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In June, the U.S. economy created 224,000 jobs, surging past analyst expectations of 160,000, raising questions about how -- or if -- the report would affect the central bank’s monetary policy.
“The straight answer to your question is no,” Powell said before the House Financial Services Committee. “Since the June meeting, and for a period for that, the data have continued to disappoint. And that’s very broad, across Europe and around Asia, and that continues to weigh.”
Powell noted that while the jobs report was positive -- “that’s great news” -- there are other factors influencing the Fed’s decision-making.
For instance, despite President Trump and Chinese President Xi Jinping agreeing to a tariff ceasefire and a renewal in trade negotiations two weeks ago at the G-20 summit in Osaka, Japan, Powell said uncertainties surrounding the year-long trade war continue to persist.
“While that’s a constructive step, it doesn’t remove the uncertainty as overall weighing on the outlook,” he said. “I would say that the bottom line for me is that the uncertainties around global growth and trade continue to weigh on the outlook. In addition, inflation continues to be muted. And those things are still in place.”
Analysts did not expect the jobs report, however, to make or break the Fed’s decision.
Dan North, the chief economist at Euler Hermes North America, told FOX Business ahead of the testimony that a rate cut was still entirely possible, despite the blockbuster employment report. That’s because, even with a solid job growth number last month, the six-month job creation average is slowing down.
“The labor market is slowing down,” he said. “There’s really no getting around that.”
The report is a lagging economic indicator, and the Fed is a forward-looking body tasked with monitoring other factors -- such as the yield curve. The spread between the 3-month and 10-year has been inverted for nearly seven weeks, worrying economists about the possibility of a recession.