The video covers a notable speech by Chair Powell of the Federal Reserve, providing insights into the current economic climate and the strategic maneuvers in monetary policy. Chair Powell highlights that the U.S. economy has shown significant strength and progress toward the dual mandate goals of maximum employment and stable prices. His confidence is reflected in the Federal Reserve's recent decision to lower the federal funds rate, emphasizing that labor market conditions have moderated and inflation is on a path towards the 2% target.

There are discussions on various economic indicators suggesting that while the labor market is in balance, some tensions remain between labor market data and GDP data. Chair Powell mentions the relevance of state-specific unemployment rates and comments on the impact of natural disasters on financial operations. The importance of the annual NIPA revisions is also acknowledged as it sheds light on the economy's real-time output.

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Key Vocabularies and Common Phrases:

1. monetary policy [ˈmɑːnɪˌtɛri ˈpɑːləsi] - (noun) - The process by which a government or central bank manages a country's money supply to achieve specific goals, such as controlling inflation. - Synonyms: (fiscal policy)

I do have some brief comments on the economy and monetary policy.

2. disinflation [ˌdɪsɪnˈfleɪʃən] - (noun) - A decrease in the rate of inflation. - Synonyms: (reduction in inflation, slowing inflation)

disinflation has been broad based, and recent data indicate further progress toward a sustained return to 2%.

3. fomc [ɛf oʊ ɛm ˈsiː] - (noun) - Federal Open Market Committee, which oversees the open market operations in the U.S. and makes key decisions about interest rates and money supply. - Synonyms: (Federal Reserve board, central bank committee)

Inflation has eased, and my fomc colleagues and I have greater confidence that it is on a sustainable path back to 2%.

4. recalibration [ˌriːˌkælɪˈbreɪʃən] - (noun) - Adjusting or readjusting the settings of a system, procedure, or instrument. - Synonyms: (adjustment, readjustment, resetting)

That decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained.

5. headline inflation [ˈhɛdlaɪn ɪnˈfleɪʃən] - (noun) - The total inflation within an economy, including commodities such as food and energy prices, which tend to be volatile. - Synonyms: (total inflation, overall inflation)

Over the most recent twelve months, headline and core inflation were 2.2% and 2.7%, respectively.

6. core inflation [kɔːr ɪnˈfleɪʃən] - (noun) - The change in costs of goods and services but does not include those from the food and energy sectors. - Synonyms: (underlying inflation, stable-price inflation)

Over the most recent twelve months, headline and core inflation were 2

7. natural rate [ˈnætʃərəl reɪt] - (noun) - The level of unemployment consistent with a stable rate of inflation, not affected by short-term cyclical factors. - Synonyms: (equilibrium unemployment)

The unemployment rate is well within the range of estimates of its natural rate.

8. gdi vs gdp [ˈdʒiːdiːˈaɪ] vs [ˈdʒiːdiːˈpi:] - (nouns) - Gross Domestic Income versus Gross Domestic Product, two principal ways of measuring a country's economic output. - Synonyms: (economic indicators)

There are two ways of measuring output in the economy. There are many ways, but two principal ways are gross domestic income versus gross domestic product.

9. resilient [rɪˈzɪliənt] - (adjective) - Able to withstand or recover quickly from difficult conditions. - Synonyms: (tough, hardy, flexible)

If it's a really important employment report, you should assume we haven't made a decision until we see it, and we will.

10. anchored [ˈæŋkərd] - (adjective) - Firmly fixed or secured in position. - Synonyms: (fixed, secured, rooted)

Longer run inflation expectations remain well anchored.

Navigating Economic Challenges Monetary Policy in A Dynamic World

Was reappointed in 2014. In 2018, he became the chair of the board of governors and was sworn in for a second term. He's had a long career in finance, and he's no stranger to navigating financial crisis, both at treasury and while on the board of governors. Chair Powell will provide some prepared remarks, and then I'm going to invite him to join me on the stage for a moderated conversation.

