The Federal Reserve’s annual Jackson Hole conference ended on a sober tone this week, with poor economic growth and fears of high unemployment driving analysts to predict more market uncertainty in the coming months.

The current forecast from the International Monetary Fund (IMF) expects to see modest growth in the global economy over the next few years, predicting European growth increase, the re-emergence of China, and a ‘soft landing’ (a slowdown but no recession) for the US. Yet looking at the economic data from the regions, these predictions seem far from assured.

As expected, Jerome Powell encouraged an ‘imminent start’ to cutting interest rates, after years of inflation fighting with a policy that drove the benchmark rate up to a quarter century high for over a year. But he also voiced concerns over the rate of US unemployment – ‘further job market cooling would be unwelcome’. Only a few weeks ago poor US job data sent the markets spiralling with fears of a US recession. As the upcoming election looms, the US's ability to avoid a recession is far from certain.

The change in strategy has been mirrored in Europe. Odds are that the European Central Bank (ECB) is also working towards a September rate cut, aimed at a relaxation of inflation pressures, but also because the rate of economic growth has not met expectations. The Euro Zone barely grew last quarter. Germany (biggest European economy) contracted and manufacturing remains in a deep recession, while exports also dropped due to weak demand from China. ECB rate-setter Olli Rehn stated that ‘the recent increase in negative growth risks in the euro area has reinforced the case for a rate cut at the next ECB monetary policy meeting in September.’

The Bank of Japan (BOJ) stood by its determination to end its economy’s dependence on external financial support, after its surprise decision to increase its rates in July. A complication for the BOJ is data showing inflation is slowing down. The cost of living is on the rise and there is doubt as to whether wages are going to increase enough to match it, despite second quarter data showing consumption going up. ‘Domestic demand is very weak. From an economic perspective, there’s little reason for the BOJ to raise rates’ claims Sayuri Shirai, former BOJ board member.

There are worries over the data coming from China. The world’s second largest economy, remains weak, with some reports showing it on the brink of deflation. Low consumption, a prolonged property crisis, debt skyrocketing, and weak consumer and business sentiment paint a grim picture. China’s central bank cut interest rates last month following weak second quarter growth and there is an expectation that the IMF will downgrade its growth projections

The overall picture is making economists nervous. Sluggish growth in the US and China is bad news for manufacturers across the globe, ‘already feeling the strain from tepid demand.’ Emerging economies are liable to be hit by the lack of demand for exports. According to Reuters, the shift in Europe and the US towards rate cuts may turn out to be the first steps to protect economic growth, rather than ‘normalization’ after years of high inflation. IMF chief economist Pierre-Olivier Gourinchas said more ‘episodes of market volatility’ are to be expected.  ‘The markets have to figure out what it all means, and markets overreact.’