November 21, 2025 • 47 mins
In early November, it looked like almost a sure thing that the Federal Reserve would cut rates. Since then, the odds have come in dramatically, as a number of FOMC members have been talking about persistent inflationary pressures. One such voice has been Susan Collins, the president of the Boston Fed. On this episode, she explains her thinking as to why, right now, she's more concerned about inflation than she is about the labor market, and she tells us what she'd like to see before supporting another rate cut. Today's episode coincides with the first day of the Boston Fed's annual economic research conference, which will be streaming live on the bank's website.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Authoughts podcast.
I'm Tracy Alloway.
Speaker 3 (00:22):
And I'm Joe. Why isn't thal Joe?
Speaker 2 (00:23):
We're in Boston.
Speaker 1 (00:24):
I know.
Speaker 3 (00:25):
We've never done an odd lotch thing in Boston of
any sort, have we?
Speaker 2 (00:29):
No, this is actually my first time in Boston. I've
been to the airport a few times, but I've never
actually stayed in the city. And everything I know about
Boston comes from the Boston New York rivalry as depicted
in thirty Rocks. So I know nothing basically, you know what.
Speaker 3 (00:44):
And I lived in Vermont for several years in high school.
Boston that was the big city. Like people in like
people aspire to go to Boston and when people I
knew a lot of people went to college here and
stuff like that. I love it here. I'm excited to
be here.
Speaker 2 (00:55):
You know. The big city closest to my house in
Connecticut is Worcester, Massa Tuessetts.
Speaker 3 (01:00):
That's the big one. That's a niceity.
Speaker 2 (01:01):
It's about forty minutes away. So all right, Well, the
reason we are here is for the Boston Fed, which
is holding their sixty ninth Economic Conference, and the theme
of this year's is the US economy in a changing
global landscape, which is putting it mildly.
Speaker 3 (01:16):
I think it is putting it mildly. There's a lot
going on globally, all kinds of things. You could just
run down the list. We don't even have to summarize it.
But it is a time of change, both macro big
picture globally, but also just for the near term. Direction
of monetary policy right now in the United States probably
as as ambiguous as it's been in a while.
Speaker 2 (01:37):
Yeah, I think so. And we're seeing that reflected in
a lot of the Fed speak that's been coming out
at the moment. We have doves on the one side,
who are talking about a deteriorating labor market, and then
we have hawks on the other side who are still
very concerned that basically, after five years of inflation, we
have still not returned to the two percent target.
Speaker 3 (01:54):
It's been half a decade, right and as of right
now recording this November nineteenth, twenty twenty five, the work
function looking at FED fund futures gives about a forty
five percent chance of a rate cut in December. That
was in the high sixties just a couple of weeks ago.
So a lot of things, a lot of uncertainty, more
or less a coin flip right now. We don't know
(02:16):
what's going on in the medium term or the long term.
Speaker 2 (02:18):
I'm going to say one more thing before we get
to our very esteemed guest. But there is another complication,
which is we've had the government shut down, right, so
we haven't had a lot of the economic data. By
the time this episode comes out, there might have been
some of the economic data, but we also have FED
minutes that are due out later today. But to emphasize,
as of this morning, everything is very very uncertain.
Speaker 4 (02:43):
Uh.
Speaker 3 (02:43):
The fog, that's like the term everyone's using.
Speaker 2 (02:46):
Yeah, there's a little bit of fog out in the
Boston Harbor right now as well, so fog fog everywhere. Okay, So,
without further ado, we have the perfect guest to talk
about the changing US economic landscape and what it means
from my arry policy. We're going to be speaking with
Boston Fed President Susan Collins. So, Susan, thank you so
much for coming on all thoughts.
Speaker 4 (03:06):
I am delighted to be here and welcome to Boston.
Speaker 2 (03:09):
Thank you so much. I heard I'm supposed to eat
beans and lobster.
Speaker 4 (03:13):
Is that right?
Speaker 2 (03:13):
All right, I'll do that all of it. Okay, perfect?
So tell us firstly about this research conference. What's the
purpose of the FED gathering people together to talk about
you know, you have a series of papers here, all
with different themes and topics. Why do this?
Speaker 4 (03:29):
Sure happy to talk about our conference. And I have
to say, I and our entire team are delighted that
you are both going to be joining us for our
day and a half conference.
Speaker 2 (03:38):
We can't say no to a conference full of academic
economic papers.
Speaker 4 (03:45):
Well, it will be quite meady and informative. You know,
it's not just academics, and that's one of the things
that I think is really important to us and one
of the things that makes it particularly valuable. So we
bring together and this is the sixty ninth Boston Conference.
It's our flagship. You know, we do other meetings and
conferences and other things, but this one is our flagship.
(04:06):
And we bring together academics, certainly, we bring together policy
makers from different institutions, We bring together business leaders. We
have a wide range of people. We actually have people
from different disciplines. So one of the papers is from
a political scientist as well, so that is as kind
of a hallmark of the conference is to really do
a deep dive to understand dimensions of a topic. And
(04:29):
we picked a pretty big one this time. So I'm
not going to suggest we're going to cover the entire thing,
but understanding the US economy in what is a changing
global landscape related to risks and uncertainties, to fragmentation. It's
a lot to talk about, and I'm really looking forward
to being part of it, to learning and to hearing
(04:50):
the presentations.
Speaker 3 (04:51):
I don't want to create any tension between you and
the fellow regional FED president, but doesn't it feel like
Kansas City cheats a little bit by having their conference
in Wyoming and August, et cetera.
Speaker 2 (05:04):
Like I we're in Boston in November, which is great.
Speaker 4 (05:07):
And it's lovely here, and it's lovely with Boston in November,
but I.
Speaker 3 (05:11):
Always feel like it's kind of cheating. That's like, oh,
we're not even going to have it in our in
the exact location, and we're going to have it some
in the middle of summer in this beautiful location. It
is kind of cheating a little bit.
Speaker 4 (05:21):
Well, you know, the Jackson Hall conference is a very
special one. I have been participating in that for a
long time and I am a huge proponent, and I
just say, the more the merrier, right, you know, it's
a lot to talk about.
Speaker 3 (05:32):
A positive abundance mindset for conference.
Speaker 2 (05:34):
That's right.
Speaker 4 (05:35):
That's right.
Speaker 3 (05:36):
So let's talk Actually, you know, we'll get into we
want to talk about some of the big themes we
want to talk. Let's talk a little bit of near
term monetary policy, et cetera. Odds of a December cut
have come in dramatically because you and some of the
other members of the FOMC have been talking about this
concern that inflation remains stubbornly over target. That big said,
(06:01):
there does seem to be a lot of evidence of
labor market weakening, right, And we haven't got the unemployment
rate for a while, but basically every measure seems to
show a significant I don't know, stall et cetera. Talk
to us about your read on the labor market right now.
Are you concerned that some of the weakness that we've
seen could snowball into seriously deteriorating environment and a sharp
(06:24):
increase in the unemployment rate.
Speaker 4 (06:26):
Yeah, So I appreciate your framing of that. You know,
I have to start by saying, I'm really focused on
both parts of our mandate, and that does mean the
labor market, say more about that in just a hot second,
but also concerns about the elevated inflation and what I
hear about that and our commitment to price stability, So
(06:46):
you know, they both really matter and I'm looking at
both of them. That's really what I've been emphasizing. As
far as the labor market, you know it it's kind
of an unusual situation in some ways, right. I mean,
what I think is pretty clear that we have seen
softening in the labor market. We are pulling together all
the data that we can find, but as you pointed
(07:07):
out earlier, we don't have the official data yet. We'll
get a job support from September tomorrow morning, and really
eager to see that, and so it's hard to tell
how much that softening has been, but I do think
it's clear it reflects both labor supply growth having slowed
pretty notably, but also labor demand growth. And so so
(07:28):
far it seems, and again we'll learn more that there's
a kind of rough unusual balance there, and so we
haven't seen a significant unemployment change, But that's something I'm
watching really carefully and I'm really attuned to.
