June jobs report raises pressure on Fed for September rate cut
The June jobs report sent a clear message to the Federal Reserve — the central bank risks falling behind the curve.
Job gains north of 200,000 last month flattered a report that otherwise suggested the US labor market is quickly cooling off, as the unemployment rate rose to its highest level since November 2021 and wage growth rose at the slowest annual rate since May 2021.
Neil Dutta, head of economics at Renaissance Macro, has become the leading voice on Wall Street arguing the Fed ought to begin its rate-cutting cycle in September. In an email just minutes after Friday’s jobs report dropped, Dutta wrote, “[Friday’s] employment report ought to firm up expectations of a September rate cut. Economic conditions are cooling and that makes the trade-offs different for the Fed.”
In Dutta’s view, the Fed’s July meeting should set the table for a September cut.