Federal Reserve

Even though today’s report gave back some of the weakness in the July household survey, the reversion was slight. The August report meets the conditions we laid out yesterday for a 50 bps cut in September to play catch-up.

We see two individually sufficient conditions for the Fed to proceed with a frontloaded interest rate cut in September above 25 basis points: either (1) the unemployment rate is 4.2% or above, or (2) the prime-age 25-54 employment rate declines in both month-over-month and year-

A quiet week after Jackson Hole. What we did hear this past week showed that Powell has some convincing to do on the Committee.

Almost as notable as the things Powell said were the things he did not. Between now and September, Fedspeak should focus on keeping the Committee’s options open to a 50 bps cut in September.

Powell's Jackson Hole speech made clear that rate cuts will begin in September. Most notable what he did not say: "gradual." Powell is keeping the door open to a larger cut in September.

When it comes to the Fed policy today, the question of whether or not these rules are good at telling us if we’re currently in a recession is almost besides the point.

Bostic and Musalem, two members on the hawkish side of the Committee, joined the rest of the Committee in signalling an openness to rate cuts in September.

The Committee continues to react to the July jobs numbers.

Just a couple of reactions to the jobs data last week from Barkin and Goolsbee, both downplaying the jobs report.