Speaker 3 (07:41):
Just to follow up though on we have not seen
a significant unemployment change, setting aside the data which is
going to be noisy for all kinds of reasons because
that's September, which is ages ago, and then the data
after that will be affected by the government shutdown itself,
which why we're't getting data. So who knows how long
it'll be until we have cleaned data. But that being said,
do you have any way to anticipate actual deterioration because
(08:04):
the concern is that once the unemployment the layoffs really
starts to snowball, then they start to feed on each
other and they accelerate, and people talk about nonlinearity potential.
Do you are you concerned that by waiting or too
much for the data to reveal oh the weakness is here,
that you won't have been able to get around get
(08:24):
in front of a deterioration.
Speaker 4 (08:26):
It's really important to be forward looking. And as you say,
I also have seen past episodes where there's been a
dynamic which can move quickly, and so it's important to
recognize that. So are there risks on the labor market side, absolutely,
and that's something that I'm attuned to. But that's not
the only consideration in terms of making monetary policy decisions.
(08:50):
It's really about balancing those risks and looking at to
the best of one's ability, you know, how do you
assess which of our goals from cos is further away?
And I think that the reasons that you're talking about,
some of that shift in risks, increase in risks in
the labor market was a good reason for the easing
(09:13):
the fifty percent basis point cuts that we have already
done this fall, and I think that that has actually
positioned us given what I know now and obviously still
watching for lots of caveats, and so I think that
the shift in that balance of risks that I started
being quite focused on over the summer was really a
(09:35):
rationale for those cuts that we've already seen. At the
same time, we have now moved much closer to a
neutral rate, and we're balancing those risks on the labor
market side with continued risks related to inflation and elevation,
and policies really only mildly restrictive in my view, And
(09:57):
so I given what I'm seeing so fartinue to see
that as appropriate for now.
Speaker 2 (10:02):
We're going to get into each one of those points.
But I have a very quick process question, and I
realize we're in unusual circumstances at the moment. But when
the jobs number hits, presumably tomorrow on Thursday, again, we're
you know, we're recording this on Wednesday, November nineteenth. But
when it comes out, what actually happens? What do you
do when you see that number? Do you, you know,
(10:24):
immediately go into analysis mode? Do you start calling fellow
FED presidents and talking about what it means?
Speaker 4 (10:31):
That's a great question. So you know, of course, we
have busy schedules and all kinds of other things going on,
and sometimes when the data hits, I'm in other meetings
or with other groups. I am well aware of when
it is due, and we do have a process. I
have a very strong Boston research team of experts, and
so you know, as soon as the numbers come out,
(10:52):
I do try to take a quick look at them,
and then we are sometimes virtually and you know, get
together relatively quickly to assess what we're seeing in those numbers.
So I have help to try to unpack them. Often
the real information is in the details. It's not necessarily
just the headline number. In fact, that can mask a
(11:13):
lot of what's really interesting about the information. We then
take some time to unpack it, and we want to
contrast those data with what we had already seen, right,
because you're adding new information. It's not going onto a
kind of totally clean palate, right, it's additional information. So
we're doing all of that, and I'm working with my team,
(11:34):
and then I do, of course talk to my colleagues
as well. But the immediate analysis is more within our
teams in each of our reserve banks.
Speaker 2 (11:43):
And one more process question. But it strikes me that
one of the unusual features of our very unusual environment
at the moment is just the sheer amount of FED
speakers that we've had in recent days. I started counting
them up yesterday and I got nine in less than
a week. And I think than our friend Tom Barkin,
friend of the pod, put out a speech or a
(12:03):
research note as well, so that brings it up to
ten in less than a week. What's going on? Why
does everyone have the urge to sort of stake their
ground ahead of a meeting that you know, the market
currently implies could be a coin flip.
Speaker 4 (12:17):
Well, all the more reason to hear a range of views.
I mean, I think one of the strengths of the
structure of our federated system is it really does bring
different viewpoints. And you know, it's interesting because sometimes there's
a claim that there's too much group think. I don't
see group think. I see this week. No, No, I
really don't. And so I think we have also a
(12:39):
responsibility to explain what we're seeing, how we're thinking about things,
and that's part of that communication that we do. And
so I actually think that's important, and I think recognizing
that the breadth of views is partly us coming together,
is sharing information, and as part of that process, they're
(13:00):
different windows. When I think you hear lots of speeches.
This is certainly not an isolated time, but it's when
there's you know, kind of less clarity, perhaps when they're
turning points in the economy, when you're more likely to
see many of us out there talking about what we're seeing,
also talking about how our regional information contributes to that
(13:23):
in different ways. And we're often talking while we're out
in our regions connecting with different people, and so there's
kind of multiple dimensions about why we're out and about
and what we're doing.
Speaker 3 (13:49):
Let's talk about inflation. So core PCE as of the
August reading, which again feels like ages ago now, but
it's the data that we have came into two point
nine per ten. So that's clearly elevated solidly above target.
You know, if you just hit like a snapshot, you're
looking at the unemployment rate, you're looking at the inflation
(14:10):
reading that two point nine percent. How much does the
significance of that change because it comes after years of
missing the inflation target to the upside versus if we
just had the snapshot, Like, how much of your thinking
is sort of informed by the fact that not only
has it been high, but it's been high for a
really long time.
Speaker 4 (14:30):
I do think that the longevity of that elevation is
a key factor to figure. It's hard to, you know,
to put a particular weight on that, but I think.
Speaker 3 (14:40):
About the balance of risks.
Speaker 4 (14:42):
Yeah, but so let me say a few things on
the inflation side. But first related to that specific question.
You know, I do think that it is a bit
of a reminder that it's economic behavior that is not
you know, one hundred percent predictable, and many of our
analyzes that are based on periods when people were really
(15:05):
used to very low inflation, maybe a bit noisier signals
of what kind of responses and changes we're going to see.
And so I do think that complementing those analyzes, you know,
of course, those are extremely valuable, and we continue to
look at total We're all data geeks here, you know,
that's kind that's kind of what we do with the conversations.
(15:26):
We have understanding how businesses are thinking about things, and
so I hear that businesses are mindful that they have
raised prices significantly over recent years. They're concerned about what
consumer responses will be. I've recently been hearing a number
of firms, at least in the New England district, the
Boston Fed's district, which is most of New England, saying
(15:47):
that that they have been passing price increases and they
have been perhaps surprised in some cases that consumers are
not pushing back, and that's leading them to expect that
they might continue to do that.
Speaker 1 (16:00):
You know.
Speaker 4 (16:01):
So I think that gathering a range of information to
complement how what our understanding of behavior is important, and
that does factor into some of the scenarios I think
are plausible, they're not necessarily my baseline. My baseline scenario
on the inflation side is that inflation's likely I think,
(16:21):
to stay elevated through the rest of this year into
early next, and then as tariffs work their way through
the system, which I think is going to take some time,
and I'm happy to talk more about tariffs suspect we
may want to come back to that. Absolutely, you know,
I think that the disinflation process, perhaps slow and uneven,
that we had seen earlier, is likely to kick in.
(16:42):
So my baseline is a relatively benign one, both on
the inflation side and on the real side of the economy.
But I don't rule out scenarios where there's a larger
increase in inflation or there's more persistence. And some of
that has to do with behavioral responses that might reflect
having been in an elevated environment for a long time
(17:05):
and concerns about profit margins, concerns about catching up to
some of the past changes, and how people think about
price levels, which is something that many of our models
are not as focused on. I hear a lot about
price levels when I'm out and about, but high cost
of living, housing in particular, but not only childcare, food
(17:27):
that that is the number one challenge that I hear
about when I'm talking to people, particularly and moderate income communities.
But not only so.
Speaker 2 (17:35):
Since we're at a research conference at the Boston Fed,
I need to bring up a really good research paper
that came out of the Boston Fed back in October,
I think, and it was looking at inflation expectations now
and comparing them to what happened in the early and
late nineteen seventies. And the finding was that the rise
in inflation expectations around COVID might not have had that
(17:57):
much to do with actual prices, but actually outran the
prices and sort of became de anchored a little bit
from reality, which is what we saw on the late
nineteen seventies. Is the concern that people, you know, after
five years of above target inflation, after price levels going up,
as you just put it, that our expectations for inflation
(18:19):
start to become unmoored from reality. Is that the nightmare
scenario for you at the moment.
