JPMorgan Says August Jobs Report Is Proof US Economic Slowdown Is Underway – Here’s the Bank’s Outlook on Fed Rate Cuts

Analysts at the financial giant JPMorgan say the tepid August jobs report is evidence of the US economic slowdown.

In a new analysis, Seth Carlson, an editorial staff member at the firm’s wealth management arm, and Vinny Amaru, a global investment strategist, cite the new Bureau of Labor Statistics (BLS) report, which noted that total nonfarm payrolls gained 22,000 jobs in August, far fewer than the 75,000 that were expected.

The unemployment rate also moved up from 4.2 to 4.3 last month, according to the BLS.

Carlson and Amaru note that major stock indices dropped after the report, arguing the market reaction suggested “tempered near-term investor optimism, as the economy shows signs of slowing.”

“Our strategists believe that the latest jobs data should keep the Fed on track to cut interest rates at its upcoming September meeting, likely by 25 basis points as hiring continues to cool. Any interest rate cut would be the Fed’s first since December 2024.

While the lower-than-expected payroll figures show that a slowdown in the economy is underway, our strategists maintain that a recession is still unlikely.”

The CME FedWatch Tool, which generates probabilities using the 30-day Fed Funds futures prices, estimates there is a 93 chance the Fed will cut the federal funds target rate by 25 basis points at the FOMC meeting later this month.