Jobless claims numbers are not concerning and align with the gradually rising unemployment rate. The key debate is whether the labor market slowdown is demand or supply driven.
Highlights the conflicting signals between strong GDP and weaker jobs data, creating a policy dilemma for the Fed.
Joe Kernen
Brett Ryan
Confusion stems from multiple simultaneous policy changes. The economy shows decent GDP/capex growth (AI-driven) and a labor market with both low hiring and low firing.
Cites Austan Goolsbee's view that low hiring and low firing indicates uncertainty, and asks if policy certainty could accelerate the job market.
Joe Kernen
Brett Ryan
Yes, fiscal policy (large tax refunds) will stimulate GDP growth (~2.8% in H1 2025). Business investment beyond AI should pick up, raising a tail risk of labor market tightening due to potential worker shortages.
Asks how the Fed should navigate interacting policy changes (productivity vs. immigration) and whether to cut rates or wait.
Joe Kernen
Brett Ryan
The Fed is split between a camp wanting to cut due to downside risks and a camp advocating caution due to above-target inflation and the potential for policies to reignite strong growth and labor demand.