Fed Fumbles Again: Top Economist Slams Powell's Job Market Misstep

The Fed Got it Wrong Again: Top Economist Slams Central Bank as Job Gains Collapse In a scathing critique, renowned economist Mohamed El-Erian accused the Federal Reserve of making another policy mistake, echoing President Donald Trump's criticism of the central bank and Chairman Jerome Powell. The latest jobs report revealed a dismal 22,000 new jobs in August, with revisions showing June actually saw a decline. The unemployment rate edged up to a four-year high of 4.3%, sparking concerns about the economy's resilience. El-Erian, chief economic advisor at Allianz, told CNBC that the Fed is behind the curve in lowering rates now that the economy is slowing, just as it was tardy in hiking rates when inflation was spiking. The Numbers: 22,000 new jobs added in August Revisions show June saw a decline in employment Unemployment rate edges up to 4.3%, a four-year high Market Implications: The dismal jobs report has sent shockwaves through the markets, with investors growing increasingly anxious about the economy's prospects. The S&P 500 index fell 1.2% on Friday, while the Dow Jones Industrial Average dropped 1.5%. The yield on the 10-year Treasury note plummeted to a record low of 0.52%. Stakeholder Perspectives: Mohamed El-Erian, chief economic advisor at Allianz: "I think they have gotten it wrong... They're behind the curve in lowering rates now that the economy is slowing." President Donald Trump: "The Fed made a mistake by raising interest rates too high and too fast. It's a big problem for us." Future Outlook and Next Steps: As the economy continues to slow, the Fed faces mounting pressure to adjust its monetary policy. El-Erian's comments have sparked renewed calls for rate cuts, with some economists predicting a 50-basis-point reduction in the next few months. However, others caution that the Fed must balance the need for stimulus with concerns about inflation and asset bubbles. "The Fed needs to be careful not to overreact," said David Rosenberg, chief economist at Gluskin Sheff. "We don't want to create a situation where we're fueling another bubble." As the central bank grapples with its next move, one thing is clear: the economy's resilience will depend on the Fed's ability to navigate this treacherous terrain. What's Next? The next Federal Open Market Committee (FOMC) meeting is scheduled for September 17-18. Markets are bracing for a potential rate cut, but the timing and magnitude of any reduction remain uncertain. As El-Erian's comments demonstrate, the stakes are high, and the Fed must get it right this time to avoid exacerbating the economic slowdown. *Financial data compiled from Fortune reporting.*