U.S. Labor Market Weakening Fuels Fed Interest Rate Cut Expectations

The U.S. labor market is showing signs of weakness, as indicated by the August non-farm employment report. This trend has been observed in employment levels, working hours, and income growth, which have reverted to pre-pandemic levels. Despite these developments, experts predict that the Federal Reserve will likely cut interest rates at its September meeting. A reduction of 25 basis points is a near certainty, although if August inflation data falls short of expectations, a 50 basis point cut might be more likely.