Payroll mitigates recession risk; start of cuts will be gradual, says André Valério, from Inter

The employment report data – the so-called payroll – from the United States released this Friday, the 6th, mitigated the perception regarding a recession in the world’s largest economy, assesses André Valério, senior economist at Inter. “The unemployment rate improved on the margin and wages increased”, he points out, in an interview with Broadcast (Grupo Estado’s real-time news system).

However, the economist says that there is still a risk of a considerable weakening of the US in the face of persistent inflation. “The risk of a recession is still greater,” he says. In Valério’s view, if the Federal Reserve (Fed) takes too long to reduce base rates, the possibility of a sharp slowdown in the US economy will increase. “There is room to cut,” but there is no need to go around cutting desperately, he emphasizes.

Despite the uncertainties, Inter expects a 0.25 percentage point cut in the US base interest rate this month. “We don’t see the data being sufficient to demand a stronger cut, the economy is still robust,” he says.

According to the economist, “a magic number” for the labor market that would keep the unemployment rate stable would be the creation of 200,000 jobs per month. This amount is below the creation reported today in the US, of 142,000 jobs – a result that fell short of the median of 165,000 expected in the survey by the Broadcast Projections.