The Federal Reserve is poised to cut interest rates for the third time this year. The market broadly expects a modest 0.25 percentage point reduction—the same size as the prior two cuts. Yet the central bank’s rate-setting meeting in Washington is shrouded by a data blackout caused by the ongoing federal government shutdown. While the September jobs report has been released, October’s report was canceled, and November’s remains delayed, with a December 16 release date anticipated for the latter. October’s consumer price index also was canceled, and December 18 is expected to bring late inflation data for November.
Across the board, alternative indicators point to a cooling labor market. ADP’s latest private payrolls data indicated 120,000 job losses among small businesses in November, contributing to a net loss of 32,000 jobs nationwide. With few government data releases available during the shutdown, Fed officials face the challenge of weighing a cooling jobs market against persistent inflation pressures.
Among the few government measures available, the personal consumption expenditures price index—Fed’s preferred inflation gauge—rose to 2.8% in September from a year earlier, up from 2.7% in August and 2.6% in July, though the data are already several months old. The report also noted flat consumer spending in September, and when volatile food and energy costs are excluded, spending edged up by only 0.2%.
The JOLTS report released Tuesday morning did not offer an outlook that would assuage the Fed. Citigroup analysts highlighted ongoing “very low-churn” in the labor market, with the hiring rate at 3.2% and the quit rate dropping to a new low of 1.8%. The delayed October jobs data is expected to carry a roughly 65,000-worker drag due to buyouts offered to federal employees earlier in the year.
Tariffs linger as another potential headwind. The Supreme Court recently heard arguments challenging President Trump’s authority under an emergency law to impose broad tariffs, with a decision anticipated in the near term.
Banks are also feeling the strain. Charlie Scharf, Wells Fargo’s chairman and CEO, said that while business customers remain strong in the long term, tariffs are causing short-term pressure, especially on hiring and investment as firms focus on managing costs. Wells Fargo ranks as the fourth-largest U.S. bank by deposits. Scharf noted that firms are readjusting to tariff-driven costs, preserving margins by prioritizing cost discipline rather than expanding for growth.
Marianne Lake, JPMorgan Chase’s head of consumer and community banking, described the consumer environment as somewhat fragile. From her vantage point serving over 85 million consumers and seven million small businesses, she observed resilient overall conditions but less capacity to absorb incremental stress in the economy.
Steve Kopack, senior NBC News business and economy correspondent, provides this briefing on a landscape where data gaps, inflation persistence, and trade tensions intersect with slower hiring and cautious business investment. The question remains: will the Fed maintain a cautious approach or alter its stance as new data finally emerge? And how will policymakers balance the risk of persistent inflation against a cooling labor market in shaping the path of rates ahead?
