{"id":21947,"date":"2025-10-23T04:08:05","date_gmt":"2025-10-23T04:08:05","guid":{"rendered":"https:\/\/incredipros.com\/?p=21947"},"modified":"2025-10-23T04:08:06","modified_gmt":"2025-10-23T04:08:06","slug":"the-fed-is-cutting-rates-but-economists-say-the-job-market-could-keep-slowing","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=21947","title":{"rendered":"The Fed Is Cutting Rates, But Economists Say the Job Market Could Keep Slowing"},"content":{"rendered":"
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First came the post-pandemic surge in prices. Then came the fastest jump in interest rates in four decades. Now, Americans are contending with a global trade war and a slowing job market.<\/p>\n

After five years of one economic headwind after another, it\u2019s no wonder many people feel uneasy about the U.S. economy. Few, however, expect it to get much better.<\/p>\n

By September 2026, economists expect the unemployment rate to climb to 4.6 percent and job growth to average just 49,000 jobs a month, less than half of its current pace, according to Bankrate\u2019s latest Economic Indicator Survey. That\u2019s far from the collapse experienced during the pandemic or the Great Recession, but it\u2019s also nowhere near the red-hot labor market of a few years ago. <\/p>\n

Economists also think price pressures will remain stubborn \u2014 a view that stands in sharp contrast to President Donald Trump\u2019s claims that inflation has been defeated. Recession odds, meanwhile, are still elevated, Bankrate\u2019s survey found.\u00a0\u00a0<\/p>\n

Those forecasts come as the Federal Reserve restarts interest rate cuts to help prevent a deeper slowdown. Policymakers are expected to cut two more times before the year ends to offer the U.S. economy more support. Yet economists don\u2019t appear to think that those moves will be enough to fully reverse the slowdown.<\/p>\n

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\n With job growth cooling and unemployment expected to edge up, workers may witness further signs that the robust job market they experienced during the past few years is in the rear-view mirror.<\/q>
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\n \u2014 Mark Hamrick, Bankrate senior economic analyst
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

Bankrate has been polling the nation\u2019s top economists on their expectations for the job market, inflation, the Federal Reserve, economic growth and more on a quarterly basis for a decade. Read on for the latest findings.<\/p>\n

Here\u2019s what the nation\u2019s top economists are expecting for the U.S. economy over the next year<\/h2>\n

Economists point to rising risks for the economy: A softer job market, sticky inflation and elevated chances of a recession<\/h2>\n

It\u2019s not an easy time to find a new job. Jobseekers now outnumber job openings for the first time since the economy emerged from the coronavirus pandemic, Labor Department data shows. Layoffs are low, but hiring has stalled. For workers, that means less leverage to negotiate higher pay \u2014 a shift many are already feeling, according to Bankrate\u2019s latest Pay Raise Survey.\u00a0<\/p>\n

Economists say businesses are cautious about hiring in an uncertain policy environment, as volatile tariff and trade disputes make it harder for companies to plan. The growing use of artificial intelligence and weaker immigration could also be weighing on job growth.\u00a0<\/p>\n

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\n An ongoing climate of caution is suppressing new hiring.<\/q>
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\n \u2014 Lauren Saidel-Baker, senior economist at ITR Economics\u00a0
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

Economists don\u2019t expect the tide to shift anytime soon. Only one economist is forecasting faster job growth and a lower unemployment rate in the year ahead, Bankrate\u2019s poll found. The majority (81 percent) expect hiring to slow and joblessness to climb over the next 12 months.<\/p>\n

At the same time, a slower job market might not take the steam away from inflation. Economists are losing confidence that inflation will return to the Fed\u2019s 2 percent target anytime soon. Just 13 percent now think that will happen by the end of next year, down sharply from 29 percent last quarter.\u00a0<\/p>\n

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\n The timeline for inflation to return to target has been significantly extended as a result of the trade war.<\/q>
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\n \u2014 Diane Swonk, chief economist at KPMG
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

Together, those trends point to a risk economists call \u201cstagflation:\u201d a rare and uneasy mix of elevated inflation and rising unemployment.\u00a0<\/p>\n

Most economists in Bankrate\u2019s survey don\u2019t see full-blown stagflation \u2014 an outcome the U.S. economy last experienced in the 1970s and \u201880s \u2014 as the most likely outcome. Yet, they acknowledge that elements of it are already emerging. Many in Bankrate\u2019s poll are dubbing it as \u201cstagflation-lite.\u201d<\/p>\n

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\n Stagflation will not be a risk if we use its true definition. We don’t think inflation will get above 5 percent, like what happened during Covid. But something like stagflation-lite, with both inflation and unemployment going up, is a real risk.<\/q>
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\n \u2014 Tuan Nguyen, economist at RSM
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

