What’s next?
Investors today are looking to Wyoming, and it’s not to book a national park getaway before the summer comes to an end. The annual Jackson Hole Economic Policy Symposium hosted by the Kansas City Fed is underway, with Chairman Jerome Powell set to take the stage at 10:00 AM ET. The theme of the 2025 conference is titled “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy,” which will come at a time when labor market indicators are being challenged and questions swirl over real-time economic data.
Snapshot: The recent massive revision to nonfarm payroll numbers not only made waves after President Trump ousted the head of the Bureau of Labor Statistics, but also sent policymakers scrambling to make sense of the new numbers. The 258K jobs that were previously thought to have been added in May and June were actually non-existent, meaning the U.S. only added 19,000 and 14,000 jobs for those two months, respectively. Another weak NFP gain of 73K was later recorded in July, indicating a broad slowdown in job growth for the overall labor market.
Typically, that would have seriously worried many Fed officials (and some are), but others are still debating root causes to determine the path forward for monetary policy. If the underlying reasons are linked to Trump’s immigration policies and baby boomer retirement, it might not warrant a strong shift in monetary policy since the downturn is based on labor supply. However, if hiring fundamentals are no longer intact, it could require a bigger dose of monetary stimulus, though that could also be complicated by signs of inflation heating up in the latest CPI and PPI prints.
The big show: Fed Chair Jerome Powell is likely to share some of his thoughts on the matter this morning and what it might mean for the interest rate outlook and long-term policy goals. Wild trading can ensue following the closely watched event, like the notable Jackson Hole hangover of 2022, which saw all three of the major averages slump between 3%-4% after Powell shot down any hopes that the Fed would telegraph a pivot on its aggressive policy tightening. “Equity markets, for its part, are entering this [year’s] symposium near their highs, and stocks are largely priced for further confirmation of an easing in rates in September,” SA Analyst Justin Purohit noted. “That does leave investors vulnerable if Powell’s speech underwhelms and delivers unexpected surprises.”
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