Standard Chartered told clients last month the Fed might have to cut rates more than expected if the economy started showing certain signs. Now one of those signs is here and it makes a bigger cut on Sep 17 more likely.
“The chance of a 50bps cut will rise if inflation data for July and August miss expectations and the job market slows further,” the bank wrote in its Aug. 8 weekly review.
The July nonfarm payrolls report already hinted at weakness, but August data painted an even starker picture: the economy added just 22,000 jobs — all of them part-time.
Revisions also showed that the U.S. lost jobs in June for the first time since the pandemic, while unemployment edged higher.
On the inflation side, July’s Consumer Price Index came in softer than forecast, but the Fed’s preferred gauge — core PCE — accelerated as expected, reaching its highest level since February.
With the labor market in decline, some analysts argue investors may be discounting the likelihood of a half-point cut at the Fed’s next meeting.
Futures markets still see such a move as unlikely, but critics say the central bank risks once again falling behind the curve.
The Fed is late (again)
After being slow to raise interest rates in 2022 as inflation surged, the Fed is now moving too late to cut rates in the face of a weakening economy, according to experts.
The Kobeissi Letter agues that President Trump has been vindicated in his repeated calls for immediate rate cuts.
“Based on recent data, President Trump’s calls for rate cuts beginning 5 months ago were correct,” The Kobeissi Letter wrote. “However, it’s also clear that the Fed was correctly basing their decisions in early 2025 on the wrong data.”
That data initially suggested cooling inflation and a resilient labor market, which has since proven misleading.
On the jobs front, the Bureau of Labor Statistics (BLS) has revised down employment growth by a staggering 1.1 million positions since February 2022.
It's worse than you think:
undefined The Kobeissi Letter (@KobeissiLetter) September 6, 2025
After a SECOND data revision, the US went from undefinedaddingundefined 147,000 jobs in June 2025, to LOSING -13,000 jobs.
Cumulative payrolls have now officially been revised down by -1.1 MILLION jobs since February 2022.
What is happening here?
(a thread) pic.twitter.com/fSMWbve3ZS
President Trump seized on the data controversy to dismiss BLS Commissioner Erika McEntarfer in early August. He has since said he will nominate Heritage Foundation chief economist E.J. Antoni — a longtime critic of the agency’s data — to the role.
The administration says the Bureau’s data quality will improve next year following planned changes to its collection and reporting methods.
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