Why This Jobs Report Could Be the Most Pivotal One in Years

A fresh jobs report set for release on Friday could mark a turning point for the American economy, making it one of the most important and closely watched pieces of data in years.

The employment numbers will shed crucial light on whether a recent jump in the unemployment rate, which tracks the share of people who are looking for work but have not yet found it, was a blip or the start of a problematic trend.

The jobless rate rose notably in July after a year of creeping higher. If that continued in August, economists are likely to increasingly worry that the United States may be in — or nearing — the early stages of a recession. But if the rate stabilized or ticked down, as economists forecast, July’s weak numbers are likely to be viewed as a false alarm.

The answer is coming at a pivotal moment, as the Federal Reserve moves toward its first rate cut since the 2020 pandemic.

Central bankers have been clear that they will lower interest rates at their meeting on Sept. 17-18. Whether that cut is a normal quarter-point reduction or a larger half-point move could hinge on how well the job market is holding up. It is rare for so much to ride on a single data point.

“It matters a lot,” said Julia Coronado, founder of MacroPolicy Perspectives, a research firm. “It’s going to set the tone for the Fed, and that’s going to set the tone for global monetary policy and markets.”