Speaker 4 (18:24):
It certainly would be a concern if I were to
see evidence that especially medium to longer term inflation expectations
were becoming an unmoored I'm not seeing that right now,
but it is something I watch carefully, and I do
think that at least certainly so far. And my baseline,
as I said, is on the more benign side. You know,
(18:45):
it's not expecting that that would happen. In particular, we're
not seeing those labor market pressures with a softer labor market.
But is it a concern? Is it something to watch carefully?
It is, and you know it's something that I know
some are more concerned about than others.
Speaker 2 (19:01):
Well, talk to us about how tariffs play into inflation expectations,
because this seems to be a difficult one to call.
You have the initial rise in prices, and then no
one is quite sure what happens after that. The consensus
seems to be that it's this one off shift and
then you know, inflation should start to cool. But on
the other hand, we're hearing a lot from consumers, as
(19:21):
you say, about price levels themselves.
Speaker 4 (19:24):
So quite a bit to say about tariffs. So you know,
let me unpack a few of the things that are
really top of mind for me. One is when certainly
when I say that, you know, my baseline expectation would
be that tariffs have a one time impact on prices.
One time doesn't mean it just happens in a week
and it's done that one time can get implemented over months,
(19:50):
a year, something like that. It just says that it's
not expected to be a continual increase. Once the level
has adjusted, did you don't get additional impacts, but that
can happen over time. So that's one point. And I
do think that in a period of high uncertainty and
(20:10):
the tariffs are really intertwined with uncertainty something to come
back to and the long elevation of higher prices that
we were just talking about, you might actually expect the
time for businesses to pass things through to be elongated, right,
And so then you start worrying more that people get
(20:33):
used to these continual price increases and you kind of
get stuck. Right. So that's a scenario, again not my baseline,
but is one that I think one could think about.
So a few things about tariffs. One is the tariffs
are really intertwined with uncertainty, which makes you know it's
uncertainty about the tariffs, which is one of the key
(20:54):
things that's having influence. For example, in terms of hiring decisions,
spent decisions, some of the reticence that firms have to
make major decisions and projects, and also in terms of
teasing out empirically right, it's going to take some time.
Our staff at the Boston FED is doing quite a
bit of work on a variety of dimensions, and that
(21:15):
includes analysis that takes into account that, you know, many
of the tariffs are impacting imported intermediates, and so there
are multiple dimensions and levels and you've got to take
all of that into account. And we're also doing a
lot of analysis on what happened in twenty eighteen. What
can we learn from that, because we've had enough time
(21:35):
that's elapsed, and actually one of the papers at our
conference will be drawing some of the lessons from a
kind of more comprehensive analysis of that experience. You know,
just one thing that they've already been talking about is
then it was a much smaller tear of increase, It
was narrower, and it was implemented over a relatively short
time period. It still took five months or more before
(21:59):
the peak impact on price levels was seen, and there
are reasons to think it might take even longer this time,
and then the survey data when we're doing survey data
at the Boston FED, particularly focused on small businesses, which
isn't a group we don't have as much line of
sight into, and the conversations that I've talked about that
(22:19):
helps to inform things. And then just one final thing,
because I think it's both intellectually interesting, you know, if
I put my academic hat on, but also really important.
We've also seen significant increases in productivity, and that is
interacting with some of the tariffs, perhaps offsetting the extent
(22:40):
to which we're seeing the impacts of tariffs on prices,
because productivity growth is actually an opportunity not to pass
things through because it enables you know, cost savings, et cetera.
So there's a lot of things going on with tariffs
which make them hard. I think this is going to
be an area we will be able to we will
(23:00):
continue studying and learning about for some time to come.
Speaker 3 (23:03):
I like your characterization of I guess maybe you'd call
it the long one off, right. There can be a
one off, but it doesn't just mean the price level
resets from today to tomorrow. It could just be the
sort of long process where some new equilibrium is formed
maybe months, maybe years, et cetera. I'm really interested, though,
in those conversations that you have with New England businesses
(23:25):
about tariffs. You mentioned perhaps some of their surprise that
they were able to pass on price increases to the
degree that they have. What else are companies saying about
sort of the operational effects, the day to day effects
of how they're managing their business in light of tariffs.
What substance of things do you hear about, So.
Speaker 4 (23:44):
A number of different, number of different things. A lot
of the tariff conversations that I've had really are intertwined
with navigating uncertainty. So one of the things that you know,
I've heard is it's challenging to navigate and make adjustments
based on a very different tariff level. But if we
knew exactly what it was and it was going to
(24:05):
stay there, that would be much easier to adjust to.
Then back and forth and uncertainty, and that creates some hesitancy.
It also creates or adds to, because I think this
was already there, what I'm calling almost an efficiency mindset
where firms are reticent to hire because they're not sure
(24:25):
how things are evolving, and tariffs are a cost increase
to the extent that you can offset that through efficiencies,
that is one way forward that it's almost kind of
like a no regrets type of investment, because whatever happens
with the tariffs, if you found efficiency improvements, that will
have been a helpful kind of context. So that links
(24:49):
up with AI. But it's certainly not only AI. It's
production processes, it's automation. It's addressing some longer standing areas
where it was difficult to hire be because of skilled shortages.
So a number of things that I have been hearing
since I started in the role in twenty twenty two
continue and then there's this additional set of things that
(25:12):
are added on. So for many businesses, especially the larger ones,
I actually hear some kind of cautious optimism as they
look out ahead. It depends someone on the sector or
some differences, and it depends what some of the global
linkages are and some of those other competitive effects. But
I've heard quite a bit of that and a bit
(25:33):
more stress and concern among some of the smaller firms
in some places, and so that's part of why we're
trying to add to the information there through a quarterly
Small Business Survey that we started doing recently.
Speaker 2 (26:04):
I hesitate to ask too many theoreticals here, but I
think this has actually become less of a theoretical recently.
But there is a good chance that the Supreme Court
strikes down a big chunk of these tariffs. How would
you as a policymaker actually deal with, you know, the
proximate cause of this one time shift of inflation suddenly
(26:25):
being put in doubt. And then on top of that,
you also have more uncertainties on the margin about whether
or not people might get tariff bonuses, and then whether
or not businesses would receive refund checks if the tariffs
were struck down by the Supreme Court. That seems like
a very complicated scenario to be thinking about, and much
less planning for.
Speaker 4 (26:46):
There is considerable uncertainty in this space, as you just
pointed out, and you know, I don't know how things
will unfold, and for some of those things, I think
recognizing the uncertainty and making assessments based on the things
that we know to some extent looking at scenario planning,
(27:07):
but some of the really hard to ferret out how
things would unfold. It may not be helpful to get
too far ahead of that so you know, again to
your point, the uncertainty remains elevated, maybe the nature of
the uncertainty is shifted in some ways, and it's something
that I think firms, households, local governments are navigating quick question.
Speaker 3 (27:30):
Even with the slowdown in hiring, et cetera, and the
sort of big changes of the labor market in the
last few years, do you still regularly hear about skilled
labor shortages?
Speaker 4 (27:41):
I do in some sectors, in some areas. And let
me give you a couple of examples. So, for you know,
parts of New England. New England is actually aging faster
than the rest of the country. That's one of our
distinguishing features. We're you know, quite seasoned and we have
many wonderful advantages. And so there are places where they're
is more of almost a labor shortage. There's some skilled
(28:04):
areas where firms continue to tell me maybe it's gotten
a bit easier, but it's still challenging to hire for
certain kinds of trades. And so one of the things
that I've been really inspired to see are innovative collaboration. So,
for example, in eastern Connecticut related to skilled manufacturing, pulling
private sector together with higher education and support across local
(28:30):
public sector, bringing people together to solve those problems and
to identify pipelines. You know, the Cape Cud Community College
has one too. They're training aviation technology maintenance. They have
a new, relatively new program which will soon, I believe,
be the biggest in the country. And that is an
area where there is a skilled shortage nationally. So there
(28:52):
are shortages in some areas, and they are also initiatives
to try to address them, which I find inspiring.
