- Some components of services inflation stem from high stock prices
- There is a lot of resilience in the US economy
- Mostly in labor market, AI will be complimentary
- There may be two economies right now, with upper income doing well and lower income struggling
- Long term neutral rate has gone up a little but, based on productivity from gen AI
- Separate question is how restrictive is the Fed's rate right now
- Data does show AI may be having some labor market effect
Notably, the Fed's Kashkari said "I basically agree with everything you said" after Barr's speech.
