It's a stall-speed US economy in need of a few interest rate cuts to reignite growth.
“I think we are close to stall speed. Where exactly we are relative to stall speed, it's hard to know,” Goldman Sachs chief economist Jan Hatzius told me at the firm's annual Communacopia + Technology conference on Monday.
Hatzius thinks growth will be “relatively slow” before beginning to improve in 2026 following the Federal Reserve's interest rate cuts.
The US economy created a paltry 22,000 jobs in August, badly missing economists' estimates of around 75,000. The jobs figures for June and July were revised down by a total of 21,000 jobs. June saw a 13,000 decline in the number of jobs created.
Blame it on Trump's tariffs sowing the seeds of uncertainty among hiring managers or AI bulldozing through offices. The reality is the job market has cooled, and that has implications for investors.
US Labor Secretary Lori Chavez-DeRemer downplayed the weak jobs report, putting full blame on the Federal Reserve, as one would expect.
“If he [Fed Chair Jerome Powell] doesn't cut those rates, the American people will continue to suffer,” Chavez-DeRemer said on Opening Bid.
Hatzius is bullish on the Fed uncorking a series of interest rate cuts.
“I think they're going to deliver three cuts in September, October, December, and then probably another couple of cuts next year,” he said.
Hatzius added, “This year, fiscal policy, if you include tariffs, is a drag on growth. Next year, fiscal policy is going to be a boost to growth. So that's probably going to help. And then it's just the passage of time. I mean, if we manage to get through this slower period, then I think the risks that weakness feeds on itself diminish clearly.”
Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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