- Jan jobs data was a surprise and may be appropriate to hold rates if it continues in Feb
- Also possible that Jan jobs data was noise and would still argue for a cut in March if Feb jobs data is weak
- It is possible labor market has pivoted to a more sound footing after a weak 2025
- Consider underlying inflation excluding the impact of tariffs to be close to 2%
- "No dismissing" weak job creation of 2025 but also true that economic activity has been stronger than expected
- Consider his support for a March cut a "coin flip" that will rely heavily on Feb jobs data
- Smoothing through impact of gov't shutdown, expect GDP will have grown around 2% from Q4 2025 through Q1 2026 with consumer spending still solid and industrial activity picking up
This guy has sufficiently debased himself and is trying to pivot back to being a serious economist after he was left at the alter in the decision for Fed Chair.
In any case, his March vote will surely be immaterial as market pricing for a cut at the March 18 meeting is just 1.2% and doesn't rise to 50% until June when a new Fed chair takes over.
More:
- There are reasons including AI to think the hiring may remain weak
- Hard to interpret recent initial jobless claims data
- AI is diffusing so fast it is easier to see what jobs might go away before it is clear what jobs may be created
- Companies are still trying to determine how AI may reduce labor demand, or similarly, allow workers to be repurposed
- The growth of productivity in the past year or so is not from AI
- Changes in working arrangements post-COVID may be adding to productivity, among other things
- All of the data for the past year shows that labor demand is falling more than labor supply
- Watching job vacancy rate, if that continues to fall it would be unusual if the unemployment rate did not rise
USD/JPY is down 44 pips to 154.63.
