Editorial: This Labor Day, our job market needs a push. Federal Reserve needs to cut rates as soon as it can.

Finding a job is getting a lot harder, and it’s likely to get harder still, but there’s an obvious remedy.

The U.S. Federal Reserve needs to cut interest rates. It needs to cut rates by a greater magnitude and maybe even sooner than the quarter-point cut widely expected when its next policymaking meeting wraps up on Sept. 18. Every day that slips by with rates at excessive levels will make rescuing the job market that much harder.

So far, the Fed has done great work tamping down the blast of inflation that crippled Americans’ spending power. The price of food, housing, transportation and other basics soared after the pandemic hit in 2020. Who knew then that a plate of scrambled eggs would become such a luxury in 2024?

The Fed miscalculated inflation at the outset, deeming it a “transitory” effect of supply-chain disruptions brought on by COVID-19. Inflation turned out to be much more stubborn than the central bank’s economists expected, and high prices continue to put a squeeze on strapped consumers today.

As inflation persisted, the central bankers belatedly took action. Starting in March 2022, the Fed raised its benchmark interest rate 11 times, from a rock-bottom 0.25% to more than 5% last summer, the highest level in two decades. The goal was to combat rising prices by making it more costly for banks, businesses and regular folks to borrow money, putting the brakes on a hot economy.

It worked, and the Fed deserves credit for guiding the country through a perilous stretch, despite political pressure to alter the timing of its rate hikes based on the election calendar.

Monthly inflation reached a shockingly high 9.1% in June 2022, meaning that overall prices were that much steeper than in the same month a year before. The annual inflation rate was 7% at the end of 2021 and 6.5% the following year.

Those were terrible numbers. And the bigger threat was that rising prices would beget more rising prices, as individuals and businesses changed their behavior based on inflation expectations. That doom loop crippled commerce in the 1970s, and it could have happened again.

By hitting the panic button and jacking up rates so sharply, the Fed avoided the worst scenario. By the end of last year, inflation was running at 3.4% and it stood at 2.9% as of July, higher than the Fed’s 2% target but moving swiftly in the right direction.

So, kudos to the Fed for getting inflation under control before it ran away with the economy. But now the Fed doesn’t seem to recognize just how badly American consumers are faring.

The average credit card balance is $6,329, up almost 5% year-over-year, according to credit reporting service TransUnion, and people are struggling to manage all that debt.

Credit card delinquency rates in the first quarter of 2024 rose to the highest level since the numbers were first tracked in 2012, the Philadelphia Fed reported. Some 2.5% of card balances were at least 60 days past due, more than double the rate during the pandemic.

The rise in credit card usage and debt is especially worrisome because interest rates are so high. The average annual percentage rate on a card balance is an outrageous 21%. Tack on mortgages and auto loans, and many households are carrying unaffordable debt loads.

When we think of inflation, we rightly consider mainly the costs of goods and services. But the cost of money is part of the equation as well, and the spike in interest rates over the past few years, while necessary, carried with it negative consequences. Top of the list of examples in our minds is the housing market, which saw too little supply and too much demand thanks in large part to homeowners unwilling to sell because of unwillingness to give up their rock-bottom, fixed-rate mortgages. That in turn put upward pressure on rents. The cost of housing is now one of America’s most vexing issues.

Up to now, economists took solace in what was thought to be a remarkably robust job market, which in turn led to strong wage growth. Turns out, jobs weren’t as plentiful as they originally appeared.

In the 12 months that ended in March, the Bureau of Labor Statistics initially reported that 242,000 jobs were created each month. A few weeks ago, however, the BLS revised its data to show that job growth during that period was 174,000 a month. The revision meant that employers had added 818,000 fewer jobs than initially reported, which helps explain why Americans feel so tapped out.

The job market is showing worrying signs of weakness. The unemployment rate is trending upward, fewer jobs are available for each job seeker and private surveys point to a softening economy. Illinois is faring worse than the nation as a whole: Unemployment rose in all 14 of the state’s metropolitan areas as of the most recent survey.

The BLS releases its next jobs report on Friday, and another wake-up call won’t be a surprise. After being late addressing inflation three years ago, the Fed already may be late acting again. Whether or not that’s the case, it needs to act now.

As America celebrates Labor Day, the parades, festivals and barbecues are nice. A half-point rate cut, as soon as possible, would be even nicer.

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