Steven Fiorillo(@stevenfiorillo):I keep coming back to this chart when I hear people arguing that the @federalreserve should raise rates again in 2026. This is the U.S. unemployment rate going back to 1948. The shaded areas are recessions. Look at what has often happened when unemployment rises roughly a full percentage point from its earlier low. By the time we get there, a recession is already underway. In 2001 unemployment reached 4.9%, up from 3.8% the year before. We were already in a recession. In May 2008 it reached 5.4% up from 4.4% a year earlier. That recession had already started, too. The concern is how quickly things can get worse once businesses pull back. Today, unemployment is 4.2%. We’re above the 3.4% low from 2023 but below the 4.4% rate from a year ago. So I’m not looking at this chart and declaring that a recession is here or that unemployment is suddenly taking off. But I also don’t see a labor market that needs more pressure. We added just 29,000 payroll jobs in September. July and August were revised down by a combined 60,000. Over the 12 months before September, job growth averaged only 45,000 a month. How much weaker does hiring need to get before we become concerned about another rate hike? Think about what happens inside a business when borrowing costs rise and customers start spending less. Maybe you were going to open another location. Maybe you needed two more employees. Now the financing costs more, sales aren’t where you expected and you decide to wait. You leave a position open when someone quits. You cut overtime. If things get worse you start considering layoffs. Those decisions affect real people who still have a mortgage, groceries and bills to pay. I understand that inflation is still a problem. People feel it every time they go shopping and the Fed has a responsibility to address it but it also has a responsibility to consider employment. Raising rates further has consequences especially when hiring is already this slow. The Fed raised rates in September. My preference would be to hold steady for the rest of 2026 and give that decision time to work while we watch the incoming data. This chart doesn’t tell us exactly what happens next but It does show why waiting until unemployment looks terrible is a dangerous approach. By then businesses have already made the cuts and families have already lost the income. U.S. Unemployment Rate (since 1948): 4.20% (Sep 2026). Data: FRED (UNRATE). Chart:

2026.10.25 15:58

I keep coming back to this chart when I hear people arguing that the @federalreserve should raise rates again in 2026. This is the U.S. unemployment rate going back to 1948. The shaded areas are recessions. Look at what has often happened when unemployment rises roughly a full percentage point from its earlier low. By the time we get there, a recession is already underway. In 2001 unemployment reached 4.9%, up from 3.8% the year before. We were already in a recession. In May 2008 it reached 5.4% up from 4.4% a year earlier. That recession had already started, too. The concern is how quickly things can get worse once businesses pull back. Today, unemployment is 4.2%. We’re above the 3.4% low from 2023 but below the 4.4% rate from a year ago. So I’m not looking at this chart and declaring that a recession is here or that unemployment is suddenly taking off. But I also don’t see a labor market that needs more pressure. We added just 29,000 payroll jobs in September. July and August were revised down by a combined 60,000. Over the 12 months before September, job growth averaged only 45,000 a month. How much weaker does hiring need to get before we become concerned about another rate hike? Think about what happens inside a business when borrowing costs rise and customers start spending less. Maybe you were going to open another location. Maybe you needed two more employees. Now the financing costs more, sales aren’t where you expected and you decide to wait. You leave a position open when someone quits. You cut overtime. If things get worse you start considering layoffs. Those decisions affect real people who still have a mortgage, groceries and bills to pay. I understand that inflation is still a problem. People feel it every time they go shopping and the Fed has a responsibility to address it but it also has a responsibility to consider employment. Raising rates further has consequences especially when hiring is already this slow. The Fed raised rates in September. My preference would be to hold steady for the rest of 2026 and give that decision time to work while we watch the incoming data. This chart doesn’t tell us exactly what happens next but It does show why waiting until unemployment looks terrible is a dangerous approach. By then businesses have already made the cuts and families have already lost the income. U.S. Unemployment Rate (since 1948): 4.20% (Sep 2026). Data: FRED (UNRATE). Chart: