The Federal Reserve broke its 11-year hiatus from lowering its federal funds rate, while job growth slowed and layoffs increased. ??Interest Rates ??Dominating financial headlines was the news that the Federal Reserve had decided to lower the target range for its federal funds rate by a quarter percent to a range of 2 to 2.25 percent. This was the first time the Federal Reserve had cut its federal funds rate since the 2008 economic crisis. ??However, unlike the 2008 rate cut to help rescue the economy, the Fed's recent move was made to shore up and protect an already well-performing economy in the face of "global developments" and "muted inflation pressures," according to a statement from Federal Reserve's Federal Open Market Committee (FOMC). Most in the financial press took "global developments" to mean ongoing trade scuffles with China. ??"The outlook for the U.S. economy remains favorable, and this action is designed to support that outlook," Jerome Powell, chairman of the Federal Reserve, told members of the news media at a press conference ??Neither the FOMC nor Powell would give any certainty on whether or not the Fed would make further adjustments to the federal funds rate. ??"As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective," the FOMC statement read. ??Employment ??The economy added 164,000 jobs in July, with key growth sectors including professional and technical services, healthcare, social assistance, and financial activities, according to last week's report from the Bureau of Labor Statistics. This was about on par with economists' expectations of 163,000 new jobs but marked a noticeable decline in the pace of job growth from June's 193,000 jobs. ??The unemployment rate for July saw no change, hovering at 3.7 percent, with the population of unemployed Americans totaling 6.1 million people. Notably, the number of long-term unemployed - those out without a job for 27 weeks or longer - fell by 248,000 to 1.2 million, representing 19.2 percent of the total unemployed population. ??Average hourly earnings for all employees rose by 8 cents in July to hit $27.98. This followed an 8-cent gain in June. Compared to the same period a year ago, average hourly earnings have grown by 3.2 percent since July 2018. ??Initial Jobless Claims ??First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending July 27 grew to 215,000, a gain of 8,000 claims from the preceding week's total of 207,000, the Employment and Training Administration reported last week. ??The four-week moving average, regarded as a more reliable measure of initial jobless claims, declined to 211,500, a drop of 1,750 claims over the previous week's average of 213,250. This marked the 230th week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.
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