So, chair Powell, please, the floor is yours. Thank you very much, Madam President. I do have some brief comments on the economy and monetary policy, and then I look forward to our discussion. Our economy is strong overall and has made significant progress over the past two years toward achieving our dual mandate goals of maximum employment and stable prices. Labor market conditions are solid, having cooled from their previously overheated state. Inflation has eased, and my fomc colleagues and I have greater confidence that it is on a sustainable path back to 2%.

At our meeting earlier this month, we reduced the level of policy restraint by lowering the target range for the federal funds rate by 0.5 percentage point. That decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation, moving sustainably down to our objective.

Turning to the labor market briefly, many indicators show that the labor market is solid, to mention just a few. The unemployment rate is well within the range of estimates of its natural rate. Layoffs are low, the labor force participation rate of prime age workers is near its historic high, and the prime age women's participation rate has continued to reach new all-time highs. Real wages are increasing at a solid pace, broadly in line with gains in productivity.

The ratio of job openings to unemployed workers has moved down steadily but remains just above one, so that there are still more open positions than there are people seeking work. Prior to 2019, that was rarely the case. Still, labor markets have clearly cooled over the past year. Workers now view jobs as somewhat less available than they were in 2019. The moderation in job growth and the increase in labor supply have led the unemployment rate to increase to 4.2%, still low by historical standards.

We do not believe that we need to see further cooling in labor market conditions to achieve 2% inflation, turning then to inflation. Over the most recent twelve months, headline and core inflation were 2.2% and 2.7%, respectively. disinflation has been broad-based, and recent data indicate further progress toward a sustained return to 2%. Core goods prices have fallen a half percent over the past year, close to their pre-pandemic pace.

As supply bottlenecks have eased outside of housing services, core services inflation is also close to its pre-pandemic pace. Housing services inflation continues to decline, but sluggishly. The growth rate in rents charged to new tenants remains low. As long as that remains the case, housing services inflation will continue to decline to broader economic conditions also set the table for further disinflation.

The labor market is now roughly in balance. Longer run inflation expectations remain well-anchored. Turning to monetary policy, over the past year, we have continued to see solid growth and healthy gains in the labor force and in productivity. Our goal all along has been to restore price stability without the kind of painful rise in unemployment that has frequently accompanied efforts to bring down high inflation.

That would be a highly desirable result for the communities, families, and businesses we serve. While that task is not complete, we have made a good deal of progress toward that outcome. For much of the past three years, inflation ran well above our goal, and the labor market was extremely tight. Appropriately, our focus was on bringing down inflation. By keeping monetary policy restrictive, we helped restore the balance between overall supply and demand in the economy.

That patient approach has paid dividends. Inflation is now much closer to our 2% objective. Today, we see the risks to achieving our employment and inflation goals as roughly in balance. Our policy rate had been at a two-decade high since the July 2023 meeting. At the time of that meeting, core inflation was 4.2%, well above our target, and unemployment was 3.5%, near a 50-year low. In the 14 months since the July 2023 meeting, inflation has moved down and unemployment has moved up, in both cases significantly.

It was time for a recalibration of our policy stance to reflect progress toward our goals as well as the changed balance of risks. As I mentioned, our decision to reduce our policy rate by 50 basis points reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate economic growth and inflation moving down sustainably to 2%.

Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course. The risks are two-sided, and we will continue to make our decisions meeting by meeting. As we consider additional policy adjustments, we will carefully assess incoming data, the evolving outlook, and the balance of risks.

Overall, the economy is in solid shape. We intend to use our tools to keep it there. We remain resolute in our commitment to our maximum employment and price stability mandates and everything we do is in service to our public mission with that. Thank you very much. And I look forward to our conversation. Thank you. Thank you so much. Short and sweet.

So here we are in Tennessee. We've had a major hurricane move through it's top of mind when we, so I thought to bring it up right at the beginning. Does the Fed have a role to play when natural disaster strikes? So let me just say, like everyone, we see the tragic loss of life and the terrible disruption of millions, literally millions of people, including here in Tennessee.

