Today's significant employment revision, the largest in 15 years, has unveiled a weaker U.S. job market than previously reported. Estimates from Goldman Sachs and Wells Fargo had anticipated a downward adjustment between 600,000 and 1 million jobs, and the actual figure from the Labor Department came in at 818,000 fewer jobs.
This revision, the largest since 2009, indicates that the labor market was not as strong as initially thought, with 818,000 fewer jobs created for the 12-month period ending March 2024. This revelation puts added pressure on the Federal Reserve to consider lowering interest rates. Jeffrey Roach, the chief economist at LPL Financial, expects the Fed to signal a possible rate cut in September.
Robert Frick, corporate economist at Navy Federal Credit Union, noted that while the revisions werenât unexpected, they underscore the need for the Fed to consider rate reductions. Following this new data, thereâs increasing anticipation of a rate cut next month, with investors largely expecting a 25-basis-point reduction. Thereâs also a growing possibility of a more significant 50-basis-point cut.
All attention is now focused on Fed Chairman Jerome Powellâs upcoming speech at Jackson Hole on Friday, where his comments will be closely watched for any hints on future rate adjustments.
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