Fed cut is 'not emergency', but 'a pivot': Economist

Federal Reserve Chair Jerome Powell spoke at the Kansas City Fed's Jackson Hole Economic Policy Symposium, discussing the cooling trend in the labor market. He noted that while the unemployment rate has risen, it remains "low by historical standards," emphasizing that the cooling in the labor market is "unmistakable."

Dartmouth College Economics Professor & Former Federal Reserve Economist Andrew Levin joins Catalysts to provide his outlook on Powell's comments and the broader economic landscape.

Levin explains that there are two ways the labor market can cool: "lots of people losing their jobs" or many individuals joining the labor force. He notes that with inflation continuing to drive prices higher, it is leading to an influx of job seekers trying to "meet their expenses."

Regarding potential rate cuts, Levin states, "I would be extraordinarily surprised if the Fed cuts by 50 bps." While Powell indicated the Fed is now leaning towards an easing cycle and maintaining a strong labor market, Levin emphasizes that the Fed is not yet "in emergency mode," adding, "it's not emergency, it's a pivot."

Levin predicts a quarter-point basis cut at at least the next four Fed meetings.

Watch Federal Reserve Chair Jerome Powell's full speech here.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith