Note: right after publication, JOLTS came out and the US now has more unemployed people than job openings for the first time since April 2021, which is one of President Hammack's labor market flags.
Expectations for a rate cute at the Fed meeting this month are still pretty high. Wonder if the amount of cuts throughout the year will change when balancing the labor markets and risks to inflation from tariffs. The downward job revisions didn't help either. So hard to keep up with the many changes going on with the economy and the statistics being released!
Good choice to interview Cleveland Fed President. Beth Hammack came across as very sensible.
Sadly, NY Times business reporters warned last week that, if Trump gets 4-3 control of Fed Board (which depends on Governors Waller and Bowman following orders and Cook being ousted and replaced; no doubt whatsoever that incoming Governor Miran will follow orders), Trump could have Board replace all regional Fed Governors in 2026 and then have effective control of short-term interest rate with majority on Federal Open Market Committee.
Waller and Bowman have clashed in past with Chicago Fed boss Goolsbee, so he would probably be the first to go.
Cleveland Fed provides excellent service by "nowcasting" upcoming CPI and PCE inflation readings. If Bureau of Labor Statistics stops producing CPI by order of incoming BLS Commissioner, Cleveland Fed "nowcast" might be alternative source of inflation data. But, if Beth Hammack removed as Cleveland Fed President by Trumpist Fed, inflation "nowcast" might not last long.
"Ray Dalio warned the U.S. faces a “debt-induced heart attack” within three years under Trump’s budget policies, citing unsustainable borrowing and soaring interest costs. While economists agree the crisis has been years in the making, they caution that shrinking tax revenues and ballooning debt service could trigger a reckoning if investors lose confidence."
The loss of confidence will appear in price action and public statements from around the world. Are we due another October debt ceiling crisis?
"There's some debate as to whether or not that's going be a one-time move or more persistently, but more concerning is that services inflation has also been moving up. That is less likely to have been driven by tariffs. That's something that we need to watch closely."
In President Hammack's mind, what would be the cause of servces inflation? And would it have anything to do with other Trump Administration policies besides tariffs?
I keep hearing that high prices never go down... Isn't that wrong? I thought the whole point of economists over capitalists was to encourage competition. With competition comes innovation, efficiency, and price decreases.
I am of the opinion that global inflation woes are hallmarks of fundamental economic change.
If your income inflated over time but the price of something stays the same, then in effect, it goes down.
We have seen that in many sectors. Food has gotten cheaper relative to household budgets over the decades, even with a reversal of that trend recently. Air travel is cheaper now than ever before. Etc.
Of course, that is not true for all sectors. Some major items for household budgets, namely housing itself, healthcare, and education, have all far outpaced gains we have seen in wage inflation, resulting in less free income for many.
Note: right after publication, JOLTS came out and the US now has more unemployed people than job openings for the first time since April 2021, which is one of President Hammack's labor market flags.
Expectations for a rate cute at the Fed meeting this month are still pretty high. Wonder if the amount of cuts throughout the year will change when balancing the labor markets and risks to inflation from tariffs. The downward job revisions didn't help either. So hard to keep up with the many changes going on with the economy and the statistics being released!
Well functioning markets provide important information. Well functioning markets are efficient over time. Distorted markets are a ticking time bomb
Good choice to interview Cleveland Fed President. Beth Hammack came across as very sensible.
Sadly, NY Times business reporters warned last week that, if Trump gets 4-3 control of Fed Board (which depends on Governors Waller and Bowman following orders and Cook being ousted and replaced; no doubt whatsoever that incoming Governor Miran will follow orders), Trump could have Board replace all regional Fed Governors in 2026 and then have effective control of short-term interest rate with majority on Federal Open Market Committee.
Waller and Bowman have clashed in past with Chicago Fed boss Goolsbee, so he would probably be the first to go.
Cleveland Fed provides excellent service by "nowcasting" upcoming CPI and PCE inflation readings. If Bureau of Labor Statistics stops producing CPI by order of incoming BLS Commissioner, Cleveland Fed "nowcast" might be alternative source of inflation data. But, if Beth Hammack removed as Cleveland Fed President by Trumpist Fed, inflation "nowcast" might not last long.
thank you, this was a great interview.
I wonder how long Fed Independence will last? I hope it is maintained.
Developed countries are having a spot of bother with their bond markets. Perhaps the US will be the 'least dirty shirt' and escape a crisis.
https://fortune.com/2025/09/02/ray-dalio-america-debt-induced-heart-attack-trump/ notes
"Ray Dalio warned the U.S. faces a “debt-induced heart attack” within three years under Trump’s budget policies, citing unsustainable borrowing and soaring interest costs. While economists agree the crisis has been years in the making, they caution that shrinking tax revenues and ballooning debt service could trigger a reckoning if investors lose confidence."
The loss of confidence will appear in price action and public statements from around the world. Are we due another October debt ceiling crisis?
Higher inflation and a tougher labor market aren’t that mysterious. Sounds like a bad supply shock from something like….umm…..tariffs?
"There's some debate as to whether or not that's going be a one-time move or more persistently, but more concerning is that services inflation has also been moving up. That is less likely to have been driven by tariffs. That's something that we need to watch closely."
In President Hammack's mind, what would be the cause of servces inflation? And would it have anything to do with other Trump Administration policies besides tariffs?
I keep hearing that high prices never go down... Isn't that wrong? I thought the whole point of economists over capitalists was to encourage competition. With competition comes innovation, efficiency, and price decreases.
I am of the opinion that global inflation woes are hallmarks of fundamental economic change.
https://www.macrotrends.net/global-metrics/countries/wld/world/inflation-rate-cpi
Prices can go "down" by simply not going up.
If your income inflated over time but the price of something stays the same, then in effect, it goes down.
We have seen that in many sectors. Food has gotten cheaper relative to household budgets over the decades, even with a reversal of that trend recently. Air travel is cheaper now than ever before. Etc.
Of course, that is not true for all sectors. Some major items for household budgets, namely housing itself, healthcare, and education, have all far outpaced gains we have seen in wage inflation, resulting in less free income for many.
Agreed. Prices can also go up if your wages stagnate and inflation is just at 2%...
Housing, HC, and education are the big problems. But IMO that's not a pandemic inflation problem in of itself. They've been problems for decades.