We have a couple of things that we do in these situations. One is that we are encouraging bankers to work with their affected customers in affected areas. And the second thing is that sometimes in these situations when power is out, there's a need for cash. And so we find that as a very important thing in these disaster situations. And so we have the ability through the reserve banks to make sure that the banks have available cash so that if power is out for a significant amount of time, there's enough cash to do transactions.

But, you know, our, obviously, we're mainly on the sidelines and, you know, sympathizing with this very difficult situation people are in. Great. You, in your prepared remarks, you walked us through the decision to begin cutting rates. What has happened, though, since the September meeting? What's new since the September meeting?

Since the September meeting. So most of the data that we'll see before our next meeting hasn't come yet, of course, and we can talk about that. But I would say, you know, one thing worth pointing to is the annual NIPA revisions, which I thought were quite interesting.

And I'd point out a couple things. First, as this audience will know well, there are two ways of measuring output in the economy. There are many ways, but two principal ways are gross domestic income versus gross domestic product. So GDI versus GDP. There's lore and there's research that says that actually GDI, gross domestic income gives a better real time reading. And in for the last year and a half or so, GDI has been quite low relative to GDP raising.

For those of us who forecast the economy, the risks, the risk that GDP will turn out to have been overstated and it will get revised down to meet GDI. So that's been a downside risk that we've been monitoring, as this audience will well known. Quite the opposite happened, and there were very large adjustments to provisions to GDI, and there's now no gap between the two. In theory, there should be no gap. It's no statistical error in measurement.

So that kind of, I would say, removes a downside risk to the economy. Secondly, it has looked as though consumers were spending more than their income. We see disposable personal income now being estimated up. And so that's no longer the case. Again, removing what we've been thinking of as a possible downside risk, that the level of consumer spending might be unsustainable.

So we look at that, and again, it looks, these were very large, healthy upward revisions to income. We had. Income was revised upward, spending was revised upward, but income was revised upward. So much more so than spending that the savings rate came up. That's right. Even with greater spending. Yeah, the savings rate, too.

So we think savings are, now there are more savings on people's balance sheet and the savings rate is higher. So that speaks of more kind of background that suggests that spending can continue at a healthy level. I'll just mention quickly two other things that I felt were interesting. One was just another modest increase in estimated productivity.

We can talk more about that. Of course, we're watching the situation with productivity. Productivity is very important to potential output. And the question is, are we seeing rising productivity which will be sustained over a period of time? And of course, I think it's way too early to say that.

Nonetheless, you do see some increase in productivity because we've increased income but not hours worked. The last thing, and maybe the most significant, though, is there's been a, there's a bit of a tension between labor market data, which speaks of a cooling labor market, and the spending data, the GDP data, and which is, which has been quite solid. And I would say that has not been, that tension has not been resolved unlike a couple of the others. Nonetheless, I would say, though, that if you take away from this, as I do, that you can be somewhat more comfortable with the spending data. That may also help with the employment data.

So if the economy, so GDI, it was pretty significant, upward revisions, GDP also was revised upward somewhat. And so when there's strength in the economy like that, does that give you some sort of sense or more of a sense of security when you're seeing a cooling labor market that maybe the worst outcomes won't happen if GDP is still that strong?

So the answer is ultimately yes. But I would add, though, that I think there's a lot of thinking that the labor market may give a better real time picture in some cases than does GDP data. So if you look back over prior downturns, you'll often see that they weren't well predicted by GDP data, but they were by one or more aspects of the labor market. Now, we don't see that happening. There's really nothing that I can point to in the economy that suggests that a downturn is more likely than it is at any time.

So we don't see that. I would say seeing that there's more support for thinking that the GDP readings we get are solid, I think that does have. It helps at the margin. That's not going to stop us from looking very carefully at the labor market data, though.

Okay, so I have a few questions here on unemployment. The first is related to the summary of economic projections, and then the second is related to state versus national rates of unemployment. So in the summary of economic projections, the median participant has the unemployment rate moving from 4.2% today to 4.4% by the end of the year. So continued drift upward, and yet the median expects that the pace of rate cuts will move down as the unemployment rate continues to move up. How do you square that picture? How do you explain that?

