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Chief Economist Updates

March 11, 2026

Disinflation Appears on Track in Final Pre-war CPI Print

Core CPI increased at an annualized rate of 2.62% in February, in line with consensus expectations and nearly a full percentage point below January’s pace. Housing inflation continued to decelerate, reaching the lowest monthly pace of the cycle, 2.26% annualized. Core goods prices rose at an annualized rate of 0.98%...

March 6, 2026

Markets Look Past Payrolls Miss, Remain Focused on War

Nonfarm payrolls declined by 92,000 in February, the largest monthly decline of the cycle if we look past the government layoffs from October. The unemployment rate rose by a tenth of a percent to 4.4% despite a decrease in the labor force participation rate. The payrolls figure was biased lower...

March 2, 2026

Energy Independence Shields U.S. Economy From Mideast War

The war in Iran will have significant impacts on the combatants involved, the people in the region, and global geopolitics. The impact on the U.S. economy, however, will be limited under most scenarios other than the tail risk of a wider conflagration. Defense spending will increase to replace munitions used...

February 20, 2026

SCOTUS Overturns IEEPA Tariffs

In one of the most economically consequential rulings in its history, the Supreme Court today held in a 6-3 decision that “IEEPA does not authorize the President to impose tariffs.” This decision invalidates around $175 billion in revenue raised last year, which is more than half of the total revenue...

February 13, 2026

CPI Inflation Muted in January

Core CPI increased by 0.295% in January, slightly below consensus expectations. The release was consistent with our broader inflation outlook for 2026 and does not change our expectations for monetary policy. We anticipate continued disinflation in core services, with housing on a steady downtrend and non-housing core services on the...

February 12, 2026

Lookin’ for Love in All the Wrong Provinces

There will be a lot of frustrated bachelors in China this weekend (yes, China increasingly celebrates Western Valentine’s Day along with a host of traditional holidays devoted to love and relationships). Most people are now aware of China’s looming demographic collapse. The UN projects that China’s working-age population will be...

February 11, 2026

The Labor Market Finds Its Footing

Like an Olympic skier recovering after a near crash, the labor market has regained its footing. Nonfarm payrolls increased by 130,000 in January, the fastest growth in 13 months, and the unemployment rate fell by a tenth to 4.3% despite an increase in labor force participation. This report confirms the...

February 9, 2026

The Warsh-ington Consensus

After much public deliberation, President Trump announced Kevin Warsh as his nominee to succeed Jerome Powell and become the 17th Chairman of the Federal Reserve Board of Governors. Relative to the wide range of candidates Trump has considered for economic policy positions in the past, Warsh is a conventional choice...

January 9, 2026

Labor Market Shows Hints of Stabilization

The December payrolls report released this morning represents the first clean view of the labor market since September. The BLS stated that the December figures were not impacted by the shutdown. The results suggest that the labor market is stabilizing, though not rebounding strongly. The establishment survey showed an increase...

charitable giving by individuals FEATURED

December 23, 2025

The Season of Giving

‘Tis the season of giving, especially in the United States. American individuals will probably donate more than $400 billion to charity this year, much of it in the month of December. If history is any guide, this will be many times more than any other nation gives in the absolute,...

December 18, 2025

Heavily Distorted CPI Print Reveals Little Useful Information

The BLS today released a heavily distorted CPI report that included some information for both October and November. The BLS stopped collecting price data when the government shutdown began on October 1 and did not resume collection until November 14. Because the data are missing, the agency did not publish...

Private Payroll Employment Growth Featured Image

December 16, 2025

Labor Market Malaise Persisted Through the Shutdown

The November employment situation report revealed a labor market that remains stuck in a low-hiring, low-firing morass – neither rebounding strongly nor rolling over into a recession. The report included mixed signals and was distorted by shutdown effects as we feared. This new information will do little to resolve the...

December 9, 2025

Quittin’ Time is Over

The BLS today released JOLTS data for September and October. These are the most recent high-quality labor market data we have received ahead of tomorrow’s FOMC decision. These latest JOLTS data continue to reflect a labor market that is soft but has not tipped over into a layoff cycle. The...

