From JOLTS Series Shift To Series Of Rate Cuts

I’ve said all along that they would be dragged into them kicking and screaming. After all, the Federal Reserve undertook its last rate hike in December 2018 – just as the markets were making clear he was completely mistaken in his view of the economy. What followed was the ridiculous “Fed pause” which pretty much everyone outside of the central bank and the Economics profession knew wasn’t the end of it.

You know the story. When he finally gave in at the end of July, the Federal Reserve Chairman at first hinted it was a one-and-done insurance type of thing. Powell said it was nothing more than a mid-cycle adjustment, “not the beginning of a long series of rate cuts.”

Then another followed in September, and despite what is now a series (if not yet a long one) Jay Powell is sticking with his mid-cycle adjustment. Asked about it at his September 17 press conference, the day after the repo rumble, the Chairman continued to say the same thing as he said last year with rate hikes, earlier this year while pausing, and now already a short series of rate cuts:

So as you can see from our policy statement and from the SEP, we see a favorable economic outlook, with continued moderate growth, a strong labor market, and inflation near our 2% objective.

It’s practically rote recitation at this point. Powell is more robot than a thinker. The economy, he will keep saying no matter what happens, is favorable particularly because of the strong labor market. Forever strong. 

But he can only be linking the term to the unemployment rate; the rest of the labor data instead indicates very clearly how something big has changed this year.

The headline payroll figures are down, on average, to where they were when Ben Bernanke’s Fed unable to launch his own second series of rate cuts (because he was still stuck at the zero lower bound) opted instead for more of the theater of QE. The internal employment data (hours) also points to a meaningful change in condition.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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