The surprisingly stable April jobs report just made incoming Federal Reserve Chair Kevin Warsh’s cues from the White House to slash interest rates next month a good deal more difficult to execute.
Despite rising energy costs fueled by the Iran War, U.S. employers added more jobs than expected for a second month and theunemployment rate held steady in April, the Bureau of Labor Statistics reported May 8. – Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024. – The unemployment rate was unchanged at 4.3%
Investors and economists debate how this could shift the Fed’s rate cut outlook from the central bank’s current “wait-and-see” approach. Bill Adams, Chief U.S. Economist at Fifth Third Commercial Bank, said a falling labor force participation rate shows that the job market’s emerging problem is a shortage of workers. “For the Fed, growing payrolls and a falling labor force are one more argument against a rate cut,’’ Adams told TheStreet in an email.
The labor market appears to be gaining steam after near-zero job growth in 2025. Hiring increased across a variety of sectors, including retail trade, healthcare and transportation and warehousing. Yet signs of the “low-fire, low-hire” patterns of employers linger. “It’s still a high-anxiety job market,” Diane Swonk, chief economist at KPMG, told The Wall Street Journal. “Those who have a job are clearly clinging on, while those looking for a job are feeling frozen out.” Bloomberg Economics’ Anna Wong said the April jobs report doesn’t change their forecast as to the “trajectory” of the benchmark Federal Funds Rate. “The central bank is still on track to keep rates steady until the fourth quarter, when we expect it will cut rates by 50 basis points as the unemployment rate climbs,” she said.