Current:Home > InvestChicago Fed's Goolsbee says jobs data weak but not necessarily recessionary -CapitalTrack
Chicago Fed's Goolsbee says jobs data weak but not necessarily recessionary
View
Date:2025-04-16 16:34:09
Chicago Federal Reserve President Austan Goolsbee said on Monday that last week’s disappointing jobs report was not necessarily a recessionary sign and that the Federal Reserve’s focus remained on inflation and employment to determine interest rate policy.
Global stock markets plunged after the U.S. Labor Department reported only 114,000 jobs were added in July while the unemployment rate jumped to 4.3%. Both were weaker than economists had predicted and immediately triggered recession fears. Stocks closed lower on Friday, and that selling spilled into overseas trading on Monday, prompting some investors and economists to call for emergency rate action by the Fed to ward off recession.
But Goolsbee hinted that’s not likely.
“The market volatility can be jarring, especially following a period where there's been so much less volatility in the market,” Goolsbee told USA TODAY in an interview. However, “the law gives the Fed two jobs: stabilize prices, maximize employment. That's the dual mandate. That's the thing that will determine what the Fed does on rates. There's nothing in the Fed's mandate that says stop market declines. Or, you know, keep traders whole on days when there's volatility, right?”
What about the weak jobs report?
Goolsbee admitted the jobs report was “negative” but also said “we should not overreact to one month's data report because there's a margin of error on the data.”
Protect your assets: Best high-yield savings accounts of 2023
The payroll jobs number has a margin of error of plus or minus 100,000 for a monthly report, making the 114,000 new jobs within the margin of error against forecasts, he said.
Details of the report also showed a murkier picture of the labor market. “The unemployment rate went up more than people thought, but the labor participation rate and the employment to population ratio both rose, which is kind of unusual,” he said. “Normally, the recessionary signs are when the unemployment rate is rising because layoffs are going up.”
Instead, he said “inflation has come down significantly over the last year, and the real side of the economy has weakened, but to levels so far that are still respectable.”
Is it still too soon for a Fed rate cut?
It might be worth considering lowering the fed funds rate, Goolsbee suggested. The fed funds rate has stood at a 23-year high of 5.25-5.5% since July 2023.
“I've been saying for quite a while that the Fed set the rate at the level it is now a year ago, and the conditions were very different a year ago than they are today,” he said. “If you're going to be as restrictive as we are for too long, then you are going to be have to think about the employment side of the mandate, and you only want to be that restrictive if you're afraid of overheating. And my thing is, this is not really what overheating looks like.”
What about Monday’s volatile markets?
Goolsbee said there might be multiple reasons for the market gyrations.
Monday’s sharp market moves feel “like there is a technology story that's going on, and the fact that in Japan, they were raising the rates when the rest of the world is either cutting or contemplating cutting the rates,” he said. “And so, it's having impacts on the exchange rate, which affects carry trades. It does seem like there are, on a global scale, a bunch of complicating factors beyond just the one month job report.”
He added, “the Fed moves in a steady manner and tries to take the totality of the data, and that's not on the timeframe of market reaction. My old mentor was (former Fed Chair) Paul Volcker, who used to always say, our job (as) the central bank..is to act, and their (the market’s) job is to react. Let's not get...the order mixed up. And I agree with that.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
veryGood! (769)
Related
- Intellectuals vs. The Internet
- E. Jean Carroll wins partial summary judgment in 2019 defamation case against Trump
- Greek shipper pleads guilty to smuggling Iranian crude oil and will pay $2.4 million fine
- NFL power rankings: Which teams are looking good entering Week 1?
- Federal Spending Freeze Could Have Widespread Impact on Environment, Emergency Management
- Lidcoin: Bitcoin Is the Best Currency of the Future and Bear Markets Are the Perfect Time to Get Low-Priced Chips
- 'Holly' is one of Stephen King's most political novels to date
- Taco Bell free Taco Tuesday deal and $5 off DoorDash delivery Sept. 12
- Federal appeals court upholds $14.25 million fine against Exxon for pollution in Texas
- Video shows drunk driver calling cops on himself while driving wrong way on highway
Ranking
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- BTS star Jung Kook added to Global Citizen lineup in New York: 'The festival drives action'
- New Pennsylvania Legislation Aims to Classify ‘Produced Water’ From Fracking as Hazardous Waste
- 'Alarming' allegations: 3 Albuquerque firefighters arrested in woman's alleged gang rape
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Hi Hi!
- 'Survivor 45' cast: Meet contestants competing for $1 million in new fall 2023 season
- Jennifer Love Hewitt Addresses Comments She Looks Different After Debuting Drastic Hair Change
- Tropical Storm Lee forecast to strengthen into hurricane as it churns in Atlantic toward Caribbean
Recommendation
Taylor Swift Eras Archive site launches on singer's 35th birthday. What is it?
Poccoin Cryptocurrency Exchange Platform - The New King of the Cryptocurrency
Heat wave in Mid-Atlantic, Northeast forces schools to close, modify schedules
Danelo Cavalcante press conference livestream: Police update search for escaped Pennsylvania prisoner
'Most Whopper
Another twist in the Alex Murdaugh double murder case. Did the clerk tamper with the jury?
Alabama Barker Reveals Sweet Message From “Best Dad” Travis Barker After Family Emergency
U.S. Air Force conducts test launch of unarmed Minuteman III ICBM from California