Well, remember that the summary of economic projections is really just a tabulation of the individual individual, 19 participants. So it doesn't come from one sort of consistent thing.

But I can tell you why I think people will have written up a couple more tenths of unemployment. It would just be that, as we've seen, the level of job creation is maybe not quite at the level it needs to be to hold unemployment constant. Given assumptions about supply, that would make sense to me. You know, I don't think, I think everyone at this point is looking at their forecasts and understanding that there are great uncertainty bands around it. But the sep asks you to write down your most likely case, whether you want to or not. And so that's what it is. So sort of a love hate relationship with the summary of economic projections.

That's not unfair, not for you personally, but yeah, I would say it's. Sometimes people can pay too much attention to it. I will say, though, one thing is we do it, as this audience well knows, we do it once a quarter and over the course of a full quarter, the old Sep can get pretty rusty. But for a few weeks after the meeting, after we write down the SeP, it's actually a pretty good read on what the thinking of the committee is. And I'll point to, one thing I will point to is that if you look at the path that people wrote down, we had ten people at four cuts or more, or two remaining cuts. We had 19 people at three or more.

But the sense of the committee, this is not a committee that feels like it's in a hurry to cut rates quickly. It's a committee that wants to be guided. Ultimately, we will be guided by the incoming data. And if the economy slows more than we expect, then we can cut faster. If it slows less than we expect, we can cut slower. And that's really what's going to decide it. But I think from a base case standpoint, we're looking at it as a process that will play out over some time, not something that we need to go fast on. It's more, it'll depend on the data, the speed at which we actually go.

So before I get to that second question on the unemployment rate, I'm going to ask you a point blank question here. How are you thinking about the November meeting? So a couple things. One, we have two employment reports and an inflation report coming in. So the main thing will be to look, when we get to that meeting, at the totality of the data, and we'll be looking at the activity data, the unemployment data and the inflation data, and asking ourselves, is our policy stance in the place where it needs to be for us to best foster achievement of our goals? And I think we'll take everything into account, and we don't have that data yet.

So that's the main thing. But the other thing is just, I wanted to point out, and I kind of just did that, you know, it's a committee that will, we will do what it takes in terms of the speed with which we move. But if you look at where we were two weeks ago, coming up on three weeks ago, I guess when we wrote down our seps and made our decision, it was a situation where people were thinking the bulk of the committee was at 75 or 100 basis points and the votes were on 50. And that would mean two more cuts. It wouldn't mean more fifties. Now, of course, that'll depend. That'll depend on the data, but ultimately, that's what the baseline is. If the economy performs as expected, that would mean two more cuts this year, a total of 50 more.

Okay. Question from the audience. Now, the regional bank presidents know their districts very well, and they come into the fomc meeting. And well, even before that, the beige book provides that snapshot of what's going on around the country. And so we focus on the national unemployment rate, but there are state unemployment rates as well.

Are there certain states that are primarily responsible for driving up the unemployment rate nationally? Is it something that's more broad-based? And how would you weigh sort of national versus state level? I mean, at the end of the day, we're looking at the national aggregate levels. But the real value, one of the great values of the Reserve bank system is we get, you know, detailed reports of what's happening in the districts, which really start with the directors of the branches and the main banks who come in and talk to their, and all, they talk to the staff and also to the president of the Reserve bank. And I think the banks just do a great job of gathering data and anecdotal information, too about what's going on in the district.

This is enormously useful to us who are sitting in the center and don't have that range of context or that. So I think it's quite useful. But at the end of the day, we have to go on national data, although, of course, there are great, there are different things. It's a big, big country, a big economy. There are parts of the country that are doing better than others.

In your prepared remarks, you mentioned about job finding prospects. We have Dana Peterson here, chief economist from the conference board. The conference board had data recently showing that folks feel like it's getting harder to find a job. How do you, does that one concern you? And two, how do you weigh sort of survey data versus hard data, like a job openings and labor turnover survey, for instance? You know, we look at everything, of course. In particular, the job finding rate has come down very significantly.

