JACKSON HOLE, Wyoming, Aug 23 Reuters As inflation fell fast in 2023 and continued to slow this year, Federal Reserve officials were cheered that the steam seemed to come out of the U.S. economy not through rising unemployment but rather a decline in the large number of job openings businesses posted during the peak of the pandemicera labor shortage.

But the economy may now be near a tipping point where a continued drop in job openings will translate into faster increases in unemployment, an argument in favor of the Fed beginning to cut interest rates to guard the labor market, according to new research presented on Friday at the Kansas City Fed39;s annual economic conference in Jackson Hole, Wyoming.

Policymakers face two risks being too slow to ease policy, potentially causing a 39;hard landing39; with high unemployment … or cutting rates prematurely, leaving the economy vulnerable to rising inflation, economists Pierpaolo Benigno of the University of Bern and Gauti B. Eggertsson of Brown University wrote in their research paper. Based on their new analysis of the job market, our current assessment suggests the former risk outweighs the latter.

Fed officials appear to have reached the same conclusion, with reductions to the U.S. central bank39;s benchmark policy rate expected to begin at the upcoming Sept. 1718 meeting and likely continue in subsequent sessions.

Still, the new research adds further detail to several ongoing Fed debates by combining in a single…