Speaker 3 (28:58):
So I certainly take your point obviously that you have
to the FED has to be or ought to be
very mindful of the fact that inflation is still above
target and that there are scenarios even if they're not
your base case, will become a real problem. That being said,
you know, at what point is it worth cutting even
if inflation is above target? Where is the labor market weakness?
(29:20):
Have to get to say, you know what, we're not
back to two percent, but that we have a real
problem on the labor market side, that that becomes the priority.
Speaker 4 (29:28):
So they're clearly, as I mentioned before, there clearly does
need to be a balance of those risks, and so
I do think about how far each of our dual
mandated goals is from the target, and so if.
Speaker 3 (29:43):
The unemployment doesn't have one, not like we have that
nice two percent number on the inflation side.
Speaker 4 (29:50):
Yeah, so that's that is a you know, a little
bit less specifically concrete than inflation. Absolutely, but I do
think that we have a sense of what full employment
looks like like. And you know, this is something we
talked about as part of the framework review that was
completed recently that you know describes that as the maximum
employment that you can sustain over time that's consistent with
(30:13):
price stability. And I think that's a helpful way of
thinking about it because it also evolves over time. It's
not just one number, and I think it's appropriate to
think about it that way. So if we were seeing evidence,
if I were seeing evidence that the labor market were
notably deteriorating, I would take that very seriously and that
certainly could justify you know, near term additional easing. And
(30:36):
so you careful to kind of qualify my statements based
on what I'm seeing at the moment that it is
based on balancing risks. But I think it's important not
to forget about the real concerns related to the inflation side,
as well as staying very attentive to what's happening on
the labor market side. And you know, with much slower demand,
(31:00):
much lower hiring, even though the labor supply growth is
clearly much lower as well, there is a risk that
the demand would fall well below the supply growth and
we would start to see more notable unemployment increases. So
something to watch very carefully. And the data from September
that we'll get tomorrow is helpful, you know, the initial
(31:21):
claims unemployment, the other information that many of us are
gathering and looking at as helpful as well, but you
know that's still from September, and so there's more information
to come.
Speaker 2 (31:32):
So one thing I'm wondering about the labor market, and
you know, we've heard the supply argument, you know, the
break even rate argument from a number of policymakers at
this point. But if supply in the labor market is
the issue here because of immigration or whatever, and it's
about that supply rather than a deterioration in demand, shouldn't
(31:54):
we have expected to see some tightness showing up in
other statistics, like we earned hours worked, the quits rate,
something like that, and we haven't really seen that yet.
Speaker 4 (32:07):
So I think it's both okay, right, I mean the
fact I don't think we are seeing significant wage pressures.
I think that's been true for a while. I think
if anything, the more recent data I've seen, but again,
you know, don't have the most recent information. You know,
has come down a bit. It's been higher than it
was pre pandemic. At the same time, given the productivity
(32:27):
that we'd seen, that is consistent, in my view, you know,
with price stability. So I have not been as concerned
about the labor market, and that speaks to both demand
and supply having come down, which is this kind of
unusual balance that I was talking about before. I see,
but looking out ahead, it's hard to really project what
(32:49):
those trajectories will be. Will the labor demand fall more
quickly than the supply has fallen, then you'd start to
see the unemployment go up, but of course it was
the other way around. You tend to see more wage pressures.
Speaker 3 (33:02):
Let's talk about AI for a second.
Speaker 2 (33:05):
What is it?
Speaker 3 (33:06):
What are the businesses that you're talking to say about there?
I don't know, adoption, implementation, investment in AI, I'm all.
You know, clearly it feels like everyone is experimenting everything.
It's very hard to detect whether there are obvious productivity
gains being seen, perhaps outside of coding and engineering. What
are they telling you about their sort of their budgets
(33:28):
and their plans for adoption of this technology.
Speaker 4 (33:32):
Yeah, you know so, if I think back even six months,
it was a kind of interesting piece of the conversation
that I would have when I'm meeting with a group
of different business leaders from different sectors. It's now a
significant share of the conversation, and typically there's not one
of the people around the table who isn't telling me
(33:54):
how they're thinking about it, what they're doing, what they're finding.
It's out there, it's everywhere, and that's true, you know So.
I was not too long ago visiting a lumber mill
in northern Vermont and learned about how they have been
using AI in order to sort planks, in part because
they were having trouble hiring that skilled labor in that
(34:17):
part of the country. But then they told me about
all of the other benefits they were finding in ways
that they were teaching it to do additional things. I
hadn't expected going to a lumber mill that we were
going to spend quite a bit of time talking about AI,
so it's much broader. I am hearing that there are
some ways that the AI is really supporting workers and
(34:39):
enabling them to do more and be more focused, saving
time in terms of reporting and a variety of different
back office kinds of things. I have some people telling
me that they actually expected it to enable them to
grow because of some of the savings in ways that
they're excited about, and then others that are telling me
(35:01):
that it may be enabling them to downsize. I think
it's still early days, and there are many, many different dimensions,
and there's still a lot of experimentation, to your point,
So I'm hearing all of it. It's really interesting, and
I think it's much too early to tell how it's
all going to play out.
Speaker 2 (35:20):
I hate to ask another theoretical question, but I apologize
in advance a research research conference. Why not? But when
you think about AI, does it make you think about
the unemployment side of the mandate and the policy making
capacity at the FED? And what I mean by that is,
you know, traditionally you lower interest rates if you want
to try to boost employment, and that's supposed to encourage
(35:44):
businesses to invest in new capital, and historically a lot
of that capital has meant additional jobs. Although we can
debate automation and all of that, but when it comes
to AI, you lower interest rates people invest in AI,
and I think the concern is that means fewer jobs. Now,
how do you think about that as someone at the
(36:04):
FED whose primary tool is the benchmark rate.
Speaker 4 (36:08):
Lots of pieces to that and a lot of thinking
going on, right, So let me just let me say
a couple of things. So I do think that even
though we're mildly restrictive, we are seeing considerable investments across
a wide range of firms and sectors in AI. That
is one of the things that firms are clearly leaning into.
And you know, I do think of AI as a
(36:29):
general purpose technology, which is like the Internet or like electricity.
And if you go back in history, in those when
those were being adopted, there was also discussion that introduction
of those new technologies was going to, you know, just
really eliminate a huge number of jobs. And what all
the people.
Speaker 2 (36:48):
Lighting gas lamps are going to be unemployed?
Speaker 4 (36:51):
Electricity and guess, you know, and other things were developed
and some of them we don't We're not imagining. Yet,
so I do think that that history is important. At
the same time, it does seem potentially like this general
purpose technology might unfold more quickly and that could create
more transition challenges. Again, it's really early days in terms
(37:13):
of thinking about how that may play out. But I
am expecting there'll be new opportunities in newb you know.
I mean, when women join the labor market, the view
was that will mean there are no jobs for men,
and therefore and on. Obviously, what we've seen is a
significant increase in job opportunities, vibrancy, and the US economy
is a vibrant, dynamic economy in a number of different ways,
(37:36):
but early days important to play out. The other thing
I will say is there are a lot of things
that Fed focuses on and cares deeply about because they
impact economic conditions, they impact employment, they impact inflation. We
need to understand them, we need to follow them, but
they aren't the direct thing that our policy tools are
(37:58):
able to influence. I think I think we need to
kind of recognize and separate those things. You know. One
reason to have you know, eased a bit is it
could facilitate an environment where it's easier for labor to
make transitions to two different kind of areas in places.
So I think there are lots of considerations there. But again,
(38:19):
this one's going to unfold over some period of time.
You know.
Speaker 3 (38:22):
One of the things you mentioned is people don't just
care about the rate of inflation. They care about affordability overall.
