- Businesses sentiment has picked up in some ways, but not yet on the hiring side.
- Businesses still do not seem to be planning layoffs.
- Credit card, other data providing a sense that July consumer data may be stronger.
- Manufacturers are all struggling with supply chains to account for tariffs.
- Consumers are ready to trade down, may make firms more cautious about passing along tariff costs.
- Unemployment rate has been remarkably stable with slowing growth in job gain matched by slowing growth in labor force.
- Businesses have been holding back on hiring, so may not have much to cut even if there is pressure on costs.
The challenge for the Fed is the perception that policy remains restrictive relative to the neutral rate. Yet anecdotal evidence doesn’t fully align with the weaker jobs data from August 1—potentially reflecting the impact of immigration shifts rather than widespread corporate layoffs. Meanwhile, tariff-driven inflation further clouds the policy outlook, making it harder to draw clean conclusions.
Fed officials have been more neutral about policy. The market however still is leaning toward a September rate cut of 25 basis points.
So far, Fed Chair Jerome Powell has remained quiet this summer. That changes next week when he delivers his keynote address at the Jackson Hole Economic Policy Symposium on Friday, August 22, 2025, during the August 21–23 event. With today’s inflation data in hand, it seems likely Powell will stick to the status quo, emphasizing that more incoming data will be needed to clarify the economic picture for him and other Fed officials. One week from tomorrow, markets will know whether the Fed chair has signaled any shift—or reaffirmed his current stance.
This article was written by Greg Michalowski at investinglive.com.