ADP Private Employment by Establishment Size Featured

December 8, 2025

ADP Data Highlights K-shaped Corporate Economy

As we await the delayed BLS payrolls data, ADP estimated that private sector employment declined by 32,000 in November. This is the fourth monthly decline in the last six for this series, consistent with the stagnant nature of the labor market reflected in the official statistics this year. Because ADP...

November 25, 2025

From Worst to First: The Mississippi Miracle

Literacy rates may not drive asset allocation decisions this quarter, but we’re all invested in America’s public school system. The deficiencies of that system lead to a less productive workforce, slower growth, greater inequality and a narrower path to solving our fiscal problems. We’d even argue that these dynamics put...

November 20, 2025

September Payrolls Report Leaves the FOMC Debate Unresolved

The September Employment Situation Report produced a mixed bag of signals that leaves the debate about a third rate cut in December unresolved. The report contained contrasting elements that provide ammunition to both the hawk and dove camps at the Fed. The BLS has delayed the publication of the next...

November 18, 2025

The Economic Data Fog Will Clear Slowly

The longest government shutdown in U.S. history is over. The BLS will resume publication of economic statistics this week, but the fog that has clouded economists’ view will lift only slowly. Most importantly for fixed income investors, the FOMC will still be missing key data points when they next meet...

October 31, 2025

Hawks Push Back Against a December Cut

The FOMC lowered their policy rate by 25 bps yesterday as expected, but Chairman Powell pushed back against market pricing of another cut in December. The FOMC also announced that they would stop reducing the size of their balance sheet on December 1, choosing the cautious course of ending QT...

October 27, 2025

September CPI Report Clears the Way for Another Cut

CPI inflation printed below expectations in September, with the core index increasing by 0.227% in the month or 2.76% annualized. This is the slowest monthly pace since May and clears the way for another 25-bp rate cut at this week’s FOMC meeting. A sharp deceleration in housing inflation drove the...

October 3, 2025

Alternative Labor Data Aren’t Encouraging

Spare a thought for your local financial economist today. The shutdown has deprived us of BLS data and our favorite day of the month spent digging through the details of the U.S. labor market. We are left no choice but to resort to second-tier and alternative sources of labor market...

September 19, 2025

Mortgage Refinancing Market Awakens from Hibernation

Mortgage applications rose by 29.7% in the week that ended September 12, driven by a surge in refinancing as mortgage rates have fallen to their lowest level in more than two years. The MBA Mortgage Refinancing Index jolted awake last week after hibernating near a quarter-century low for most of...

Monthly Change in NF Payrolls Featured Image

September 17, 2025

Divided FOMC Resumes Easing Cycle

A starkly divided FOMC lowered the policy rate by 25 bps today to a range of 4.00-4.25%, resuming the easing cycle that had been paused since January due to inflation concerns. This was an FOMC meeting unlike any other, with one governor serving under the protection of a temporary restraining...

Initial Jobless Claims featured website image

September 11, 2025

Initial Claims Jump. Inflation Accelerates. Fed on Track to Cut Next Week…

CPI inflation accelerated again in August in services categories as well as tariff-exposed goods. The bigger surprise in today’s economic data was a significant increase in initial jobless claims — a concerning warning sign but too tenuous of a data point to change our labor market assessment. Both data points...

September 5, 2025

August Payrolls: Yet More Feeble

The August payrolls report printed weaker than expected, and the prior two months of job creation were revised lower on net. The June figure received its final revision to -13,000, the first negative print after 53 consecutive months of positive job creation. The July figure was revised higher from 73,000...

September 3, 2025

Labor Market Musical Chairs Gets Interesting

The JOLTS data for July appeared consistent with the labor market status quo. There was little to no change in the rates of hiring, quitting or layoffs across the private and government sectors. The July payrolls report has rightfully increased attention on the downside risks to the labor market, but...

August 26, 2025

Eroding the Fed’s Independence Could Put Upward Pressure on Treasury Yields

As the Trump administration continues to escalate its pressure campaign against the Federal Reserve, Chairman Powell stuck to the economic script and sent a fairly clear signal at Jackson Hole that the FOMC intends to lower the policy rate at their next meeting in September. Will 10-year yields also decline...