And so if you're out of work now, it's going to be harder to find a job than it was two years ago when the, when the labor market was extremely tight, where you would have had multiple employers waiting for you outside the building to give you offers. You know, now it's much more at a normal level or even perhaps a little bit soft.

So the job finding rate is much lower by so many measures. The labor market is still solid, but it really has cooled. I mentioned vacancies relative to actual unemployed people who are looking for jobs, so they're counted as unemployed. That is right around 1.1 ratio. That was a tight labor market before the pandemic, but it's less tight now. That number was at 2.0, and it's worked its way down like so many measures. Quits, all of those wages, all the wedge. They point to the same thing, which is a labor market that's still strong, where conditions have cooled considerably. And as I mentioned, we don't think that labor market conditions need to cool further from where they are just to take the unemployment rate.

I mean, it's substantially higher. 4.2% is substantially higher than where unemployment was in 2019 and inflation was below 2%. 2019. Take a broad set of conditions. Look at 2019. That was not a high inflation environment. So this is not a problem with excessively tight labor markets causing inflation.

I'm so glad that someone submitted a question on housing inflation. I'm sure you're so glad as well. And so I'm going to ask it because we haven't really talked about inflation yet. You made a great point in your prepared remarks that it's running right around three month annualized pace is running right around 2%. So housing inflation has been a large contributor to the overall inflation and continues to be an issue throughout the country, eroding wage gains.

And although housing costs are not a dual mandate, how is the housing market factored into decision making? So, you know, we think of core inflation as three buckets. Goods inflation, non-housing services, which is by far the biggest bucket, and then housing services, and that's rents and also owner's equivalent rent. The first two have looked like they, broadly speaking, moved back to their pre-pandemic level. Housing services inflation has not yet. And what's happened is that what should happen is when market rents drop as leases turn over.

When, sorry, when the increase in market rents drops to a low level, as it has as leases turn over year upon year, you should see housing services inflation flatten out. And you are seeing that. But you're seeing it just at a sluggish pace, as sluggish as it usually.

So I think we went from thinking, I went from thinking at the beginning that this would happen fairly quickly to now thinking that that process will play out over a period of some years, two, three, four years. Nonetheless, as long as market rents, actual new leases are, as long as inflation in those rents, those leases is relatively low, it's going to show up in housing services inflation as well. It's just going to take, my guess is it's just going to take longer than we've been expecting and longer than we've wanted. But I think the direction of travel is clear. As long as market rents remain, market rate inflation remains relatively low, which it still does.

So the good side of that equation, goods prices are less, you know, less under the control of the Fed. But we have been sort of moving back to our previous regime of deflation in goods prices. Some of that is probably sluggish growth from China. But how much do you rely on goods prices being in deflation in order to help that overall aggregate inflation? So if you go back before the pandemic you had, as you pointed out, you had mild deflation in goods for globalization reasons and other reasons.

And so if you take those three buckets I talked about, together, they produced inflation between 1.7 and 2%. So we're trying to get back to a world where inflation is 2%, and the combination of those three buckets is less important than the fact that you get the aggregate back. So I just pointed out that goods inflation is kind of back to where it was, and so is non-housing services, and that's most of the inflation bucket. But the third one is not there. Any combination of those things will do.

But I think it really looks like the third, over time, is going back down to where we would like it to be, which is at a level which won't be 2%. It'll be a little higher than 2%. But that will make the aggregate 2% right in the range of 2%.

So you're going to be embarking on a review of the framework and inflation, the behavior of inflation since the framework change in 2020. Is that, do you think that will inform, or how well will that inform the discussions when you do start the process of going through that five-year review again? So we're starting our second five-year review late this year. So we haven't started yet. We're just now in the process of kind of laying out all the questions we're going to ask and assigning the memos and doing that kind of thing.

We're not really ready to roll that out yet. But of course, you know, we're going to be asking, how should we change our framework, which is embodied in the statement on longer run goals and monetary policy? How should we adapt that to what we now understand to be the way the economy works? What have we learned from the last five years? And that's what we'll be doing. So we'll be asking all of those questions and, you know, giving our answer.

