The latest US jobs data was weaker than expected, which indicates that America might face a potential recession.
This comes after the US Federal Reserve Chairman Jerome Powell signalled a rate cut in September.
The United States’ employers added 1,14,000 jobs in the most recent data, less than the 175,000 expected. The unemployment rate increased to 4.3%, surpassing the forecasts of economists who predicted that it would remain at 4.1% for the entire month.
This higher unemployment rate suggests that 2025 will see a recession, according to media reports.
According to V K Vijayakumar, chief investment strategist at Geojit Financial Services, expectations for a soft landing for the US economy are widely held. However, the decline in US job creation in July and the sharp increase in the US unemployment rate to 4% have put this expectation in jeopardy.
An additional contributing factor is the geopolitical tensions in the Middle East, V K Vijayakumar said, News 18 reported.
Moreover, Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics said that the increase in the unemployment rate “points to a recession in 2025,” Al Jazeera reported.
“I’m expecting the US Fed to start cutting the policy rate in September, and to continue cutting in subsequent meetings. That response will probably ensure a shallow recession,” Hufbauer added.
The expectations of economists at Goldman Sachs and Citigroup, among others, were revised to anticipate a quarter-point rate cut in December and a half-point rate cut in both September and November.
