Cooling Job Market

Matthew Allgood |



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The Federal Reserve recently decided to keep interest rates at a 22-Year high for the second time in a row. Fed Chair Jerome Powell, during a press briefing, showed caution, raising doubts about future rate hikes. The U.S. job market has cooled off, and this is guiding the Federal Reserve's approach. It suggests that interest rates will likely stay the same through December. This marks a change from the last four decades' very aggressive rate-hiking campaign. In the latest job report, the unemployment rate went up to 3.9%. Monthly wage growth has slowed, and nonfarm payrolls increased by 150,000, which is less than expected. September's numbers were also revised downward. Although this slowdown might ease concerns at the Fed, there are still questions about the long-term impact of keeping interest rates high for a while.


Economic downturns often involve a shrinking job market and less job growth. We've been seeing early signs of this since the peak following the COVID-19 pandemic. Whether there will be a recession and how severe it might be is uncertain and beyond everyone’s control. This is why investors should focus on factors they can manage, such as risk, and why our RiskFirst® approach focuses on managing drawdowns to be within a client’s risk tolerance.


Cooling Job Market


A graph showing the average number of payrolls

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Source: Bloomberg, Redwood. Data as of 11/3/2023. Date Range from 3/31/1939 - 10/31/2023. For illustration purposes only.



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Disclosure: This piece is for informational purposes only and contains opinions that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss.  Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.


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