So the price level which has gone up very significantly,
and one segment of people's consumption basket that's gone up
a lot in several years at the cost of housing
and so forth. And this is something that comes up
from time to time, which is the rate. Policy when
(38:44):
it comes to housing can sort of cut in multiple
directions because higher interest rates might you know, make mortgages
more costly and you get a depression a little bit
and demand and maybe that helps balance prices. On the
other hand, that could also curtail development, and developers are
very attuned to the interest rates. We have seen a
lot of measures of housing starts come down, housing activity,
(39:07):
et cetera. How do you think about getting that balance right,
and this particularly given the salience of residents when it
comes to the price level, et cetera. How do you
think about optimal policy for housing supply?
Speaker 4 (39:22):
Yeah, housing is really important for variety of reasons. It
is one of the most frequent concerns that I hear,
not just for lower moderate income, right, I mean the
accessibility availability is much broader than that. So you know,
it matters in terms of economic vibrancy individuals households. It
matters in terms of it can be a barrier to
(39:45):
participating in the economy, right, So I worry about that
from a fast standpoint. We got in the context that
we're in now with real challenges with affordability, and there
are lots of statistics that demonstrate the lack of house
and affordability challenges over a long period of time, and
it's going to take a number of different groups working
(40:06):
together to be able to really address them. So you know,
it is true that in the short run higher interest
rates do have an impact. At the same time, of course,
the shorter the longer term rates that are often relevant
there are influenced by a number of different factors. I
would say importantly, I guess two just quick things. One
(40:29):
is that restoring and maintaining price stability and maximum employment
creates an environment that's really conducive to addressing our housing challenges,
and sustaining that environment, that infrastructure over time, and so
it's you know, it's maintaining that broader environment that I
(40:50):
think is what Congress has charged us to do, and
that we'll create that environment. The other thing is that
you know, as a nonpartisan, trusted data geekish, the FED
can help to bring different groups together to share information,
to help be a convener. The Boston FED hosted a
conference this summer with the Harvard Center Housing Studies that
(41:14):
put out their annual report, and we had our colleagues
from eight different reserve banks. All of us are engaged
and interested in working in our communities to support addressing
the housing challenges. So it's top of mind, and there
are things that we can influence, and then there's some
things that, of course we cannot.
Speaker 2 (41:32):
We've been talking a lot about the economy for obvious reasons.
But I am aware that we are in Boston and
you are the Boston Fed President. And if there's one
thing I do know about the city is that it
is a financial center. There are a lot of financial firms,
especially on the buyside over here. Can I ask, very quickly,
how much have you been watching the markets and reflecting
on what's been going on there, because of course we've
(41:52):
had lots of talk about an AI bubble, although maybe
some of the error has been kicked out of that
bubble's tires in recent days and weeks. But we also
have some strains in the funding markets. You know, we've
seen some kerffuffles, to put it mildly, in repot and
things like that. Are you watching those as well as
what's happening with the broader economy.
Speaker 4 (42:13):
Absolutely so. You know, our teams are also very carefully
watching developments in financial markets, and you know, we are
seeing some more volatility certainly, you know, compared to the
beginning of the year. Markets are still up, but spreads
are still relatively low, and so there are a number
of things to be focused on and to be aware
(42:33):
of as we think about our broader responsibilities and charge.
Speaker 2 (42:37):
All right, Susan Collins, Boston FED President, We're going to
try to grab you later at the conference after the
jobs numbers come out and see if anything has changed.
But thank you so much for coming on all thoughts,
really appreciate.
Speaker 4 (42:48):
It a pleasure. We're delighted you're here.
Speaker 2 (43:03):
Joe, I really enjoyed that conversation. I think it is
such an interesting time to be talking with anyone on
the FED. I guess I'm still trying to wrap my
head around whether the division among policymakers currently whether it's
about how they see the state of the economy right now,
because actually, there does seem to be a lot of
(43:24):
consensus the labor market is deteriorating and inflation, you know,
you can't deny that it is above target, or whether
it's about which side of the mandate they want to emphasize,
or whether it's about which side of the mandate has
the potential to get out of hand basically, and you know,
either rise or decrease exponentially the inflation rate or the
(43:46):
unemployment rate.
Speaker 3 (43:47):
Yeah, I think that's a very good way of summarizing
why there is so much debate and disagreement because a look, again,
even setting aside the data blackout from the official sources,
there's confusion. But then you add in the data blackout
and then the questions about look, I mean, the labor market.
(44:08):
The risk to the labor market is that sort of nonlinearity,
right that you get an increase and then an increase,
and then an increase, and then suddenly you have very
severe unemployment, you're very far away from your mandate. The
risk to the inflation is that, yeah, as Susan and
others have noted, they've been missing for a long time,
they're still not back to their target. Even in Susan's
(44:28):
base case, they don't get back to their target for
a while, and there are concerns about something more deeper
becoming embedded. I thought it was very interesting that she
said that the context that she talked to have been
surprised by the degree to which they can pass price
in this environment, and so yeah, very easy to see
all the different ways that you could derive uncertainty. Now
(44:52):
to mention the fact that policy itself, the fiscal policy
through tariffs and so forth, remains uncertain there absolutely.
Speaker 2 (44:58):
I thought it was also really interesting she was talking
about the idea that the one off tariff price increase
can take some time to materialize, and she called back
to the research paper that they're going to be discussing
at the Boston FED about the twenty eighteen tariffs and
this idea that even those which we're you know, looking
back fairly straightforward, took months to actually work their way
(45:21):
through the economy. Now we're in a place where the tariffs,
you know, they've been on and then they're off, and
there's some discussion about what's going to happen. Now, it
seems likely that you could see that those would take
even longer to work their way through. I should just
say we are going to be releasing a special episode
of the podcast where we talk to a lot of
(45:41):
the researchers who are presenting at this Boston FED conference,
So look out for that. And also, if you're interested,
the Boston Fed will actually be live streaming this conference,
so you can follow along in real time on Friday
and Saturday and listen to all the papers actually get toss.
Speaker 3 (46:00):
Yeah, all the PDFs are there, and so that's what
Tracy and I are going to be doing on Friday
and Saturday. We're going to be listening to speakers. We're
going to be reading their PDFs, so you can virtually
join with us, read all the PDFs yourself, and talk
about them in the discord with us.
Speaker 2 (46:14):
We should actually outsource some of our work and just
ask people read this paper and then tell us what
questions we should ask about it.
Speaker 3 (46:20):
No, no, no, that's what cha GPTs for.
Speaker 2 (46:22):
Yeah, all right, Well, we'll be in a Both of
us are probably going to be in a Boston bar
in the next day or so, eating beans and reading
research papers, So that's what we'll be doing. Shall we
leave it there for now?
Speaker 3 (46:33):
Let's leave it there.
Speaker 2 (46:34):
This has been another episode of the aud Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 3 (46:40):
And I'm Joe wi isn't Thal. You can follow me
at the Stalwart. Follow our producers Carman Rodriguez at Carmen
armand dash Ol Bennett at Dashbot and Kilbrooks at Keil Brooks.
For more odd Lats content, go to Bloomberg dot com
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(47:00):
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Speaker 2 (47:01):
And if you enjoy odd Lots, if you like it
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Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Authoughts podcast.
I'm Tracy Alloway.
Speaker 3 (00:22):
And I'm Joe. Why isn't thal Joe?
Speaker 2 (00:23):
We're in Boston.
Speaker 1 (00:24):
I know.
Speaker 3 (00:25):
We've never done an odd lotch thing in Boston of
any sort, have we?
Speaker 2 (00:29):
No, this is actually my first time in Boston. I've
been to the airport a few times, but I've never
actually stayed in the city. And everything I know about
Boston comes from the Boston New York rivalry as depicted
in thirty Rocks. So I know nothing basically, you know what.
Speaker 3 (00:44):
And I lived in Vermont for several years in high school.
Boston that was the big city. Like people in like
people aspire to go to Boston and when people I
knew a lot of people went to college here and
stuff like that. I love it here. I'm excited to
be here.
Speaker 2 (00:55):
You know. The big city closest to my house in
Connecticut is Worcester, Massa Tuessetts.
Speaker 3 (01:00):
That's the big one. That's a niceity.
