By Maria Eloisa Capurro and Amara Omeokwe
Federal Reserve Governor Lisa Cook called the July jobs report “concerning,” and said it could signal an inflection point for the US economy.
“These revisions are somewhat typical of turning points,” Cook said Wednesday during a moderated discussion organized by the Boston Fed.
Data published last week pointed to a sharp cooling in the labor market over the last few months. Employers added a lower-than-expected 73,000 jobs in July, and gains in the prior two months were revised down by nearly 260,000, according to the Bureau of Labor Statistics. The unemployment rate ticked up to 4.2% from 4.1% in June.
Just two days before the release, Fed policymakers kept interest rates steady out of concern for the impact of tariffs on inflation. Fed Chair Jerome Powell said the labor market’s stability also gave the central bank time to collect more information before adjusting rates.
Earlier on Wednesday, Minneapolis Fed President Neel Kashkari pointed to the jobs report and other evidence that the US economy is slowing to say an interest-rate cut might be appropriate in the “near term.” He added that he still expects the Fed to lower rates twice before the end of 2025.
Fed officials next meet Sept. 16-17.
Cook also said the ongoing period of uncertainty facing companies was acting like a tax. She said business leaders report spending significant amounts of time managing uncertainty.
“This is deadweight loss,” she said.
Boston Fed President Susan Collins, speaking on the same panel, agreed, saying an “uncertainty tax” was “top of mind across a wide range of different industries.”
While uncertainty has been blamed for slowing business investment, Collins said it’s also affecting pricing decisions.
“I do also hear about uncertainty leading to a wait-and-see in terms of how to think about pricing decisions, especially coming out of a period of high inflation,” Collins said.