- Mass layoffs are in the works…
- Do we really need a “low interest rate” guy?…
- Can you imagine stock market wins 138 times bigger than Nvidia? If you’re like most people, probably not. But then again, most people haven’t seen this report.
Dear Reader,
Ill omens begin to proliferate… and straws sway worryingly in the wind.
I refer you to the looming prospect of mass pink slip issuances.
I learn that 39,006 American laborers received advance layoff notices in October — second-highest since the plague year of 2020.
These were issued under the Worker Adjustment and Retraining Notification Act.
Under its provisions, employers must give 60 days notice of substantial layoffs or plant shutterings.
The October figure represents a 162% leap from August’s figure.
Meantime, the 12-month average comes in at 26,927. Not since the locust year of 2008 have these issuances attained such scale.
All the while, United States employers have announced 1,099,500 job axings this year through October.
That figure represents the second-highest figure since the bleakness of 2009.
What’s Going on Here?
A question then dangles naturally in the air: Why?
What lies in back of it all?
Do employers observe recessionary writing upon the cracking wall?
Is it because artificial intelligence is turning the human employee out upon the pasture, obsolete?
Here is the Kobeissi Letter:
- What is driving massive job cuts in the US?
- US-based employers have announced 1,099,500 job cuts in the first 10 months of 2025, the 2nd-highest since 2009.
- 20.9% of those layoffs were driven by “unfavorable” market and economic conditions.
- 7.0% of job cuts were made to reduce costs, while 4.4% were as a result of AI.
- In October alone, US companies announced 153,074 job cuts, the worst October in 22 years.
- 32.9% of October’s cuts were due to cost-cutting, 20.3% due to AI, and 13.8% due to market and economic conditions.
- AI automation is only part of the narrative for layoffs.
Thus artificial intelligence cannot brunt the full load of blame. Nor even the majority of it.
The central villains of this labor tale are “unfavorable” market and economic conditions… and cost-reduction.
The Fed’s Definitely Going to Cut, Right?
Thus you can expect the Federal Reserve to hatchet interest rates during its December meeting.
Full employment is, after all, one pillar of its dual mandate, so-called.
Yet do not forget… tamed inflation represents the second pillar of its dual mandate.
And inflation remains a prickly thorn in the Federal Reserve’s flesh.
So, what do we learn from the freshly released minutes of the Federal Reserve’s October confabulation?
We learn that certain members of its Open Market Committee argued that a rate reduction “could well be appropriate in December…”.
Yet we also learn that:
- Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.
And that:
- Most participants noted that, against a backdrop of elevated inflation readings and a very gradual cooling of labor market conditions, further policy rate reductions could add to the risk of higher inflation becoming entrenched or could be misinterpreted as implying a lack of policymaker commitment to the 2 percent inflation objective.
The Fed’s Frustrated About Inflation
I am far from convinced that the United States economy confronts a “gradual cooling of labor market conditions.”
I would suggest instead a far more abrupt freezing of labor market conditions.
Yet I let it pass. The central kernel is that inflation continues to scandalize the Federal Reserve and injure its professional pride, such as it is.
The Federal Reserve therefore has its blood up — and its back up. It does not absorb insults well.
Thus it will likely stand firm against inflation, for now at least.
And so I do not expect a December rate reduction.
Nor, incidentally, does the market itself.
Upon the release of yesterday’s minutes, the odds that the Federal Reserve would hold steady in December leapt to 68%.
Just one day prior, those odds came in at 50%.
A “Low Interest Rate Guy” Will Replace Powell
Yet Chairman Powell will preside over a mere handful of additional meetings of the Federal Open Market Committee.
His tenure expires next May. You can be certain President Trump will appoint a “low interest rate guy” in his place.
Yet does the “hottest country anywhere in the world” — as the president styles the United States — require low interest rates?
Economics professor Joshua Stillwagon:
- President Donald Trump seems to want to have it both ways on the U.S. economy.
- On the one hand, he recently said the economy is in its “golden age” and referred to the U.S. as the “hottest country anywhere in the world.”
- Yet at the same time, he has outright demanded that the Federal Reserve sharply slash interest rates to fuel economic activity…
What about inflation?
- In the simplest terms, the Fed raises interest rates when… inflation is above the Fed’s 2% target…
- According to the Fed’s preferred measure, the personal consumption expenditures index, inflation has been accelerating… well above the Fed’s 2% target.
I have often argued that the Federal Reserve wields far less influence over economic affairs than widely believed.
Yet the perception is the perception. And many perceive Federal Reserve omnipotence.
Be Careful What You Wish for, Mr. President
I would remind the president that the voting public is acutely sensitive to inflationary flarings.
They detect it at the filling station, at the grocer and elsewhere.
I would further remind the president that the precious midterm elections are one year distant.
In midterm elections, voters often train their cannons upon the incumbent party.
And voters may well turn his party out should inflation continue to hold them in siege next November.
Absent congressional majorities, the president’s remaining agenda would therefore die the death.
It would be bottled up in Congress.
Thus he would be reduced to a duck with a very lame gait.
He may prefer a low interest rate guy to replace Mr. Powell, it is true.
Yet he might be careful of that for which he wishes.
Regards,
Brian Maher
for Freedom Financial News
