Fed's Powell: policymakers noted 'artificially high' jobs data, revisions in rate cut decision

Published On Sep 19, 2024, 3:41 PM

Federal Reserve Chair Jerome Powell has highlighted concerns regarding recent labor market data, indicating the jobs numbers may be 'artificially high' due to significant downward revisions from the Labor Department. This revelation comes as the Fed decided to cut interest rates by 50 basis points, marking a shift in monetary policy in response to these revised employment figures. The Labor Department's latest reports showed a decrease of 818,000 jobs in payroll data, with revisions leading to substantially lower job growth figures than previously reported. Powell stated that the Fed considered this revised data in their rate cut decision as they assessed the overall health of the economy.

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Stock Forecasts

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Negative

The downward revision of jobs suggests potential weaknesses in the labor market that could lead to slower economic growth, influencing investor sentiment. As the economy slows, this may negatively impact consumer spending and corporate earnings, especially in sectors sensitive to interest rates and job growth.

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Positive

However, the rate cut by the Fed could stimulate the economy in the medium term, offering a positive impact on markets that are keen on increasing liquidity. Sectors like technology and real estate often benefit from lower rates as borrowing costs decrease, possibly leading to a short-term uptick in those stocks.

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