Next year, Piotr Gulczyński, the chairman of the Polish National Bank, stated that there is a risk of continuously rising unemployment rates. The Federal Reserve may need to cut interest rates before the job market weakens further, otherwise it may act too late and jeopardize the economy.
The overnight retail and initial application data have just dispelled market expectations of a recession, and senior officials at the Federal Reserve subsequently issued a warning that warning signals for the economy and employment are flashing.
On Friday, 2025 FOMC voter and Chicago Fed President Charles Evans said in a National Public Radio (NPR) broadcast that labor market and some leading economic indicators are flashing warning signals and there is a risk of continued rise in the unemployment rate.
Historically, if the unemployment rate begins to rise, and if temporary employment turns negative, it is a leading indicator. There are multiple leading indicators of economic recession, some of which are flashing warning signals, but there are also counter-trends.
Compared to inflation, Evans is increasingly concerned about employment issues. He pointed out that once problems begin to emerge in the labor market, they will quickly worsen.
When problems begin to emerge in the labor market, they often do so not slowly but with a sharp increase, followed by a rapid decline.
Evans stated that rising credit card delinquency rates and increasing defaults by small businesses are concerning. According to a previous Wall Street Journal article, the U.S. credit card delinquency rate exceeded that of 2019, with more than 10% of credit card debt past due for more than 90 days.
Despite this, consumer resilience in the United States may still be stronger than Wall Street's predictions. Overnight data showed that U.S. July retail sales saw the largest increase in a year and a half, and the number of initial claims for unemployment benefits was lower than economists expected. Combined with Walmart's strong profitability, some recession fears have been dispelled.
Evans refused to say whether or not he would support a rate cut at the Fed's next meeting in September, but he reiterated that if the economy is not overheating, there is no need to continue to implement tightening policies.
Earlier this week, Evans told the Associated Press that the Fed needs to cut rates before the labor market softens further, otherwise it may act too late and endanger the economy.
On Friday, when asked about possible rate cut levels, Evans said that "all scenarios are always being considered."
Over the past year and a half, inflation has fallen sharply, the unemployment rate has risen slightly, and the labor market is cooling. We hope it stabilizes at the level of full employment. Some are concerned about whether (inflation) will stop falling.
Editor/ping