According to FRED data, the threshold will be breached if the unemployment rate rises to 4.2% in this week’s employment report, which is set for release on August 2.
Economists’ Forecast for the July 2024 Employment Report
The preliminary forecast for the July employment report, to be released Friday, calls for a net gain of 200,000 jobs, with the unemployment rate expected to fall from 4.1% to 4%, according to the analyst blog The Real Economy on July 29.
Analyst Joseph Brusuelas also anticipates a 0.2% increase in average hourly earnings, which corresponds to a year-over-year increase of 3.7%. Seasonal hiring in the leisure and hospitality sector will likely be an important factor in the report. July usually presents seasonal adjustment challenges for the Bureau of Labor Statistics, and this year is no exception.
If the estimate is incorrect, it could point to a faster pace of hiring overall. Additionally, the direction of the unemployment rate will be a key issue, as it has been rising due to more people entering the labor market, enticed by higher wages.
Expert Urges Fed to Cut Rates Soon to Ease Recession
While Wall Street expects Fed Chairman Jerome Powell to cut the prime rate at a Fed meeting in September, experts warn that it may already be too late to avoid a recession. Goldman Sachs and UBS predict a rate cut before the November presidential election, but not as soon as the Fed’s July meeting.
One supporter of an earlier rate cut is former New York Fed President Bill Dudley, who initially advocated for higher rates for longer but now urges an immediate cut.
The former New York Fed president argues that the economic outlook has shifted due to slowing consumer spending, rising auto repossessions, and loan defaults.
“The facts have changed, so I’ve changed my mind. The Fed should cut, preferably at next week’s monetary policy meeting,” Dudley said on July 24.
He believes the Fed should act quickly despite skepticism about the severity of rising unemployment. Dudley stresses that delaying rate cuts could raise the risk of recession, even if it is already inevitable.
