BlackRock Think Tank: Cooling Labor Market Becomes Key Catalyst for Fed Rate Cut in December.

BlackRock Institute's latest article states that due to the prolonged government shutdown in the United States, data releases have been delayed, making it more difficult for the Federal Reserve to assess the economic situation. The Federal Reserve is concerned that the labor market may further weaken, hence they see it necessary to implement a "risk-management" style interest rate cut. The Federal Reserve has already cut interest rates twice this year and will continue to use the weakened labor market as a key factor in their decision making. According to BlackRock, September's employment report and other related data indicate that the U.S. labor market is currently in a state of stagnation where employers are neither hiring nor laying off workers. Since the beginning of the year, employment growth in the United States has slowed down, with both labor demand and supply decreasing, mainly due to a sharp decline in immigration numbers. The level of job growth needed to maintain a stable unemployment rate has also decreased. This explains why wage growth is still robust, and why the unemployment rate has only slightly increased this year and remains at a historically low level.