|
Here’s what we know: Inflation has been stubbornly hanging around 2.8% for months, above the Federal Reserve's 2% target. Meanwhile, key areas of the labor market are showing signs of weakness. “So if you look at the Black unemployment rate,
that's been rising pretty steadily over the last few months. Young workers, their unemployment rate has been rising over the last year, almost two years,” said Elise Gould at the Economic Policy Institute.
That can indicate changes to come for the broader labor market, she said. A long delayed count of October job openings is set to come out tomorrow, and Gould said she’ll be watching the rate of new hires, which has been falling. “The hires rate is about where we were in the aftermath of the Great Recession. So think 2013, 2014. Not a very strong economy,” she said.
But the labor market isn’t the Federal Reserve’s only concern; it also works to keep prices stable. On that front, Aditya Bhave at BofA Global Research said he’s watching out for “reflation.”
“In reflation, you have more money, and the risk is that everybody else has more money as well, and so that might drive prices up,” Bhave said. Where’s all that money coming from? New tax breaks. “You're going to get $100 billion in consumer stimulus from the big, beautiful bill,” Bhave said. That means tax cuts for workers who get overtime and on tips, he said, and around $65 billion in larger-than-expected refunds next year. For now, the Federal Reserve appears more worried about the labor market, said Kyle Rodda at Capital.com. He said a quarter point cut this week is all but certain.
“I think the really critical issue at this Fed meeting, perhaps not so much if the Fed cuts or not, but it's the kind of color around the cut,” Rodda said.
As in, what Chair Jerome Powell says in the aftermath. This time, Rodda expects to hear that a December cut doesn’t mean a January cut. | 
