.Fed's Musalem:
- Outside of data centers, business investment has been tepid
- Business learning how to run their firms in uncertain environment
- Critical to return to having readily available official data that has integrity.
- We are not flying blind though.
- Have a reasonable picture of what the economy is doing
- Expected 4th-quarter weakness, rebound 1st quarter with next year at or above potential.
- Very accommodative financial conditions and deregulation are tailwinds.
- Expect labor market to stay around full employment, likely to soften a little, get the 4.5% unemployment.
- Expects impact of tariffs to fade by 2nd half of next year
- Expects inflation the ball starting 2nd half of next year, provided we have appropriate monetary policy.
- Supported rate cuts so far to protect labor market.
- Limited room to ease without becoming overly accommodative
- Closer to neutral than modestly restrictive.
- Need to continue to lean against inflation.
Meanwhile the hawkish comments from Hammack have given stocks the go-ahead to push lower. The NASDAQ is now down 2.5%. The S&P is down -1.61% and the Dow industrial average is down -1.25%
Musalem is the president of the St. Louis Fed, and is a voting member for the December meeting.
