Part 7/12:
Fewer immigrants entering the workforce and retirements could account for slower hiring, independent of economic health, complicating the Fed’s assessment. The central question remains whether the slowdown warrants rate cuts to stimulate demand or signals underlying fragility that warrants caution.
The Fed’s Crossroads: Rate Cuts or Maintenance?
The upcoming decision hinges on interpreting these conflicting signals. If the slowdown results primarily from supply-side factors like demographic shifts, the Fed might opt to hold rates steady or even reassess the need for cuts. Conversely, if weakening employer demand and economic activity are evident, lower interest rates could help sustain growth.