 4.4% next year [5]. - Powell stated that the current interest rate policy is close to neutral, which should help stabilize the labor market and prevent a more significant downturn [5][6]. Policy Decisions and Dissent - Two policymakers dissented from the rate cut decision, advocating for unchanged interest rates due to economic uncertainty and inflation concerns [9][12]. - Chicago Fed President Goolsbee emphasized that the labor market is only moderately cooling and characterized the environment as "low hiring/low-firing," indicating stability rather than a conventional slowdown [12].