Steve Rattner: Rising unemployment signals a softening job market

Interest Rate Policy - The Federal Reserve announced its first interest rate cut of the year, lowering its benchmark rate by 0.25 percentage point to a range of 4% to 4.25% [1] - The board voted 11 to 1 in favor of the rate cut, signaling expectations for two more cuts before year-end [1] - One governor favored a larger 0.5 percentage point cut [2] - The Fed's interest rate projections have fluctuated based on factors like trade tensions [4] Labor Market - The Fed is shifting its focus from inflation to the softening jobs market [5] - Job creation has slowed, with the last four months averaging only 27,000 jobs per month [6] - There are now more people looking for jobs than there are jobs available, a sign of a weakening labor market [9][10] - 26% of unemployed individuals have been unemployed for 6 months or more, a level last seen in 2016 [12] - Young college graduates are facing a tough hiring season [13] Inflation and Growth - The Fed is willing to accept slightly higher inflation to prioritize jobs [17] - Inflation is projected to gradually decline but not reach the 2% target until 2028 [16] - Growth is expected to remain below the levels of 2023 and 2024, projecting around 1.5% going forward to 2028 [18][19]