You asked about the job market. Again, look at labor force participation, look at wages, look at job creation, they’re all at healthy levels now. I would say you can see, perhaps, a very, very slow continued cooling, but nothing that’s troubling at this time. But, you know, we watch it—we watch it very, very carefully.
FED CHAIR POWELL, FOMC Press Conference, June 18, 2025
Concerns about the state of the labor market are growing. The fear stems from a recent uptick in private sector layoff announcements, as well as a very slow escalation in the pace of initial and continuing jobless claims. In addition to the slowing in the housing market, the softer employment data is being seen as one of the main catalysts for the Fed to start lowering interest rates in the coming few months.
In this Economics Weekly, Richard de Chazal takes a fresh look at the latest employment data. He finds that while there is some deceleration in growth where lower rates may be needed to shore up the expansion, the labor market is also structurally tight, and while he expects to see some further softening, he does not see this as the start of a major round of layoffs leading to recession.