Goldman Sachs is warning that the US economy is sputtering, citing a major downward revision of job growth numbers.
Job Growth Numbers Revised Down Sharply
The Bureau of Labor Statistics (BLS) recently slashed its June job growth figures from a previously reported 147,000 to a mere 14,000 – a massive 90% reduction. May’s numbers also took a hit, revised down from 144,000 to 19,000. This means that over the past two months, the revised job growth figures are 258,000 lower than initially reported.
Goldman Sachs: Economy at “Stall Speed”
Goldman Sachs chief economist, Jan Hatzius, stated in a CNBC interview that this weak job growth indicates the US economy is slowing significantly. He described the situation as the economy operating at “stall speed,” with growth in the first half of the year barely exceeding 1%. While acknowledging continued growth, albeit slow, Hatzius also pointed to a gradually rising unemployment rate and highlighted the increased downside risks in the labor market.
Fed Rate Cuts on the Horizon?
Hatzius believes the revised job numbers increase the likelihood of the Federal Reserve cutting interest rates in the coming months to bolster the economy and support the labor market. He suggested a series of rate cuts, possibly starting in September, and indicated that further cuts could be necessary to bring the economy back to a more neutral position.