Five years has blown by. I can't believe we're already up on another review of the framework. It feels like yesterday. I know. So let me ask you, because you talked a few times about the data that you're going to receive before the November meeting, and one of those data points, most notable being an employment report that comes out during blackout.

Now, some time ago, the blackout period around Fed meetings was extended. And I can tell you that as a longtime Fed watcher, I loved it when the blackout period was extended because it was almost like a sleep while the baby sleeps, so I could, like, relax longer. Leading up to the meeting because we could all sort of take a break. And so, and I also used to have a saying that the, and this was my personal saying, the Fed does not react well to late-breaking news. And it was my way of saying once you went into blackout, that was it.

The data in hand determined that meeting. But it feels like more so over the last year or two data. And maybe it's the volatility around the data. Data is being considered during the blackout period. Maybe it always was. It just wasn't that volatile. Even policymakers have talked about and yourself data that was released during blackout leading up to the meeting.

So what does that mean for an employment report that's released during blackout just ahead of the November meeting? I mean, it depends on the broader situation. But if it's a really important employment report, you should assume we haven't made a decision until we see it, and we will. We're absolutely going to take into account data, important data that comes in during the blackout period. It gets harder when it's like the morning of the second day of the meeting. It's harder to do that because it's a big machine. But if it comes out during the blackout period, you should just, going into that, you should just assume that what happens there could really matter for the decision.

If that makes sense, there might be a situation where that wouldn't make sense. I think in the world we're in right now, then we're going to be looking carefully at the data even though it's in blackout. Absolutely. And if this is right, then even during the deliberations, during the fomc meeting, policymakers do have the ability to change their thinking or their forecasts or their views during that meeting. Yes.

I mean, we do a lot of work, you know, during blackout, we spend a lot of time, I talk to every participant on the Thursday and Friday before the meeting in detail about the economy and what they're hearing. And so there's a lot of discussion that goes on. And ideally, what we discuss in the meeting is kind of a synthesis of all of the views and information that we're all sharing with each other. So, but you should just assume, though, that decisions don't get made until the meeting. They're not going to be made of. I mean, sometimes there isn't really a decision to make. Right. It's pretty obvious what we're going to do.

Other times, when there is a serious decision to make, you should just assume that it gets made with as much information as possible. If you make the information, the decision before you get all the information, you're throwing away some information there. You wouldn't do that. So when you began hiking the federal funds rate in 2022, the focus has been on the policy lags, sort of long and variable, but who knows how long or how variable? And so, you know, it seemed like the lags were longer than we thought they would be on the way up.

Does that mean that the lags may be longer on the way down? And How do you gauge whether those lags are changing? You know, this is a very hard part of it. You can't really know. Even now, we can't really know why what's happening is happening. People will be debating in 25 years whether what's happening now with the cooling labor market is due to policy lags or due to something else.

So we can't know. What we can know is that we think what we believe is that policy works with long and variable lags. And we have to take that into account in our thinking. And we do, you know, it's challenging. On the other hand, just take the current situation. What you see is solid growth in the economy. So. And what you see is a solid labor market.

So in a way, the measures we're taking now are really due to the fact that our stance is due to be recalibrated. But at a time when the economy is in solid condition, that's what we're doing. We're recalibrating policy to maintain the strength in the economy, not because of weakness in the economy. The transcripts are released every five years, and so I believe it's January of 2025 that we'll first get a look at the 2019 transcripts.

Five years ago, you may recall that you were cutting rates. So give us a peek, if you will, into what the transcripts might show around the deliberations you were having at that time as to what were you seeing in the national and the international economy that would drive you to make that rate adjustment? And what did you see that made you feel like you had done enough? It's very different situation than the current one, I guess I'd start by saying.

But, so, if you remember, we had raise rates very slowly, I think, a total of nine times to maybe two and a quarter and two and a half percent. And what my colleagues and I were feeling in 2019 was significant global economic weakness and also some weakness in the United States economy.

