Employment report for August in focus: Election campaign becomes more exciting, Fed aims to cut interest rates

The US job market is losing momentum. Today, Americans are experiencing just how much.

The Bureau of Labor Statistics will soon release August's labor market data, including the unemployment rate. The rate was 4.3% in July, down from 4.1% in June and the highest since September 2017, excluding the Covid-19 pandemic peak – but still low by historical standards. According to Dow Jones, Wall Street expects the report to show a gain of 161,000 jobs, while the unemployment rate will fall to 4.2%.

The jobs report will come under even more scrutiny on Friday, as the Federal Reserve is expected to cut interest rates this month and economic issues dominate the presidential campaigns of Vice President Kamala Harris and former President Donald Trump. After Friday, only two more monthly jobs reports will be released before Election Day.

There are conflicting signals coming from the economy. Earlier this week, two indicators for the manufacturing industry showed weak figures, fuelling fears that the economy is slowing down faster than hoped.

On Wednesday, the BLS reported that job openings continued to decline sharply, although they were still above pre-pandemic levels. However, it showed that the hiring rate for professionals and business services workers – who tend to receive higher salaries – has hit lows not seen since the Great Recession in 2009.

Still, the number of layoffs remains largely subdued, even after last month's jump, and the same is true for jobless claims.

Companies are “laying off employees like there's a boom and hiring like there's a recession,” Dario Perkins, chief executive of financial firm TS Lombard, said in a post on X on Wednesday.

The crosscurrents come as Americans have largely used up their pandemic-era cash holdings, while borrowing remains constrained by the high interest rate environment. And although inflation has largely been brought back down to the Federal Reserve's 2% target, consumers are still suffering from four years of rising prices.

Despite these headwinds, there was talk all summer that the U.S. economy had experienced a “soft landing” with relatively low unemployment and relatively low inflation.

Despite recent turbulence, share prices also remain close to their all-time highs.

Mark Zandi, chief economist at Moody's Analytics Group, told NBC News he believes a soft landing is possible as long as the unemployment rate remains at current levels.

However, he said that this cheerful image could easily be destroyed.

“It wouldn't take much to disprove that story and get companies to pull back and lay off,” Zandi said. “The labor market is good, but it feels like a fragile commodity.”

The current unemployment rate means that more than 7 million Americans are still unemployed and looking for a job. Among them is Cassandra Kelly, a 38-year-old New Jersey resident and mother of two who told NBC News she has been on the job market for more than a year now.

Kelly, an operations specialist with experience in communications and social media, said she gets by thanks to a severance package from her landlord, financial support from her partner and occasional freelance work. But none of it is enough to cover her expenses.

Full-time positions in her field currently pay as little as $45,000 — barely enough to afford an apartment in the New York area, Kelly says. She adds that some of the positions don't offer any benefits, which she needs to cover her own and her family's medical needs.

“Even if I'm willing to go down to $45,000 or $50,000, the amount of work they're asking for that little bit of money isn't fair,” she said. “It creates resentment. There have been times when I've wanted to give up.”

There are hopes that the widely expected interest rate cut by the US Federal Reserve at the end of the month will ease the brakes on growth and improve financing conditions.

When this happens, the cost of borrowing for everything from cars to credit cards will fall. Mortgage rates are also likely to fall, although the Fed does not directly control them.

Whatever financial relief may come, the Fed's policy measures will not have an immediate effect – especially given the already high interest rate of currently 5.5 percent.

“This is not a game-changing event,” Zandi said, meaning the economy will need time to adjust to a rate cut in September and any subsequent cuts in November, December and beyond.