The September jobs report brought positive news to Wall Street as the US economy added 254,000 jobs while the unemployment rate ticked slightly lower to 4.1%.
Guy Berger, Burning Glass Institute director of economic research, joins Morning Brief to discuss the print and what it means for the Federal Reserve's interest rate-cutting cycle.
"I thought it was great news. I think I've been mildly pessimistic thinking we've been seeing this bit-by-bit deterioration in the labor market with each report. And I think there's been a worry that even if we don't have recession, unemployment is just going to be quite a bit higher by the end of the year. And I think this buys us some breathing space and gives policy more time to kick in and keep the labor market in what Fed Chair Powell thinks is a good place," Berger tells Yahoo Finance.
However, he still has concerns about the pace at which hiring has slowed, explaining, "I'm still worried about the fact that hiring has come down as much as it has and has shown no signs of that descent moderating. So, you know, this is a good job market to have a job. Your layoffs are very low. This has been a tough job market to find a job if you need it."
Guy, I want to get your reaction to the report. I mean, it felt like once it crossed the wires, it was kind of a spit your coffee out moment and just kind of have your eyes popping out of your head as you're looking at this hotter than expected print. What immediately went through your mind?
I I thought it was great news. I think I've been mildly pessimistic thinking we're seeing this bit by bit deterioration in labor market with each report and I think there's been worry that even if we don't have a recession, unemployment's going to be quite a bit higher by the end of the year. And I think this buys us breathing space and gives us policy more time to kick in and keep the labor market in what Fed chair Powell thinks is a good place.
Guy, when you take a look at this print, you have the jobs market holding up or very strong here from this. You also have the Fed in this rate cutting cycle now, lots of questions about what exactly that pace is going to be. But is there anything to be too nervous about then at this point or does it put maybe some of those fears that you did have to rest, at least for now?
I mean, I'm still worried about the fact that hiring has come down as much as it has and has shown no signs of that descent moderating. So, you know, it's a good job market to have a job. Your layoffs are very low. This has been a tough job market to find a job if you need it. Um this allays my worries a little bit just because again there's more room for policy to act, which is really what we need here. There was talk a month ago of the Fed being behind the curve. They're a little less behind the curve both because they moved and because the labor market, judging by this report, is not deteriorating as fast as some people worried about. Um but there isn't I don't I I'm a little less worried on the margin, but it's one report. Um if we're still here at 4.1% with three job reports down, then I'll say amazing, this was a turning point. Um and at that point maybe some Scots worries about wage growth do start coming back into Fed and inflation start coming back into Fed's focus. Um but you know, it's still we're still in a place where labor market's been cooling for quite a while and seems set to keep doing so for a little while longer.
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Yet, September's better-than-expected jobs report eases his concerns, as it allows more room for the Fed's monetary policy to kick in. While the Fed was behind the curve, he notes that the central bank is in a much better position now after delivering a 50 basis point cut in September, and the labor market did not deteriorate as quickly as many expected.
Moving forward, Berger stresses the importance of more data to ensure that the labor market remains resilient and that inflation does not reignite.
He concludes, "We're still in a place where the labor market has been cooling for quite a while and seems set to keep doing so for a little while longer."
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Read more: How does the labor market affect inflation and the Fed?
This post was written by Melanie Riehl