The latest numbers from the Bureau of Labor Statistics report showed that unemployment in the US ticked down slightly to 4.2% in August, as most experts had predicted.Â
Although that's about the same as it was in July, unemployment is up from where it was last year at this time, when the jobless rate was 3.8%. The Federal Reserve factors in employment data when assessing the health of the economy. Higher unemployment could prompt the central bank to finally lower sky-high interest rates.
The jobs report comes on top of revised data from the BLS released Wednesday showing that about 818,000 fewer jobs were created between March 2023 and March 2024 than had previously been reported.
A slowing job market signals that the once red-hot US economy is cooling, but inflation is also slowing. The Fed’s preferred inflation indicator showed prices rose by 2.5% annually in July, the same as it did in June and coming in slightly under expectations.Â
All this means that the Fed could finally have enough data to decide it's time to lower historically high interest rates. The Fed has left the federal funds rate at a target range of 5.25% to 5.50% since last summer in an attempt to bring soaring inflation back down to 2%.Â
Most experts expect the Fed to cut interest rates at its next meeting on Sept. 17-18. Lower interest rates can make it less expensive to get a mortgage or pay off credit card debt, but it can also mean lower earning rates for CDs and high-yield savings accounts.