Consumers are already appearing increasingly tapped out. Stubborn inflation and a weaker job market could make that even worse. More than 2 in 5 Americans with a credit card (46 percent) report carrying a balance, Bankrate\u2019s Credit Card Report found. About a quarter (23 percent) don\u2019t think they\u2019ll ever pay it off. Low-income Americans are disproportionately more likely to carry a balance, the report found. More than half (56 percent) of cardholders making under $50,000 a year reported carrying a balance, versus 34 percent of those earning $100,000 or more.\u00a0<\/p>\n

All of those risks help explain why economists still see elevated odds of a recession over the next 12 months. Economists don\u2019t think a recession is as near a certainty as they did a few years back. Back in 2022, those odds were as high as 65 percent. Those chances, however, are up from 26 percent at the end of 2024 and 36 percent in the first half of 2026.\u00a0<\/p>\n

A rising share of economists (13 percent) now say the odds of a recession are higher than a coin flip, or 50 percent. No economist in Bankrate\u2019s prior quarter poll previously expected that the U.S. economy had that high of a chance. The economy\u2019s current recession chances ranged from as high as 80 percent to as low as 18 percent, according to respondents.\u00a0<\/p>\n

In short, economists say the economy isn\u2019t falling off a cliff, but it could be walking on the razor\u2019s edge of a slowdown. <\/p>\n

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\n I have long held the view that economic growth would slow to near stall speed but avoid a recession in the near term. Nonetheless, the risk of recession remains high, and an adverse, unexpected shock could easily send the economy into recession.<\/q>
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\n \u2014 Bernard Markstein, president and chief economist at Markstein Advisors
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

From inflation and trade wars, to the coronavirus pandemic and intense pressure from Trump, the Fed has had its fair share of dilemmas to navigate. Periods of elevated inflation and rising unemployment pose challenges for the Fed. Keeping rates too high for too long can weaken hiring even more. Cutting rates too quickly or too soon, however, risks fueling more inflation.\u00a0<\/p>\n

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\n Powell has demonstrated resilience and pragmatism in navigating the Fed through a series of extraordinary economic shocks. While the delayed response to inflation remains a blemish, his commitment to transparency and data-driven policy earns him a high grade. <\/q>
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\n \u2014 Selma Hepp, chief economist at Cotality\u00a0
\n <\/cite>\n <\/p><\/blockquote>\n<\/div>\n

Managing your money in a cooling economy: What economists\u2019 latest forecasts mean for you<\/h2>\n

The picture economists are painting isn\u2019t entirely dire, but it likely isn\u2019t comforting, either. A slower job market, stubborn inflation and lingering recession risks point to an economy that\u2019s losing steam, even if it hasn\u2019t stalled completely. That can make it even harder to navigate your personal finances in the months ahead. Finding a new job could take longer, and your paychecks might not stretch as far.\u00a0<\/p>\n

In uncertain times like these, it helps to focus on what you can control: building a cushion of cash for emergencies and creating a game plan for when money feels tight, Hamrick says.\u00a0<\/p>\n

\u201cWhile the U.S. economy has proven remarkably resilient, the risk of recession hasn\u2019t gone away,\u201d Hamrick says. \u201cThough not inevitable over the next year, elevated risks serve as a reminder that people should prioritize emergency savings and strive to pay down highest cost debt, with credit card debt at the top of the list.\u201d<\/p>\n

1. Be prepared for longer job hunts<\/h3>\n
    \n

    When businesses pull back on hiring, the balance of power shifts toward employers, often leading to slower wage growth and fewer opportunities to switch jobs. But slower labor markets don\u2019t mean opportunities vanish \u2014 they just become more competitive.\u00a0<\/p>\n

    Lean into what sets you apart. Get comfortable demonstrating how you add to your company\u2019s bottom line, why you\u2019re worth the investment and how you\u2019re continuing to build your skills and get more efficient. Top performers often stand out, even more when hiring slows.<\/p>\n

    2. Prioritize your recession preparedness\u00a0<\/h3>\n
      \n

      Economists in Bankrate\u2019s survey still see elevated odds of a downturn, reason enough to build up a safety net, according to Hamrick. An emergency fund can be a crucial cushion if layoffs pick up or expenses rise unexpectedly.\u00a0<\/p>\n

      If you\u2019re just getting started, save what you can and keep it in an account that earns a competitive return, like a high-yield savings account.\u00a0<\/p>\n

      At the same time, focus on paying down high-interest debt as a way to free up extra cash that you can recycle back into your emergency fund. If you have credit card debt, a balance-transfer card can help you speed up your credit card payments by lowering your annual percentage rate (APR) to 0 percent for a set number of months.\u00a0<\/p>\n

      3. Stay the course with your investments\u00a0<\/h3>\n
        \n

        The stock market has looked past plenty of downside risks, crushing multiple record highs this year, but volatility could always be in store. For long-term investors, though, short-term turbulence shouldn\u2019t be a reason to panic.\u00a0<\/p>\n

        Keep any cash you might need in the next couple of years liquid and accessible. For the rest, remember that investing in financial markets has historically outpaced inflation and built wealth through ups and downs. Staying diversified, investing regularly and resisting emotional reactions to headlines remain the best ways to stay on track.<\/p>\n