The next Federal Open Market Committee (FOMC) meeting will take place on July 30-31, and Federal Reserve Chair Jerome Powell and officials will decide on whether to cut rates. Yet, some economists are questioning if a rate cut is a good idea.
Jason Furman, former chair of the Council of Economic Advisers and professor at Harvard University's Kennedy School of Government, joined Yahoo Finance’s The Final Round to discuss the state of the economy ahead of the upcoming FOMC meeting.
“The unemployment rate is still coming down. The employment rate is still rising. So this is an economy that the Fed has been allowing to grow faster than its potential growth rate” said Furman.
Last month’s U.S. jobs report went far beyond expectations by adding 224,000 non-farm payrolls in June. The health care, business services, transportation and warehousing sectors showed the biggest gains.
The latest data on the U.S. GDP shows the that while there was a slow down in growth, there was 2.1% growth in the second quarter, beating estimates. Consumer activity leveled out the loss felt in business investment.
The Fed is expected to cut rates by either 25 or 50 basis points, and Furman does not see a strong case for this move. “There’s actually less of a fiscal risk now than there’s been most anytime for the last decade ... I just don’t see an economic case for 50 basis points; I’m not sure I even see one for 25.”
Devin Southard is a Producer at Yahoo Finance.