August 15, 2025

The Response Rate Crisis Is Overblown, for Payrolls Anyway

The large revisions in the July payrolls report have awakened the popular press to the response rate crisis that experts have been monitoring for more than a decade. Important context is sadly missing from the narrative. Response rates to government surveys are indeed falling around the world. It is a...

August 13, 2025

Inflation Accelerates in July, Though Tariff Effects More Muted

The July CPI report showed another acceleration in the pace of core inflation, to a 3.94% annualized rate in the month. This is the highest monthly pace since January and the second highest in the last 16 months. Tariff-induced inflation is still evident in the data, though at a slightly...

August 7, 2025

Continuing Claims Hit a New Cycle High

Jobless claims data corroborate our assessment of the low-hiring, low-firing state of the labor market. We economists love the jobless claims data for two reasons. First, the data are collected via hard count of actual unemployment insurance claims, not a survey subject to sampling bias, estimation methods, etc. Second, the...

Revisions to Payroll Employment by Sector Web

August 1, 2025

Massive Payrolls Revisions Raise Prospect that Fed May Indeed be “Too Late”

A bombshell payrolls report for July meaningfully changes our perception of the state of the labor market. The report estimated 73,000 of job gains in July, which was only modestly below expectations, but the shocking figure was 258,000 in downward revisions to the prior two months. That is the largest...

July 21, 2025

Tariff Inflation Arrives in June CPI Report

Tariff inflation made its highly anticipated debut in the June CPI report. Core CPI increased at a 2.77% annualized rate in the month, slightly above the pace of recent months. This figure was held down by continued disinflation in housing prices, which rose at a 2.12% annualized rate in June,...

July 10, 2025

More on Tariff Calculations

Our prior note on decoupling from China prompted several reader questions about tariff calculations. We stated that the effective tariff on imports from China generally runs well below the statutory rate. The chart below shows those two measures back to 2018 and President Trump’s first trade war. The statutory rate...

Government and Healthcare Employment Chart

July 3, 2025

June Payrolls Report Justifies the Fed’s Wait-and-See Posture

The U.S. economy created an estimated 147,000 jobs in June, well above expectations. The prior two months were revised slightly higher, and the unemployment rate declined from 4.2% to 4.1%. This is a strong print on the headlines. However, the diffusion was exceedingly narrow, with fully 90% of the job...

June 27, 2025

Gradual Decoupling from China Began in 2018

By reducing the tariff rate on Chinese imports from 145% to 30%, President Trump significantly de-escalated his trade war and reduced the left-tail risk of a sudden forced decoupling from China. But remember that the 30% figure represents new tariffs. Those are applied on top of preexisting tariffs, many of...

June 18, 2025

Fed Maintains Wait-and-see Posture

The Federal Open Market Committee (FOMC) left the federal funds rate target unchanged today as expected, maintaining the wait-and-see posture they have adopted since trade policy uncertainty spiked in the springtime. Today’s outcome does not materially change our outlook for monetary policy or the U.S. economy. Our modal expectation remains...

June 13, 2025

The Returns to Job Switching Have Evaporated

In recent notes, we have highlighted elements of underlying weakness in an otherwise stable labor market. The Atlanta Fed released another such data point this week. Their Wage Growth Tracker improves upon the average hourly earnings data released with each monthly payrolls report by adjusting for compositional changes and calculating...

June 11, 2025

Little Sign of Tariff Inflation in the May CPI Report

CPI inflation printed below expectations in May as isolated signs of tariff-induced inflation were offset by cooler price pressures in autos and other components. Core CPI increased by 0.13% m/m in May, which was lower than the estimates of all 73 economists surveyed by Bloomberg. Core CPI inflation has now...

June 6, 2025

Labor Market Remains Stable in May

The May jobs report showed little change in the stable-but-vulnerable labor market dynamics we have highlighted in recent months. This report does not meaningfully change our outlook for the economy or monetary policy. We maintain our view that the first rate cut will not arrive until January 2026. We did...

