The Fed got it wrong and is late again, top economist says, as job gains collapse

"That would mark another policy mistake in recent years. As the economy began to recover from the COVID-19 pandemic, prices began surging, but the Fed was slow to hike rates. When it finally started in 2022, it launched the most aggressive tightening cycle in four decades, though the economy didn't tip into a recession as was widely expected. El-Erian's remarks echo President Donald Trump's criticism of the central bank."

"The Fed should've cut rates in July, but Powell's view of the job market was too narrow and ignored the weakness that was building under the surface, El-Erian said. The risk with waiting to provide support to a weakening labor market is that it can deteriorate in a "nonlinear" fashion, meaning that job losses can quickly accelerate, he explained. For his part, Powell"

"The latest jobs report revealed the U.S. economy added just 22,000 jobs in August with revisions to prior months showing June actually saw a decline. Meanwhile, the unemployment rate edged up to a four-year high of 4.3%. "I think they have gotten it wrong," he told CNBC on Friday. "I think once again they're late. They will cut in September, and I suspect there will also be discussion should they cut by 25 or 50" basis points."

Allianz chief economic advisor Mohamed El-Erian said the Federal Reserve is behind the curve in lowering rates as the economy slows, repeating earlier tardiness in hiking rates when inflation spiked. The U.S. economy added 22,000 jobs in August, with revisions showing June saw a decline, and the unemployment rate rose to 4.3%. El-Erian predicted rate cuts in September and said policymakers may debate 25- or 50-basis-point moves. He warned that waiting to support a weakening labor market risks nonlinear deterioration that could rapidly accelerate job losses. The remarks aligned with President Donald Trump's criticism of the Fed and Jerome Powell.

Read at Fortune