Speaker 2 (01:01):
It's about forty minutes away. So all right, Well, the
reason we are here is for the Boston Fed, which
is holding their sixty ninth Economic Conference, and the theme
of this year's is the US economy in a changing
global landscape, which is putting it mildly.
Speaker 3 (01:16):
I think it is putting it mildly. There's a lot
going on globally, all kinds of things. You could just
run down the list. We don't even have to summarize it.
But it is a time of change, both macro big
picture globally, but also just for the near term. Direction
of monetary policy right now in the United States probably
as as ambiguous as it's been in a while.
Speaker 2 (01:37):
Yeah, I think so. And we're seeing that reflected in
a lot of the Fed speak that's been coming out
at the moment. We have doves on the one side,
who are talking about a deteriorating labor market, and then
we have hawks on the other side who are still
very concerned that basically, after five years of inflation, we
have still not returned to the two percent target.
Speaker 3 (01:54):
It's been half a decade, right and as of right
now recording this November nineteenth, twenty twenty five, the work
function looking at FED fund futures gives about a forty
five percent chance of a rate cut in December. That
was in the high sixties just a couple of weeks ago.
So a lot of things, a lot of uncertainty, more
or less a coin flip right now. We don't know
(02:16):
what's going on in the medium term or the long term.
Speaker 2 (02:18):
I'm going to say one more thing before we get
to our very esteemed guest. But there is another complication,
which is we've had the government shut down, right, so
we haven't had a lot of the economic data. By
the time this episode comes out, there might have been
some of the economic data, but we also have FED
minutes that are due out later today. But to emphasize,
as of this morning, everything is very very uncertain.
Speaker 4 (02:43):
Uh.
Speaker 3 (02:43):
The fog, that's like the term everyone's using.
Speaker 2 (02:46):
Yeah, there's a little bit of fog out in the
Boston Harbor right now as well, so fog fog everywhere. Okay, So,
without further ado, we have the perfect guest to talk
about the changing US economic landscape and what it means
from my arry policy. We're going to be speaking with
Boston Fed President Susan Collins. So, Susan, thank you so
much for coming on all thoughts.
Speaker 4 (03:06):
I am delighted to be here and welcome to Boston.
Speaker 2 (03:09):
Thank you so much. I heard I'm supposed to eat
beans and lobster.
Speaker 4 (03:13):
Is that right?
Speaker 2 (03:13):
All right, I'll do that all of it. Okay, perfect?
So tell us firstly about this research conference. What's the
purpose of the FED gathering people together to talk about
you know, you have a series of papers here, all
with different themes and topics. Why do this?
Speaker 4 (03:29):
Sure happy to talk about our conference. And I have
to say, I and our entire team are delighted that
you are both going to be joining us for our
day and a half conference.
Speaker 2 (03:38):
We can't say no to a conference full of academic
economic papers.
Speaker 4 (03:45):
Well, it will be quite meady and informative. You know,
it's not just academics, and that's one of the things
that I think is really important to us and one
of the things that makes it particularly valuable. So we
bring together and this is the sixty ninth Boston Conference.
It's our flagship. You know, we do other meetings and
conferences and other things, but this one is our flagship.
(04:06):
And we bring together academics, certainly, we bring together policy
makers from different institutions, We bring together business leaders. We
have a wide range of people. We actually have people
from different disciplines. So one of the papers is from
a political scientist as well, so that is as kind
of a hallmark of the conference is to really do
a deep dive to understand dimensions of a topic. And
(04:29):
we picked a pretty big one this time. So I'm
not going to suggest we're going to cover the entire thing,
but understanding the US economy in what is a changing
global landscape related to risks and uncertainties, to fragmentation. It's
a lot to talk about, and I'm really looking forward
to being part of it, to learning and to hearing
(04:50):
the presentations.
Speaker 3 (04:51):
I don't want to create any tension between you and
the fellow regional FED president, but doesn't it feel like
Kansas City cheats a little bit by having their conference
in Wyoming and August, et cetera.
Speaker 2 (05:04):
Like I we're in Boston in November, which is great.
Speaker 4 (05:07):
And it's lovely here, and it's lovely with Boston in November,
but I.
Speaker 3 (05:11):
Always feel like it's kind of cheating. That's like, oh,
we're not even going to have it in our in
the exact location, and we're going to have it some
in the middle of summer in this beautiful location. It
is kind of cheating a little bit.
Speaker 4 (05:21):
Well, you know, the Jackson Hall conference is a very
special one. I have been participating in that for a
long time and I am a huge proponent, and I
just say, the more the merrier, right, you know, it's
a lot to talk about.
Speaker 3 (05:32):
A positive abundance mindset for conference.
Speaker 2 (05:34):
That's right.
Speaker 4 (05:35):
That's right.
Speaker 3 (05:36):
So let's talk Actually, you know, we'll get into we
want to talk about some of the big themes we
want to talk. Let's talk a little bit of near
term monetary policy, et cetera. Odds of a December cut
have come in dramatically because you and some of the
other members of the FOMC have been talking about this
concern that inflation remains stubbornly over target. That big said,
(06:01):
there does seem to be a lot of evidence of
labor market weakening, right, And we haven't got the unemployment
rate for a while, but basically every measure seems to
show a significant I don't know, stall et cetera. Talk
to us about your read on the labor market right now.
Are you concerned that some of the weakness that we've
seen could snowball into seriously deteriorating environment and a sharp
(06:24):
increase in the unemployment rate.
Speaker 4 (06:26):
Yeah, So I appreciate your framing of that. You know,
I have to start by saying, I'm really focused on
both parts of our mandate, and that does mean the
labor market, say more about that in just a hot second,
but also concerns about the elevated inflation and what I
hear about that and our commitment to price stability, So
(06:46):
you know, they both really matter and I'm looking at
both of them. That's really what I've been emphasizing. As
far as the labor market, you know it it's kind
of an unusual situation in some ways, right. I mean,
what I think is pretty clear that we have seen
softening in the labor market. We are pulling together all
the data that we can find, but as you pointed
(07:07):
out earlier, we don't have the official data yet. We'll
get a job support from September tomorrow morning, and really
eager to see that, and so it's hard to tell
how much that softening has been, but I do think
it's clear it reflects both labor supply growth having slowed
pretty notably, but also labor demand growth. And so so
(07:28):
far it seems, and again we'll learn more that there's
a kind of rough unusual balance there, and so we
haven't seen a significant unemployment change, But that's something I'm
watching really carefully and I'm really attuned to.
Speaker 3 (07:41):
Just to follow up though on we have not seen
a significant unemployment change, setting aside the data which is
going to be noisy for all kinds of reasons because
that's September, which is ages ago, and then the data
after that will be affected by the government shutdown itself,
which why we're't getting data. So who knows how long
it'll be until we have cleaned data. But that being said,
do you have any way to anticipate actual deterioration because
(08:04):
the concern is that once the unemployment the layoffs really
starts to snowball, then they start to feed on each
other and they accelerate, and people talk about nonlinearity potential.
Do you are you concerned that by waiting or too
much for the data to reveal oh the weakness is here,
that you won't have been able to get around get
(08:24):
in front of a deterioration.
Speaker 4 (08:26):
It's really important to be forward looking. And as you say,
I also have seen past episodes where there's been a
dynamic which can move quickly, and so it's important to
recognize that. So are there risks on the labor market side, absolutely,
and that's something that I'm attuned to. But that's not
the only consideration in terms of making monetary policy decisions.
(08:50):
It's really about balancing those risks and looking at to
the best of one's ability, you know, how do you
assess which of our goals from cos is further away?
And I think that the reasons that you're talking about,
some of that shift in risks, increase in risks in
the labor market was a good reason for the easing
(09:13):
the fifty percent basis point cuts that we have already
done this fall, and I think that that has actually
positioned us given what I know now and obviously still
watching for lots of caveats, and so I think that
the shift in that balance of risks that I started
being quite focused on over the summer was really a
(09:35):
rationale for those cuts that we've already seen. At the
same time, we have now moved much closer to a
neutral rate, and we're balancing those risks on the labor
market side with continued risks related to inflation and elevation,
and policies really only mildly restrictive in my view, And
(09:57):
so I given what I'm seeing so fartinue to see
that as appropriate for now.
