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The Federal Reserve cut its benchmark interest rate by a quarter percentage point Wednesday, as policymakers work to shore up the softening job market.  

It was the Fed's second rate cut in six weeks, after holding rates steady for much of the year in an effort to curb stubborn inflation.  

Prices are still climbing faster than the central bank would like, but for now, policymakers are more concerned with preventing a big jump in unemployment. 

A number of prominent corporations have announced job cuts in recent days.  Amazon announced plans to cut 14,000 corporate positions.  (Amazon is a financial supporter of NPR and pays to distribute some of our content.)  Target said last week it's cutting about 1000 corporate jobs and leaving another 800 jobs unfilled.  And the federal government cut about 100,000 jobs in the first eight months of the year, with many more workers expected to drop off the federal payroll in October. 

Government shutdown clouds economic outlook

The vote to cut interest rates by a quarter point was not unanimous.  The newest Fed governor, Stephen Miran, would have preferred a larger, half-point cut, while Jeffrey Schmid, who heads the Kansas City Federal Reserve Bank, would have preferred to leave rates unchanged.   

The Fed's job has been complicated by the government shutdown, which has choked off much of the official data used to track the economy.  A report on September's job gains is 

. And there's a question about whether October's job growth will be tallied at all.  

The Labor Department did produce one official economic report last week, showing 

inflation in September was slightly milder

 than forecasters had expected.  That reinforced the idea that inflation concerns should take a backseat to worries about faltering job growth.

"My focus is on the labor market," Fed Governor Chris Waller said earlier this month.  "Payroll gains have weakened this year and employment may well be shrinking already." 

Waller says that while President Donald Trump's tariffs are putting some upward pressure on prices, he does not expect long-lasting effects on inflation.  

In the absence of official government data, analysts are looking to alternative tea leaves for signs of which way the economy is moving.  On Tuesday, the payroll processing company ADP reported a modest uptick in private-sector hiring during the four weeks ending in mid-October.  ADP's jobs numbers often differ, however, from the official government tallies.  

"We're seeing some improvement, but that improvement is tepid, and it is preliminary," said ADP's chief economist Nela Richardson.  "As the weeks progress, we might see further weakness."  

Weaker job market could weigh on spending 

So long as workers are earning paychecks, they can continue to spend, but if job growth stalls and layoffs jump, that could become a drag on the broader economy. 

"The reason why consumers have been so resilient is the labor market has been relatively strong," Richardson says.  "It's not glorious.  Some of the momentum that we saw early in the year has slowed down. But overall we are seeing enough strength to keep consumer spending steady."  

Unemployment inched up over the summer, but there's been no official tally of the unemployment rate for September or October.  

That's led Waller to rely more heavily on anecdotal reports from business contacts, which offers a mixed picture. 

"Employers indicate to me that there was some further softening in the labor market last month, while retailers report continued solid spending," Waller said.  

Much of that spending may be driven by wealthy Americans who are less dependent on weekly paychecks, but a clearer picture will not be available until the government resumes releasing economic data.

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The Federal Reserve cut its benchmark interest rate by a quarter percentage point Wednesday, because the central bank is more concerned about the job market than it is with battling inflation.  

The Fed cuts interest rates again as concerns grow about the job market

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