It's too late

“And it’s too late, baby, now it’s too late. Though we really did try to make it. Something inside has died. And I can’t hide, and I just can’t fake it.”

- WILSON SY

These famous lines from Carole King’s timeless song may strike a chord with the Federal Reserve as it shifts toward policy easing. After years of trying to bring inflation under control and achieve a soft-landing, the Fed is once again confronted with a familiar dilemma: Is it too late in cutting its policy rates to avert a recession?

Too late again?

The Fed was in a similar “too late” position in 2022. Ongoing debate whether inflation was transitory or persistent led to delays in raising interest rates. By June 2022, inflation surged to 9.1 percent, its highest level in four decades. As a result, the Fed was forced to implement aggressive rate hikes, a decision some analysts believe could have been avoided with earlier action.

Weak job growth raises alarms

The US jobs report, announced on Sept. 6, has added to market concerns. In the last three months, the private sector has averaged only 96,000 new jobs per month—a pace not seen since the summer of 2007, just before the global financial crisis. This slowing pace of job growth shows underlying weaknesses in the economy.