Speaker 2 (10:02):
We're going to get into each one of those points.
But I have a very quick process question, and I
realize we're in unusual circumstances at the moment. But when
the jobs number hits, presumably tomorrow on Thursday, again, we're
you know, we're recording this on Wednesday, November nineteenth. But
when it comes out, what actually happens? What do you
do when you see that number? Do you, you know,
(10:24):
immediately go into analysis mode? Do you start calling fellow
FED presidents and talking about what it means?
Speaker 4 (10:31):
That's a great question. So you know, of course, we
have busy schedules and all kinds of other things going on,
and sometimes when the data hits, I'm in other meetings
or with other groups. I am well aware of when
it is due, and we do have a process. I
have a very strong Boston research team of experts, and
so you know, as soon as the numbers come out,
(10:52):
I do try to take a quick look at them,
and then we are sometimes virtually and you know, get
together relatively quickly to assess what we're seeing in those numbers.
So I have help to try to unpack them. Often
the real information is in the details. It's not necessarily
just the headline number. In fact, that can mask a
(11:13):
lot of what's really interesting about the information. We then
take some time to unpack it, and we want to
contrast those data with what we had already seen, right,
because you're adding new information. It's not going onto a
kind of totally clean palate, right, it's additional information. So
we're doing all of that, and I'm working with my team,
(11:34):
and then I do, of course talk to my colleagues
as well. But the immediate analysis is more within our
teams in each of our reserve banks.
Speaker 2 (11:43):
And one more process question. But it strikes me that
one of the unusual features of our very unusual environment
at the moment is just the sheer amount of FED
speakers that we've had in recent days. I started counting
them up yesterday and I got nine in less than
a week. And I think than our friend Tom Barkin,
friend of the pod, put out a speech or a
(12:03):
research note as well, so that brings it up to
ten in less than a week. What's going on? Why
does everyone have the urge to sort of stake their
ground ahead of a meeting that you know, the market
currently implies could be a coin flip.
Speaker 4 (12:17):
Well, all the more reason to hear a range of views.
I mean, I think one of the strengths of the
structure of our federated system is it really does bring
different viewpoints. And you know, it's interesting because sometimes there's
a claim that there's too much group think. I don't
see group think. I see this week. No, No, I
really don't. And so I think we have also a
(12:39):
responsibility to explain what we're seeing, how we're thinking about things,
and that's part of that communication that we do. And
so I actually think that's important, and I think recognizing
that the breadth of views is partly us coming together,
is sharing information, and as part of that process, they're
(13:00):
different windows. When I think you hear lots of speeches.
This is certainly not an isolated time, but it's when
there's you know, kind of less clarity, perhaps when they're
turning points in the economy, when you're more likely to
see many of us out there talking about what we're seeing,
also talking about how our regional information contributes to that
(13:23):
in different ways. And we're often talking while we're out
in our regions connecting with different people, and so there's
kind of multiple dimensions about why we're out and about
and what we're doing.
Speaker 3 (13:49):
Let's talk about inflation. So core PCE as of the
August reading, which again feels like ages ago now, but
it's the data that we have came into two point
nine per ten. So that's clearly elevated solidly above target.
You know, if you just hit like a snapshot, you're
looking at the unemployment rate, you're looking at the inflation
(14:10):
reading that two point nine percent. How much does the
significance of that change because it comes after years of
missing the inflation target to the upside versus if we
just had the snapshot, Like, how much of your thinking
is sort of informed by the fact that not only
has it been high, but it's been high for a
really long time.
Speaker 4 (14:30):
I do think that the longevity of that elevation is
a key factor to figure. It's hard to, you know,
to put a particular weight on that, but I think.
Speaker 3 (14:40):
About the balance of risks.
Speaker 4 (14:42):
Yeah, but so let me say a few things on
the inflation side. But first related to that specific question.
You know, I do think that it is a bit
of a reminder that it's economic behavior that is not
you know, one hundred percent predictable, and many of our
analyzes that are based on periods when people were really
(15:05):
used to very low inflation, maybe a bit noisier signals
of what kind of responses and changes we're going to see.
And so I do think that complementing those analyzes, you know,
of course, those are extremely valuable, and we continue to
look at total We're all data geeks here, you know,
that's kind that's kind of what we do with the conversations.
(15:26):
We have understanding how businesses are thinking about things, and
so I hear that businesses are mindful that they have
raised prices significantly over recent years. They're concerned about what
consumer responses will be. I've recently been hearing a number
of firms, at least in the New England district, the
Boston Fed's district, which is most of New England, saying
(15:47):
that that they have been passing price increases and they
have been perhaps surprised in some cases that consumers are
not pushing back, and that's leading them to expect that
they might continue to do that.
Speaker 1 (16:00):
You know.
Speaker 4 (16:01):
So I think that gathering a range of information to
complement how what our understanding of behavior is important, and
that does factor into some of the scenarios I think
are plausible, they're not necessarily my baseline. My baseline scenario
on the inflation side is that inflation's likely I think,
(16:21):
to stay elevated through the rest of this year into
early next, and then as tariffs work their way through
the system, which I think is going to take some time,
and I'm happy to talk more about tariffs suspect we
may want to come back to that. Absolutely, you know,
I think that the disinflation process, perhaps slow and uneven,
that we had seen earlier, is likely to kick in.
(16:42):
So my baseline is a relatively benign one, both on
the inflation side and on the real side of the economy.
But I don't rule out scenarios where there's a larger
increase in inflation or there's more persistence. And some of
that has to do with behavioral responses that might reflect
having been in an elevated environment for a long time
(17:05):
and concerns about profit margins, concerns about catching up to
some of the past changes, and how people think about
price levels, which is something that many of our models
are not as focused on. I hear a lot about
price levels when I'm out and about, but high cost
of living, housing in particular, but not only childcare, food
(17:27):
that that is the number one challenge that I hear
about when I'm talking to people, particularly and moderate income communities.
But not only so.
Speaker 2 (17:35):
Since we're at a research conference at the Boston Fed,
I need to bring up a really good research paper
that came out of the Boston Fed back in October,
I think, and it was looking at inflation expectations now
and comparing them to what happened in the early and
late nineteen seventies. And the finding was that the rise
in inflation expectations around COVID might not have had that
(17:57):
much to do with actual prices, but actually outran the
prices and sort of became de anchored a little bit
from reality, which is what we saw on the late
nineteen seventies. Is the concern that people, you know, after
five years of above target inflation, after price levels going up,
as you just put it, that our expectations for inflation
(18:19):
start to become unmoored from reality. Is that the nightmare
scenario for you at the moment.
Speaker 4 (18:24):
It certainly would be a concern if I were to
see evidence that especially medium to longer term inflation expectations
were becoming an unmoored I'm not seeing that right now,
but it is something I watch carefully, and I do
think that at least certainly so far. And my baseline,
as I said, is on the more benign side. You know,
(18:45):
it's not expecting that that would happen. In particular, we're
not seeing those labor market pressures with a softer labor market.
But is it a concern? Is it something to watch carefully?
It is, and you know it's something that I know
some are more concerned about than others.
Speaker 2 (19:01):
Well, talk to us about how tariffs play into inflation expectations,
because this seems to be a difficult one to call.
You have the initial rise in prices, and then no
one is quite sure what happens after that. The consensus
seems to be that it's this one off shift and
then you know, inflation should start to cool. But on
the other hand, we're hearing a lot from consumers, as
(19:21):
you say, about price levels themselves.
Speaker 4 (19:24):
So quite a bit to say about tariffs. So you know,
let me unpack a few of the things that are
really top of mind for me. One is when certainly
when I say that, you know, my baseline expectation would
be that tariffs have a one time impact on prices.
