This Time Is Different for the US Economy

Concerns about potential risks to the labor market are growing among Federal Reserve policymakers, with some members considering a July interest rate cut. For three years, there have been recurring fears that high interest rates could push the US economy into a recession. While skepticism is natural when economic data softens, recent evidence suggests this situation may indeed be different. The unique factors that supported the labor market post-pandemic have largely dissipated, increasing the likelihood of typical recession risks if the economy weakens further. A worrying trend is the rise in unemployment benefit claims, which has accelerated at its fastest pace since early 2024. Coupled with easing underlying inflation, this has led some Federal Reserve officials to reconsider the pace of policy easing to support the labor market.
— news from Bloomberg.com

— News Original —
This Time Is Different for the US Economy
Downside risks to the labor market are becoming more of a concern for Fed policymakers, with some open to a July interest rate cut. n nIt’s been three years now since people began worrying that high interest rates would push the US economy into recession, so some skepticism is in order whenever a spell of soft economic data draws fresh concerns. A growing body of evidence, however, suggests that this time really is different. The unusual supports that held up the labor market following the pandemic are now largely gone, inviting more typical recessionary risks if the economy weakens from here. n nThe most concerning recent trend is the uptick in the number of people collecting unemployment benefits, which has accelerated over the past couple of months at the quickest pace since early 2024. This, combined with the softening in underlying inflation, has prompted a rethink from some members of the Federal Reserve’s rate-setting committee on how quickly to resume policy easing to support the labor market.

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