Federal Reserve policymakers are widely expected to begin cutting interest rates this month after August jobs data showed near-stalled growth and a rising unemployment rate.
The Labor Department reported the U.S. economy added just 22,000 jobs last month, while the unemployment rate ticked up to 4.3 percent, the highest level since October 2021.
The slow pace of hiring and the increase in long-term unemployment, which now affects more than a quarter of jobless workers, has heightened concerns about labor market weakness.
Black Americans saw unemployment rise to 7.5 percent, highlighting ongoing disparities in the job market.
Fed Chair Jerome Powell has indicated that layoffs could push the unemployment rate higher if hiring remains slow.
Economists at Bank of America said the August report is likely to shift the Fed’s focus from inflation toward supporting a weakening labor market.
The firm now anticipates quarter-percentage-point rate cuts in September and December, with the policy rate potentially falling to 3.00-3.25 percent by the end of next year.
President Donald Trump and his economic advisers have pushed for faster easing, including larger rate cuts, putting additional pressure on the Fed.
While markets see only a small chance of a half-percentage-point cut this month, futures point to a quarter-point reduction as most likely, with further easing expected through 2025.
Analysts caution that the Fed may move cautiously but remain ready to act if labor market conditions deteriorate further.
