The Strong Labor Market Bolsters the Case for Fed to Increase Rates Again

The strong labor market in the United States is bolstering the case for the Federal Reserve to increase interest rates once again, according to experts. The September jobs report, which showed the US economy added 336,000 jobs, far surpassing expectations, suggests that the labor market remains very strong and supports the need for further rate hikes. Robert Schein, chief investment officer at Blanke Schein Wealth Management, stated that the report cements the case for an additional rate hike this year and likely delays the pace of eventual rate cuts. He added that investors will need to become accustomed to the idea of higher interest rates for a longer period of time due to the strength of the economy. The market is now predicting a greater likelihood of a rate increase next month, with the CME FedWatch Tool showing a jump from a 20% probability of a rate increase in November to nearly 30% after the release of the jobs report. The resilient jobs growth also indicates that there is some cushion for the Fed’s efforts to cool inflation without causing job losses, according to Daniel Zhao, Glassdoor’s lead economist. He noted that as the labor market remains resilient, the country is one month closer to exiting 2023 without a recession.