Part 8/12:
The Fed faces a delicate balancing act. With an upcoming interest rate decision, policymakers are closely watching these signs of weakness. Jerome Powell, Chair of the Federal Reserve, recently described the slowdown in labor demand as "curious" and expressed increasing concern. He warned that downside risks to employment are rising and could materialize suddenly through mass layoffs or a spike in unemployment.
Upcoming data releases, including the August jobs report and inflation figures, are critical. If job growth remains sluggish and inflation continues to ease, the Fed might decide to cut interest rates to support economic growth. Conversely, if the data deteriorates, more aggressive rate hikes could be on the table, potentially deepening economic distress.