{"id":2496,"date":"2025-12-10T23:43:40","date_gmt":"2025-12-10T23:43:40","guid":{"rendered":"https:\/\/microvibenews.com\/?p=2496"},"modified":"2025-12-10T23:43:40","modified_gmt":"2025-12-10T23:43:40","slug":"powell-warns-of-a-very-unusual-economy-as-inflation-remains-high-amid-a-weakening-job-market","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=2496","title":{"rendered":"Powell warns of a \u2018very unusual\u2019 economy as inflation remains high amid a weakening job market"},"content":{"rendered":"

<\/p>\n

Federal Reserve Chair Jerome Powell on Wednesday described the U.S. economy as \u201cvery unusual,\u201d saying policymakers are navigating a rare combination of tariff-driven goods inflation and a labor market that may already be weaker than official data suggests.<\/p>\n

\n

The Fed cut interest rates for the third consecutive meeting, a quarter-point reduction Powell framed not as a confident pivot toward easier policy, but as a defensive move meant to keep the labor market from slipping further. He repeatedly emphasized risks to employment have risen \u201cin recent months,\u201d and noted that behind the headline numbers, job creation may already be negative.<\/p>\n

Powell made the striking admission the Fed believes the official payroll figures\u2014which have slowed sharply since the summer\u2014are overstating job growth by roughly 60,000 per month.\u00a0<\/p>\n

\u201cForty thousand jobs could be negative 20,\u201d he said, adding this dynamic is not well understood by the public because unemployment claims remain historically low\u2014something both economists Mark Zandi and Claudia Sahm recently toldFortune <\/em>could be giving people a false sense of security about the job market.<\/p>\n

\u201cI think a world where job creation is negative \u2026 we need to watch that very carefully,\u201d Powell said.\u00a0<\/p>\n

It is this weakening backdrop that Powell said makes the current moment \u201cvery unusual\u201d: Inflation remains elevated, but most of the remaining overshoot comes from goods categories directly affected by tariffs, as opposed to domestic economic overheating, which he said the Fed has worked hard to cool since its 2022 highs; inflation excluding tariff-affected goods is \u201cin the low [2%],\u201d he said. Services inflation is cooling, wage pressures are easing, and neither the labor market nor business surveys suggest a \u201cPhillips-curve\u201d kind of inflation threat, Powell said, referring to the inverse relationship between inflation and unemployment.\u00a0<\/p>\n

Instead, Powell said, the bulk of the problem is a \u201cone-time price increase\u201d pushing up goods categories as import levies work their way through supply chains. Goods inflation, he noted, should peak around the first quarter of 2026, assuming no additional tariff rounds.<\/p>\n

Those crosscurrents have fractured the Fed. Three officials formally dissented from the rate cut on Wednesday, and several others offered what Powell described as \u201csoft dissents,\u201d when an official\u2019s personal projection falls out of what they ultimately voted for. There were six such \u201csoft dissents\u201d this time, during one of the deepest divides inside the Federal Open Market Committee in years, driven by disagreement over how to weigh the risks of lingering inflation against the possibility that job growth is weaker\u2014and much more fragile\u2014than reported.<\/p>\n

Powell stressed that policymakers cannot simply choose one mandate to prioritize.\u00a0<\/p>\n

\u201cThere is no risk-free path,\u201d he said, a refrain he\u2019s repeated for months. \u201cWhen both sides of the mandate are threatened, you should be kind of neutral.\u201d\u00a0<\/p>\n

He characterized the current stance as being at the \u201chigh end\u201d of neutral, allowing the Fed to \u201cwait and see\u201d how the data evolve.<\/p>\n<\/div>\n

#Powell #warns #unusual #economy #inflation #remains #high #weakening #job #market<\/p>\n","protected":false},"excerpt":{"rendered":"

Federal Reserve Chair Jerome P… <\/p>\n","protected":false},"author":1,"featured_media":2497,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[486,617,1542,293,176,1553,2187,635,522,2188,33,1499,397,415,490,491,829,2577,613,2578],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/2496"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2496"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/2496\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/2497"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}