Brusuelas: Weak September Jobs Report Will Force Fed to Hold Interest Rates

The U.S. labor market is transitioning into a "low-fire, low-hire" phase, characterized by a modest 29,000 job gain that remains above the 35,000 monthly threshold required for stability. Joe Brusuelas, chief economist at RSM, attributes this cooling trend to long-term demographic shifts, specifically baby boomer retirements, and restrictive immigration policies that constrain labor supply. While the unemployment rate sits at a healthy 4.2%, stagnant real wage growth and rising energy prices pose risks to middle-class stability. Despite these labor constraints, the broader economy shows resilience with projected quarterly growth between 3.5% and 4%, driven by massive investments in artificial intelligence infrastructure. This cooling employment data likely removes an October interest rate hike from the Federal Reserve's agenda, though persistent service-sector inflation suggests further hikes remain probable in December and early next year.