The Chicago Fed model estimates that U.S. employment has clearly cooled, with the unemployment rate remaining at 4.3%
The Chicago Fed model shows that the U.S. unemployment rate remained around 4.3% in October, indicating a cooling job market but not out of control. Due to the government shutdown, official data has been suspended, and the model estimates are based on private sector data. The current results are consistent with the rising trend of unemployment claims in some states, showing that the job market is cooling but has not entered a recession. The Federal Reserve is expected to cut interest rates by 25 basis points to address the risks of economic slowdown and rising unemployment
According to the Zhitong Finance APP, on Monday, in the context of the federal government shutdown leading to the suspension of official labor data releases, the model constructed by the Chicago Federal Reserve using private sector data indicated that the U.S. unemployment rate in October remained roughly around 4.3%, consistent with the official reading from August, suggesting that the job market is further cooling but has not shown signs of losing control.
The Chicago Federal Reserve previously estimated that the unrounded unemployment rate for September was 4.34%, and 4.35% for August. Due to the absence of official unemployment data for September, the model was forced to use the previous month's "real-time estimate" as a benchmark to infer the October level. The Chicago Federal Reserve cautioned that this approach may accumulate errors if the government shutdown lasts for an extended period, but it expects the impact to remain "limited" in the next one to three months.
This model combines various private sources and is highly correlated with different aspects of the labor market. The Chicago Federal Reserve noted that the current estimate aligns with a slight upward trend in unemployment claims in some states that are still reporting normally, indicating that U.S. employment has clearly cooled but has not entered a recessionary deterioration.
The Federal Reserve will hold a monetary policy meeting this week, and the market widely expects another 25 basis point rate cut, both as a precautionary measure against the risks of economic slowdown and data blind spots, and to preemptively hedge against potential sudden upward pressure on the unemployment rate
