Laura: What did the Fed do, and should I panic?
Will: They cut rates 25 bps to 4–4¼%—think of it as an “insurance cut,” not a fire alarm. Policy’s been restrictive, but with revised job numbers and higher uncertainty, the balance of risks has tilted toward labor‑market weakness. Translation: not a bad economy—just one that keeps asking, “Are we there yet?”
Laura: Inflation—going up, down, or just being difficult?
Will: Inflation moved up and tariffs likely add upward pressure this year. The silver lining: the “middleman” is absorbing some costs (bless their margins). Long‑term expectations are well anchored, short‑term ones are a bit spicy—but the Fed still aims squarely at 2%. Persistent runaway inflation? Less convincing right now. Cheat day vibes, not a new diet.
Laura: What’s really happening in the labor market?
Will: Growth moderated, job gains slowed, unemployment edged up (still low), and the job‑finding rate is low—it’s harder to get hired if you’re out. It’s a weird combo of low hiring and low firing, which works until layoffs start, and then unemployment can jump fast. Younger workers and some minorities are struggling more—so yes, it’s complicated. Upside surprise? Possible—and very welcome.
Laura: What’s next—more cuts, more QT, more vibes?
Will: The Fed is data‑dependent (the sequel), ready to adjust policy as risks evolve. QT continues (Trsy/Agency/MBS roll‑off). They can’t fix the housing shortage, they’re watching defaults tick up, and they remind us that forecasting is humbling—because of course it is. On process: QCEW revisions were as expected, BLS is tuning the estimates, and the Fed is reducing headcount ~10% back to ~10‑years‑ago staffing. Independence? “You’ll know it by the speeches.”If it sounds political…that’s not the look.
