The U.S. added 254,000 nonfarm payroll jobs in September as the unemployment rate ticked down to 4.1%, according to Bureau of Labor Statistics (BLS) data released Friday.
Economists expected 150,000 jobs to be added in September, slightly higher than the initially reported 142,000 job gain in August, and the unemployment rate to remain at 4.2%, according to MarketWatch. Meanwhile, previously reported job gains for July and August were revised up by 55,000 and 17,000, respectively, breaking a trend under the Biden-Harris administration of overestimating employment growth in initial estimates, with the cumulative number of new jobs reported in 2023 roughly 1.3 million less than previously thought. (RELATED: ‘Mysterious’: Shelter Costs Continue To Surge Under Biden-Harris Administration)
The Federal Reserve reduced rates by 0.5% in September following decelerating inflation and a labor market slowdown that elevated fears of an economic slowdown, marking the first change in Fed policy since July 2023 and the first cut since March 2020. The lower rates could boost purchasing power for businesses and consumers and spur hiring due to greater access to capital.
WASHINGTON, DC – SEPTEMBER 18: Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee when the Federal Reserve announced it would cut the central bank’s benchmark interest rate by 50 basis points. (Photo by Anna Moneymaker/Getty Images)
Unemployment has risen 0.7% since April 2023, when it sat at just 3.4%, according to the Federal Reserve Bank of St. Louis. Meanwhile, inflation measured 2.5% year-over-year in August, well below its recent peak of 9% in June 2022. Inflation stood at just 1.4% year-over-year when President Joe Biden took office in January 2021.
Prior to the September cut, the FOMC held its target federal funds rate at a 23-year high of 5.25% and 5.50% for eight straight meetings in an effort to combat runaway inflation. The combination of high inflation and high interest rates pushed many Americans into bankruptcy, with delinquent credit card balances reaching a 12-year high in the first quarter of 2024, according to the Federal Reserve Bank of Philadelphia.
The rate cut loosens capital constraints, which could boost economic growth. The U.S. economy grew 2.8% year-over-year in the second quarter of 2024, up from 1.4% in the first quarter.
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