Fed Eyes Rate Cuts As Fragile Labor Market Raises Recession Risk

Federal Reserve Chair Jerome Powell signaled policymakers may cut rates next month, citing a weakening labor market after revisions showed slower job growth, according to The Wall Street Journal. The U.S. faces a precarious “low-hire, low-fire” environment where companies are reluctant to hire but also reluctant to lay off workers. Economists warn that even a modest rise in layoffs could trigger job losses and recession risk. Tariff uncertainty, higher rates, and potential overhiring after the pandemic have weighed on hiring, leaving younger and poorer workers struggling most. The Fed is uneasy as the fragile balance raises the chance of a downward spiral if conditions worsen.