TechFlow, August 2 — According to Jinshi Data, Federal Reserve official and Powell ally Williams said, "The labor market conditions I've observed over the past year can be described as 'moderate and gradual cooling,' but overall remain solid." Although the unemployment rate rose only slightly to 4.2% in July (from 4.1% in June), the relatively weak nonfarm payrolls data have created room for Powell to build consensus around rate cuts. Williams pointed out that the significant downward revisions to job growth figures for May and June were the real focus of this report. He said, "This information is crucial in helping us understand the direction of labor supply and demand, and the trend of cooling momentum in the labor market." On the possibility of a rate cut in September, Williams remained cautious and did not endorse market expectations, which had briefly reached as high as 80%. He stated, "The challenges facing market participants are the same as those we face as policymakers. The market's directional reaction to signals is, in my view, understandable." Williams expects U.S. economic growth to slow to about 1% this year, but believes the economy could rebound by 2026.
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