And also, just a lot of this was a time of, of a lot of trade issues, and it was, it was, markets were really uncomfortable and businesses were. Business sentiment was very concerned. So we cut three times. And I felt like at the end of the year, I felt like that. I really felt like it had worked well to settle things down. And so we were, we were still, you know, at 175 basis points or something like that.

That was that situation. Current situation is one where we raised really quickly to the highest level in 20 years, policy being at about 5.3%, five and a quarter to five and a half to get to help with inflation in a world where we had the highest inflation in a long time. And then I think if you take a snapshot of our policy stance, which we put in place in July of 23, and look at this in my remarks, unemployment was 3.5% really tight and inflation was 4.2 or 3%.

So now, now look where we are. We're at 4.2% unemployment and two and a half percent ish inflation. So the stance that we put in place 14 months ago is not the stance that we need now. It's time to recalibrate. I think we held on for a long time and I think we did the right thing.

I mean, history will tell, but I think we wanted to get confident about inflation so we wouldn't be in a situation where inflation could just come right back. And so we held on long enough that I think we're more confident that. So this is, this is quite a different situation than 19, but that's how I remember 19.

Do you think that the 50 basis points that you delivered in September, that cut you described as a strong start, did that cut give you more confidence in the soft landing? I would put it this way, it's a reflection of our confidence that inflation is moving sustainably down, our growing confidence that it's moving sustainably down to 2%.

As I mentioned, our design overall is to achieve disinflation down to 2% without the kind of painful increase in unemployment that has often come with this inflation process. So we are, we've been, that's been our goal all along. We've made progress toward it. We haven't completed that task. I think you'll see us using our tool, you know, in a way that shows our commitment to achieving that in terms of.

I don't want to make a judgment about its likelihood. I just want to know that. We want you to know that we're committed to using our tools to do everything we can to achieve that outcome. Well, you know, economists, every day we're asked to put a probability on the soft landing. I try very artfully to avoid it. And I'll just put it as I have high hopes.

So the unemployment rate, though, has risen. And so should folks be focused more on the delta, the change in the unemployment rate from that very low 3435 to now four two, or the fact that four two is only two tenths above where the committee believes full employment to be?

If we can have any confidence of where we think full employment is. And how would parsing demand versus supply in that rise in the unemployment rate factor in? I mean, the change that we've experienced in the unemployment rate is information, and we shouldn't reject that. For what it's worth, it's information. We should know it and consider it. And it may.

Is it telling us something about future movements in that direction? We can't know that, but that's the question. So, you know, we're not going to ignore that. I think also the level of, and the reason why unemployment has moved up too, is also important. But the level is still a level that is, I mean, I remember when I joined the Fed in 2012, I remember unemployment going down below six and then down below five. And people were really thinking, wow, we're in the fours. This is really low.

You know, 4.9% was considered to be perhaps below the natural rate. Now we're talking about 4.2. So I think you need to keep that in context. In terms of supply and demand. You know, it's really down to your, the level of payroll job creation has come down pretty significantly from where it was earlier this year and certainly in prior years. You're, it's 116,000 a month for the last three months.

And that's without the QCEW adjustment, which would tend to suggest that that will be revised down significantly in time if the QCEW adjustment is sending an accurate signal about what's happening now. Those are the annual, the preliminary annual benchmark revisions. Yes. Through March, right? That's right.

So, you know, I think you look at all of it, you've got a solid labor market, and, you know, we are recalibrating our policy stance and we'll continue to do so going forward in order to maintain that position. And when you talk about following the totality of the data, obviously in the US, we enjoy really a good deal amount more of government sources than, I think, other countries. We have a lot of private sources for data. And so this is a shameless plug for NAEP, really, because I wouldn't be president without it.

But Svenya Goudel, who is the chief economist of, indeed is a member, a valuable member, and indeed, LinkedIn, ADP, they all put great monthly reports out on the dynamics of the labor market from millions of data points, really, that they track. How do you take into account, sort of, say, jolts, which is an official government source for the flows in and out of the labor market, versus what some of the private sources show? How closely do your economists follow that?

