Fed’s Mester says September job report was ‘pretty solid’

Cleveland Federal Reserve President Loretta Mester said Friday the September job report was “pretty solid” and it was still possible the economy could avoid a severe downturn.

Job growth was growing at a faster pace in September than is needed to meet the number of people entering the labor force each month, Mester said in an interview on CNBC.

And the Cleveland Fed president downplayed the deceleration in wages seen in the data, saying that overall wage growth can sustain consumer spending.

There is a chance the economy “can maintain that good job growth and consumers continue spending and then we work through some of softness on the business side,” Mester said.

The Cleveland Fed president refused to discuss if she was leaning toward supporting another rate cut at the Fed’s next meeting at the end of October.

“Let’s take the time we have here to observe what’s happening to the economy,” she said.

The Fed has been expecting the economy to slow for some time, so the big question for policy makers is whether the slowdown may turn out to be more severe than expected, Mester said.

There are downside risks, especially if uncertainty over trade policy and tariffs spill over and dampen consumer spending, she said.

But, at least so far, “things are holding up” for household consumption, Mester said.

Mester is not a voting member of the Fed’s interest-rate committee this year. The Fed has cut rates two times in successive meetings. Only 7 of 17 Fed officials have called for another rate cut this year, according to projections released by the Fed last month.

But earlier this week, soft readings from widely-followed business sentiment surveys of manufacturers and the service sector spooked investors and raised recession fears.

After sharp selloffs, stocks recovered some ground later in the week, with gains accelerating after the jobs report was released.

The Dow Jones Industrial Average DJIA, +1.42%   was up 372 points on Friday, but was still down by almost 250 points for the week.

* This article was originally published here