The Federal Reserve cut rates for a third straight meeting on Wednesday in what analysts call a “hawkish” move: an attempt to support a softening labor market while signaling reluctance to keep cutting.
The government’s long-delayed JOLTS report, released Tuesday, added another layer. Job openings in October rose modestly, but remained far below last year’s levels; the quit rate fell to 1.8%, the lowest since early 2021; and hiring remained stuck at 3.2%, consistent with what economists and Powell himself have called a “low hire, low fire” labor market. Companies aren’t slashing staff outright—but they aren’t expanding either. That’s enough to worry economists.
“Low hiring on its own is bad news,” top economist and Fed-watcher Claudia Sahm told Fortune. “It puts upward pressure on unemployment, and that’s the dynamic the Fed is trying to get ahead of.”
The Fed sought to balance labor-market concerns with the political sensitivity of cutting rates while inflation is still elevated.
Still, Powell cannot declare victory or signal a pause with confidence. The November jobs report arrives just days after the meeting, and he will want flexibility in case that comes out worse than expected, so he doesn’t look “flat-footed,” Sahm said.
For the Fed, the goal is to smooth out the cycle—to cut early enough to prevent a deeper downturn without abandoning the fight against inflation, still sticky at 2.8%, higher than the Fed’s preferred rate of 2%. Sahm, who helped design the Fed’s framework for interpreting labor-market inflection points, argues timing is crucial.
“If the Fed waits to cut until they see clear deterioration, they’ve waited too long,” she said. Initial jobless claims remain low, she noted, but they are not predictive. As a lagging indicator, they tend to spike only after a recession has begun.
The central bank’s challenge now is to navigate between those competing risks while markets, the White House, and Congress push for clarity the Fed cannot yet provide.
If the Fed has to continue easing into early 2026, Sahm argues, it will not be a bullish signal.
“If they end up doing a lot more cuts,” she said, “then something has gone wrong.”
