Just as the U.S. labor market showed signs of clear stagnation, one of the leading Wall Street strategists sounded warned: As the U.S. labor force is underway in the historical changes in population austerity and immigration policies, “there is a good chance that the next five years will see workers’ growth.”
David Kelly, chief global strategist at JPMorgan Asset Management, is far-reaching for the Fed and investors, including the need to be cautious before lowering interest rates.
Kelly Friday’s shocking work reportwhich will be revised to 258,000 jobs in May and June. Additionally, employers added only 73,000 jobs in July, well below the 110,000 consensus estimates. This has led to an average of 35,000 jobs per month in the past quarter. Unemployment accounted for 4.2% in July due to further circulation of employment and labor force.
Kelly also highlighted signs of tight labor markets, where labor participation rates fell from 62.65% in July 2024 to 62.22% in July 2025. This translates to nearly 1.6 million people who are 16 years old and older who are working or actively looking for a job.
He attributed half of the decline to American retirement, but noted that participation rates also declined among those aged 18 to 54.
Kelly Embattled Chair Jerome Powell There will be significant challenges in fighting inflation, which means opportunities All important speeds cut market demand.
Workers’ problems in the economy
Aging populations and declining labor participation also indicate deeper structural challenges that will continue into the future.
According to the census forecast, he noted that the working-age population will actually be signed in the next few years, while immigration returns to its previous level.
Kelly highlighted the following census forecasts that the population aged 18 to 64 will actually fall by more than 300,000 for the year to July 2026 and continues to decline at a pace around 2030.
The Fed’s Dilemma: Inflation, Growth and Political Pressure
This pressure comes a time when the Fed is under enormous political pressure on lower interest rates, as President Trump and his allies call for easier money to offset new tariffs and support to mark the impact of the market.
However, Kelly believes that central banks must trample carefully because reducing the speed to structurally tight labor market risks will inspire wage and price inflation rather than accelerate economic growth.
He observed that since the early 21st century, the U.S. economic growth averaged 2.1% per year, largely due to the 0.8% annual growth in the labor force.
He added: “Given the continued retirement of the baby boom, given that the deportation and voluntary departure of immigrants completely offset the possibility of new immigrants in the coming years, there will be no way to see workers growth in the next five years,” he added.
If this happens, Kelly predicts that the economy will be slower.But it can only grow more slowly without igniting higher inflation. ”
For the Fed, the message is clear: Be very cautious about any rate of cuts. This is a warning for investors to adjust expectations for fast economic gains or sustained bull markets powered by relaxed currencies. In other words, the United StatesExceptionism“Not given, move forward.
“Investors should no longer bet roughly on the U.S. economic trend or lower interest rates,” Kelly said.
For this story, wealth Use the generated AI to help with the initial draft. The editor verified the accuracy of the information before publishing.
