U.S. Unemployment Rises and Major Banks Predict Significant Interest Rate Cuts

The U.S. economy is showing signs of strain as unemployment climbed from 4.1% to 4.3% in July, increasing the number of jobless Americans to around 7.2 million.

This labor market decline coincides with a massive $6.4 trillion drop in global stock markets over a three-week period.

Wells Fargo analysts are sounding alarms, urging the Federal Open Market Committee (FOMC) to shift to a ‘neutral’ policy stance to avoid worsening the economic downturn. In response, major banks are predicting significant interest rate cuts.

Bank of America anticipates a rate cut in September, while Wells Fargo and JPMorgan Chase foresee a 50 basis point reduction in both September and November. Citi expects a cumulative 100 basis point cut by November, aiming for a range of 3% to 3.25% by mid-2025.

These anticipated rate adjustments reflect growing concerns about the economic stability in the U.S. and globally, suggesting that investors should prepare for potential financial instability in the near future.