June 4, 2025

Tariff Revenue Starting to Roll In

Financial markets have rebounded strongly following the de-escalation of President Trump’s trade war, mostly retracing the price declines of April. That sanguinity is understandable but may be premature. The agreements with China and the U.K. leave in place 10% universal tariffs, and those are only just beginning to impact the...

May 30, 2025

Graduating with Distinction

The high school class of 2025 will graduate with distinction, but not the kind worth celebrating. It is probably the largest graduating class most of us will see in our lifetimes. Many of those who received a diploma this spring were born in 2007. That year saw the most births...

Budgetary Impact of House Reconciliation Bill v

May 23, 2025

House Reconciliation Package is Even More Irresponsible Than It Appears

The House of Representatives passed their version of the reconciliation bill yesterday by a vote of 215-214. The legislation as written would increase federal deficits by an estimated $2.5 trillion over the next decade, exacerbating America’s fiscal woes even as interest costs reach record highs relative to GDP. But House...

May 20, 2025

JOLTS Data Reflect a Stable-but-Vulnerable Labor Market

This morning brought the first of two labor market data releases for the week. The Job Openings and Labor Turnover Survey (JOLTS) data released today showed a continuation of the trend that has been underway for several years. Since the extreme labor shortage of the pandemic peaked in late 2021,...

May 20, 2025

Stagflation Could Keep the Fed on the Sidelines this Summer

President Trump’s tariff increases put the Fed in a very difficult position. If the current tariff rates of 15-18% are maintained (again, this is The Big If), we would expect the price level to increase by 1.0-1.5% over the next few months, pushing core PCE inflation from 2.6% currently to...

May 20, 2025

Last Week’s Treasury Selloff

The rise in long-term Treasury yields last week surprised market participants and may have played a role in President Trump’s decision to temporarily pause the highest tariffs. The price action has been extreme: 10-year and 30-year Treasury yields registered their largest weekly increases since 2001 and 2008, respectively. It is indeed unusual...

May 20, 2025

Trade Policy Rollercoaster Clouds the Economic Outlook

Trade policy uncertainty was the single greatest risk for the U.S. economy coming into Inauguration Day. President Trump has been talking about tariffs since the 1980s and continued in increasingly provocative terms on the 2024 campaign trail. Coming into 2025, we shared the consensus opinion that he would only deliver...

Broad Tradeweighted Dollar Index Date Range

May 19, 2025

Trade War De-escalation Reduces Left-tail Risk

The U.S. and China agreed last week to substantially reduce their bilateral tariffs as they continue negotiations towards a comprehensive trade agreement. New tariffs on China under the Trump administration are lowered from 145% to 30%. While some de-escalation was baked into our economic forecast, this development arrived sooner and...

May 9, 2025

U.S.-U.K. Handshake Agreement Suggests Tariffs are Here to Stay

The trade deal between the U.S. and U.K. announced yesterday appears to make only minor changes to current trade policy between the two nations. Details are scant as no text has been signed, and the White House fact sheet is fewer than 750 words. Based on what we know so...

May 7, 2025

May FOMC: The Waiting is the Easiest Part

The Federal Reserve left their policy rate unchanged today as expected, embracing the wait-and-see attitude that they have adopted since President Trump escalated the trade war in March and April. Today’s events disappointed those market participants who expected a signal that rate cuts would begin at the June or July...

May 2, 2025

Status Quo Labor Market Persisted Through April

The April payrolls report showed little change from the labor market dynamics of the past year. This was a relief to the minority of analysts who expected to already see the labor market impact from the trade policy shock in early April. The reference week for this report was April...

May 1, 2025

Tariff Frontrunning Propels Imports to a Record High

American companies rushed to stockpile imported goods ahead of the Liberation Day tariff announcement, recent trade data show. Goods imports surged to a record high of $343 billion in March, driving the monthly goods trade deficit to a record $162 billion. The import surge that began in December and gathered...

April 22, 2025

China Can’t Fight the Fed

As often happens when there is an unexplained rise in interest rates, some market participants recently speculated that China has been dumping their Treasury holdings. We continue to believe that any threat by China to weaponize their Treasury holdings as a tactic in the trade war would not be credible....

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