There are two things affecting the job market. One is a dramatic reduction in the supply of new workers, including declining labor force participation and declining immigration. Labor demand has also declined, with the unemployment rate going down meaning demand for workers is going down a little more than supply. Overall, job creation adjusted for likely overcounting is close to zero, indicating a curious balance. The Fed has reduced rates to support demand, making rates looser and less tight, which should help the labor market not get worse. While some argue supply cannot be affected with tools, others, including the expert, believe demand is impacted and tools should be used to support the labor market.

The expectation is some additional inflation increase due to tariffs as they work through the production chain to consumers, continuing probably into spring. These increases are modest, about a tenth on inflation overall. Once all tariffs are in effect, inflation generated by tariffs stops, resulting in a higher price level but no further increases, and measured inflation will return to levels close to 2%. Despite prices not going up as fast, consumers feel higher prices due to inflation in 2021-23, causing unhappiness. Real incomes rising will improve the perception over time.