Oh, really closely. Yeah. You know, of course we look at jolts. We look at, indeed, you know, you can pick out any of these and critique it. But I think the bigger picture is that the business of collecting data about the us economy and analyzing it is really one of the great achievements of our country, frankly.

You know, we're committed to doing everything science allows us to do to understand what's going on in the economy. Understanding it perfectly is impossible, but we do everything, and we do some of this at the Fed. Mostly this is not done at the Fed, but the collection of data and the information that we get are as good as it can possibly be.

And I think basically it's a great success story about our country and about our economy. I think overall. Yeah, maybe another shameless plug is just that NAEP is a very strong supporter of funding data agencies at the government level to ensure healthy, reliable and sound data sets. Just saying.

So, given that you're talking to a room full of economists, I'd love to get a sense of how you all at the Fed use your economists. You have a few? Just a few at the Fed. I think of 150 or so. I'm not sure, but it's a lot. And maybe, you know, when you're in the committee meeting itself, how do you use the economist to give you updates, to give you the data that you need to help you make decisions? We have a lot more than 150 economists.

I knew it was a big number. It's a big number. But are you hiring for the NAEP scholars? We're always hiring. Always. We're an interesting organization, and we have very large number of PhD economists, but we also have policymaking responsibilities and monetary policy and payments and financial regulation.

And so we're kind of on the line between academics and policy making. Very important policy making. A, the economists that we have, I would say this about the other professionals that we have, they're incredibly important to the work that we do. The way I experience it is I meet regularly with different groups of economists. But if I have a question about something, often about the labor market or inflation or anything, I'll get an answer, but I'll get, usually I get a group of people, and these will turn out to be people who have spent 30 years or 20 years, you know, thinking about that very question, and there might be two or three different opinions or way to approach that problem in the room.

So people, they feel free to disagree with each other, and they also feel free to disagree with us, with the policymakers, and we feel free to disagree with them. I mean, it's a very healthy dynamic. But, you know, these are, you know, so many of these people, they're wonderful people. They're incredibly committed public servants. I'm deeply honored to get to work with these people, and I think the Fed is a great place to work for an economist.

One of them said to me, one of the most senior ones said, if all we could do around here was just sit around and analyze and talk about the economy, we'd have the best jobs in the world. All the policy making is hard, but ultimately it's really fun and enjoyable to analyze and discuss the economy. We could all spend our whole lives doing that. But we have other responsibilities, too, just a few. You can probably relate to that.

Yeah. Well, I think even you and I have a conversation where you said, I like nerding out with the economists, and we appreciate that. I'm glad that you do. I speak economies, you speak economists. Yeah. It's a whole different language.

So in our last minutes here, you know, sandwiched between you and Elan Colette at the lunch table, lots of talk around. I hear guitars, I hear blues music. I hear comparing every band that's your favorite and albums. And I feel like that's been the conversation of this whole conference. As Elan said, we were at the Johnny Cash museum last night.

It's just Nashville is just a phenomenal place. And so if you were to be able to stay overdevelop, what would you do this evening in Nashville? I would certainly visit the Patsy Klein Museum and the Johnny Cash Museum. Big Patsy Klein fan. So many. I like this kind of music. I like music way too much.

The other thing is, there's a band that turns out Alon's going to see tonight called the Time Jumpers, and it's basically the best studio musicians in Nashville, and hence in the world, really, in the kind of music they play. And they play at a place called third and something or other, third and Linsley. But it's an excellent band. Vince Gill sits in as the lead singer, but he's not always there. Anyway, that's what I would do.

And I've got to come back because I've been a fan of that band for ten or 15 years, and I've never seen him live. Well, in about 15 minutes, it's going to be sold out. I've got some tickets. Well, yeah, already is sold out. Oh, gosh. Okay. Should have known. All right, well, next time, then.

And for now. Thank you so much for giving us your time today, chair Powell. We really appreciate it. Thank you. Thanks.

Economics, Finance, Leadership, Jerome Powell, Interest Rates, Federal Reserve