Just a week before the Federal Reserve’s next monetary policy meeting, US President Donald Trump has once again turned his sights on Chair Jerome Powell, calling for the central bank to slash interest rates without delay. However, unlike previous times, this coming meeting may see Powell and his policymaking team edging closer to delivering what Trump has long demanded.
Posting on Truth Social, Trump wrote: “Just out: No Inflation!!! ‘Too Late’ must lower the RATE, BIG, right now. Powell is a total disaster, who doesn’t have a clue!!!”
Trump’s longstanding standoff with Powell for holding up interest rates has been a major part of his presidency. After numerous calls to cut rates, Trump went to the extent of threatening Powell of expelling him from the Federal Reserve. Yet, unlike the last few months, current economic data may do more to support Trump’s case this time, than undermine it.
Recent data shows the US labour market losing momentum after a long stretch of resilience. August payrolls registered an increase of just 22,000 jobs, the weakest monthly gain since the early months of the pandemic, and far below the expectations of economists.
The unemployment rate ticked up to 4.3%, its highest level since 2021. On closer inspection, the rise in joblessness was largely due to more people entering the labour force, rather than a surge in lay-offs. Still, the overall picture is of a cooling employment engine.
On top of that, revisions to earlier estimates further put out a softening trend of jobs growth in broad daylight. June, initially reported a139,000-job gain, which was later re-estimated as a loss of 13,000, marking the first monthly decline in over three years. July’s figure was revised slightly higher, but the broader trajectory points to slowing hiring, shorter working hours, and a moderation in wage growth. Average weekly hours fell to 34.2, while annual pay growth eased to 3.7%.
