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September jobs report buys Fed 'breathing space' in cutting cycle

The September jobs report brought positive news to Wall Street as the US economy added 254,000 jobs while the unemployment rate ticked slightly lower to 4.1%. Guy Berger, Burning Glass Institute director of economic research, joins Morning Brief to discuss the print and what it means for the Federal Reserve's interest rate-cutting cycle. "I thought it was great news. I think I've been mildly pessimistic thinking we've been seeing this bit-by-bit deterioration in the labor market with each report. And I think there's been a worry that even if we don't have recession, unemployment is just going to be quite a bit higher by the end of the year. And I think this buys us some breathing space and gives policy more time to kick in and keep the labor market in what Fed Chair Powell thinks is a good place," Berger tells Yahoo Finance. However, he still has concerns about the pace at which hiring has slowed, explaining, "I'm still worried about the fact that hiring has come down as much as it has and has shown no signs of that descent moderating. So, you know, this is a good job market to have a job. Your layoffs are very low. This has been a tough job market to find a job if you need it." Yet, September's better-than-expected jobs report eases his concerns, as it allows more room for the Fed's monetary policy to kick in. While the Fed was behind the curve, he notes that the central bank is in a much better position now after delivering a 50 basis point cut in September, and the labor market did not deteriorate as quickly as many expected. Moving forward, Berger stresses the importance of more data to ensure that the labor market remains resilient and that inflation does not reignite. He concludes, "We're still in a place where the labor market has been cooling for quite a while and seems set to keep doing so for a little while longer." For more expert insight and the latest market action, click here to watch this full episode of Morning Brief. Read more: How does the labor market affect inflation and the Fed? This post was written by Melanie Riehl