OHIO — The U.S. is starting off the year strong despite high interest rates. While the Federal Reserve acknowledged the positive gains, even with jobs this past week, they still may not move as quickly when it comes to lowering rates. 

What You Need To Know

  • Shifts in the labor market will likely determine when and by how much the Federal Reserve cuts rates 

  • A softening in the labor market underneath the surface may shift the narrative 

  • In Ohio, the demand for workers remains high in education and healthcare 

Brandon Zureick, Managing Director and Portfolio Manager at Johnson Investment Counsel, said, “Investors maybe got a little overeager and thought it could start that process as early as January or potentially even March. The Fed took some effort to push back a bit on the notion that they’re going to be lowering rates in the very near term.”

Zureick indicated that now the question in the forefront of people’s minds is when and by how much they will lower rates. He added that if we continue to see positive job numbers, we could see some rate cuts later in the year, but how the market shifts will determine when and what moves the federal reserve makes. 

In the meantime, while a number of indicators suggested the U.S. would enter into a recession, it didn’t happen. “And for that reason, now, people’s expectations are that we just won’t have a recession,” Zureick said. He went on to explain that historically, it’s taken four years from the beginning of federal rate hikes to the onset of a recession to happen.

Currently, the US is at the midway point. So, it’s too early to tell if the country will enter one or not. “Underneath the surface there are a lot of layoffs being announced. There is a softening in the number of hours being worked. So there’s some, you know, kind of quiet softening happening beneath the surface in the labor market that the payrolls numbers might not always reveal,” said Zureick.

As many around the country wait to see what happens, the health care and education sectors are where the jobs are in Ohio. “The job market 50, 60 years ago, it was predominantly manufacturing oriented. And as you know, global economies evolved and a lot of those jobs are no longer here in the US, and they’ve been replaced by a lot of health care and education jobs,” said Zureick.

At this point, Zureick doesn’t see the market shifting concerning that demand.