It seems to me that the problem with the economy is not laid at the feet of the Fed. They can lower rates, but that doesn’t mean that companies are gonna be more inclined to hire or invest because they don’t know what’s coming.
I think there's an under-discussed (at least today) AI element to the job market. Firms are investing massive amounts into technology that they believe will increase productivity and/or reduce their payrolls. Don't these two factors work together to depress hiring, at least in the short term?
AI investment crowds out hiring-based growth options; and the prospect of AI efficiency gains "just around the corner" make firms reluctant to hire now. This is consistent with the higher unemployment numbers for recent grads, at least if you believe that AI will first replace entry-level jobs.
It's not the full story - sectors that don't expect massive AI gains are also down. But I think it's worth mentioning.
And breaking news: The President is now monkeying with the BLS in a way that may make it harder for the Fed to justify a rate decrease.
I recall the Fed telling us that the high inflation is transient! Now they are telling us the opposite. Inflation is stubborn and worsen with tariffs. I think if you look at history the Fed's record
has not been very accurate and it appears the current Fed is not improving on that record.
The Fed said it was transient because the pandemic was transient. Inflation is now being caused by other things, which might be less transient than the pandemic.
It seems to me that the problem with the economy is not laid at the feet of the Fed. They can lower rates, but that doesn’t mean that companies are gonna be more inclined to hire or invest because they don’t know what’s coming.
I think there's an under-discussed (at least today) AI element to the job market. Firms are investing massive amounts into technology that they believe will increase productivity and/or reduce their payrolls. Don't these two factors work together to depress hiring, at least in the short term?
AI investment crowds out hiring-based growth options; and the prospect of AI efficiency gains "just around the corner" make firms reluctant to hire now. This is consistent with the higher unemployment numbers for recent grads, at least if you believe that AI will first replace entry-level jobs.
It's not the full story - sectors that don't expect massive AI gains are also down. But I think it's worth mentioning.
And breaking news: The President is now monkeying with the BLS in a way that may make it harder for the Fed to justify a rate decrease.
I recall the Fed telling us that the high inflation is transient! Now they are telling us the opposite. Inflation is stubborn and worsen with tariffs. I think if you look at history the Fed's record
has not been very accurate and it appears the current Fed is not improving on that record.
The Fed said it was transient because the pandemic was transient. Inflation is now being caused by other things, which might be less transient than the pandemic.
I mean inflation *was* largely transient and was mostly over after 2.5 years. A remarkably short time to go from 9% to ~ 2.5%