"Well, what they're hoping to avoid is a big jump in unemployment. You know, we've seen a slowdown in hiring in recent months. Employers actually cut the number of jobs in June. And, you know, just this week, we've seen some big companies announcing widespread layoffs. General Motors is cutting 1,700 factory jobs. Amazon is cutting 14,000 corporate jobs. Amazon, by the way, is a financial supporter of NPR and pays to distribute some of our programming."
"By lowering rates at the margin, that will support demand and that will support more hiring. And that's why we do it. But Powell cautions some of the slowdown in hiring is the result of fewer people being in the labor market, either as immigrants get deported or baby boomers retire. Lower interest rates are not going to change that supply of workers, but they might help to the extent that demand gets boosted."
The Federal Reserve cut its benchmark interest rate for the second time in six weeks to support a weakening job market. Policymakers aim to prevent a significant rise in unemployment amid a recent slowdown in hiring and net job cuts in June. Several large firms announced widespread layoffs, including 1,700 factory cuts at General Motors and 14,000 corporate positions at Amazon. Rate reductions are intended to make borrowing cheaper, boost demand, and encourage hiring. Some hiring weakness reflects a reduced labor supply from deportations and retirements, which lower rates cannot directly reverse. The government shutdown has limited access to key economic data.
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