One time doesn't mean it just happens in a week
and it's done that one time can get implemented over months,
(19:50):
a year, something like that. It just says that it's
not expected to be a continual increase. Once the level
has adjusted, did you don't get additional impacts, but that
can happen over time. So that's one point. And I
do think that in a period of high uncertainty and
(20:10):
the tariffs are really intertwined with uncertainty something to come
back to and the long elevation of higher prices that
we were just talking about, you might actually expect the
time for businesses to pass things through to be elongated, right,
And so then you start worrying more that people get
(20:33):
used to these continual price increases and you kind of
get stuck. Right. So that's a scenario, again not my baseline,
but is one that I think one could think about.
So a few things about tariffs. One is the tariffs
are really intertwined with uncertainty, which makes you know it's
uncertainty about the tariffs, which is one of the key
(20:54):
things that's having influence. For example, in terms of hiring decisions,
spent decisions, some of the reticence that firms have to
make major decisions and projects, and also in terms of
teasing out empirically right, it's going to take some time.
Our staff at the Boston FED is doing quite a
bit of work on a variety of dimensions, and that
(21:15):
includes analysis that takes into account that, you know, many
of the tariffs are impacting imported intermediates, and so there
are multiple dimensions and levels and you've got to take
all of that into account. And we're also doing a
lot of analysis on what happened in twenty eighteen. What
can we learn from that, because we've had enough time
(21:35):
that's elapsed, and actually one of the papers at our
conference will be drawing some of the lessons from a
kind of more comprehensive analysis of that experience. You know,
just one thing that they've already been talking about is
then it was a much smaller tear of increase, It
was narrower, and it was implemented over a relatively short
time period. It still took five months or more before
(21:59):
the peak impact on price levels was seen, and there
are reasons to think it might take even longer this time,
and then the survey data when we're doing survey data
at the Boston FED, particularly focused on small businesses, which
isn't a group we don't have as much line of
sight into, and the conversations that I've talked about that
(22:19):
helps to inform things. And then just one final thing,
because I think it's both intellectually interesting, you know, if
I put my academic hat on, but also really important.
We've also seen significant increases in productivity, and that is
interacting with some of the tariffs, perhaps offsetting the extent
(22:40):
to which we're seeing the impacts of tariffs on prices,
because productivity growth is actually an opportunity not to pass
things through because it enables you know, cost savings, et cetera.
So there's a lot of things going on with tariffs
which make them hard. I think this is going to
be an area we will be able to we will
(23:00):
continue studying and learning about for some time to come.
Speaker 3 (23:03):
I like your characterization of I guess maybe you'd call
it the long one off, right. There can be a
one off, but it doesn't just mean the price level
resets from today to tomorrow. It could just be the
sort of long process where some new equilibrium is formed
maybe months, maybe years, et cetera. I'm really interested, though,
in those conversations that you have with New England businesses
(23:25):
about tariffs. You mentioned perhaps some of their surprise that
they were able to pass on price increases to the
degree that they have. What else are companies saying about
sort of the operational effects, the day to day effects
of how they're managing their business in light of tariffs.
What substance of things do you hear about, So.
Speaker 4 (23:44):
A number of different, number of different things. A lot
of the tariff conversations that I've had really are intertwined
with navigating uncertainty. So one of the things that you know,
I've heard is it's challenging to navigate and make adjustments
based on a very different tariff level. But if we
knew exactly what it was and it was going to
(24:05):
stay there, that would be much easier to adjust to.
Then back and forth and uncertainty, and that creates some hesitancy.
It also creates or adds to, because I think this
was already there, what I'm calling almost an efficiency mindset
where firms are reticent to hire because they're not sure
(24:25):
how things are evolving, and tariffs are a cost increase
to the extent that you can offset that through efficiencies,
that is one way forward that it's almost kind of
like a no regrets type of investment, because whatever happens
with the tariffs, if you found efficiency improvements, that will
have been a helpful kind of context. So that links
(24:49):
up with AI. But it's certainly not only AI. It's
production processes, it's automation. It's addressing some longer standing areas
where it was difficult to hire be because of skilled shortages.
So a number of things that I have been hearing
since I started in the role in twenty twenty two
continue and then there's this additional set of things that
(25:12):
are added on. So for many businesses, especially the larger ones,
I actually hear some kind of cautious optimism as they
look out ahead. It depends someone on the sector or
some differences, and it depends what some of the global
linkages are and some of those other competitive effects. But
I've heard quite a bit of that and a bit
(25:33):
more stress and concern among some of the smaller firms
in some places, and so that's part of why we're
trying to add to the information there through a quarterly
Small Business Survey that we started doing recently.
Speaker 2 (26:04):
I hesitate to ask too many theoreticals here, but I
think this has actually become less of a theoretical recently.
But there is a good chance that the Supreme Court
strikes down a big chunk of these tariffs. How would
you as a policymaker actually deal with, you know, the
proximate cause of this one time shift of inflation suddenly
(26:25):
being put in doubt. And then on top of that,
you also have more uncertainties on the margin about whether
or not people might get tariff bonuses, and then whether
or not businesses would receive refund checks if the tariffs
were struck down by the Supreme Court. That seems like
a very complicated scenario to be thinking about, and much
less planning for.
Speaker 4 (26:46):
There is considerable uncertainty in this space, as you just
pointed out, and you know, I don't know how things
will unfold, and for some of those things, I think
recognizing the uncertainty and making assessments based on the things
that we know to some extent looking at scenario planning,
(27:07):
but some of the really hard to ferret out how
things would unfold. It may not be helpful to get
too far ahead of that so you know, again to
your point, the uncertainty remains elevated, maybe the nature of
the uncertainty is shifted in some ways, and it's something
that I think firms, households, local governments are navigating quick question.
Speaker 3 (27:30):
Even with the slowdown in hiring, et cetera, and the
sort of big changes of the labor market in the
last few years, do you still regularly hear about skilled
labor shortages?
Speaker 4 (27:41):
I do in some sectors, in some areas. And let
me give you a couple of examples. So, for you know,
parts of New England. New England is actually aging faster
than the rest of the country. That's one of our
distinguishing features. We're you know, quite seasoned and we have
many wonderful advantages. And so there are places where they're
is more of almost a labor shortage. There's some skilled
(28:04):
areas where firms continue to tell me maybe it's gotten
a bit easier, but it's still challenging to hire for
certain kinds of trades. And so one of the things
that I've been really inspired to see are innovative collaboration. So,
for example, in eastern Connecticut related to skilled manufacturing, pulling
private sector together with higher education and support across local
(28:30):
public sector, bringing people together to solve those problems and
to identify pipelines. You know, the Cape Cud Community College
has one too. They're training aviation technology maintenance. They have
a new, relatively new program which will soon, I believe,
be the biggest in the country. And that is an
area where there is a skilled shortage nationally. So there
(28:52):
are shortages in some areas, and they are also initiatives
to try to address them, which I find inspiring.
Speaker 3 (28:58):
So I certainly take your point obviously that you have
to the FED has to be or ought to be
very mindful of the fact that inflation is still above
target and that there are scenarios even if they're not
your base case, will become a real problem. That being said,
you know, at what point is it worth cutting even
if inflation is above target? Where is the labor market weakness?
(29:20):
Have to get to say, you know what, we're not
back to two percent, but that we have a real
problem on the labor market side, that that becomes the priority.
Speaker 4 (29:28):
So they're clearly, as I mentioned before, there clearly does
need to be a balance of those risks, and so
I do think about how far each of our dual
mandated goals is from the target, and so if.
Speaker 3 (29:43):
The unemployment doesn't have one, not like we have that
nice two percent number on the inflation side.
Speaker 4 (29:50):
Yeah, so that's that is a you know, a little
bit less specifically concrete than inflation. Absolutely, but I do
think that we have a sense of what full employment
looks like like. And you know, this is something we
talked about as part of the framework review that was
completed recently that you know describes that as the maximum
employment that you can sustain over time that's consistent with
(30:13):
price stability. And I think that's a helpful way of
thinking about it because it also evolves over time. It's
not just one number, and I think it's appropriate to
think about it that way. So if we were seeing evidence,
if I were seeing evidence that the labor market were
notably deteriorating, I would take that very seriously and that
certainly could justify you know, near term additional easing. And
(30:36):
so you careful to kind of qualify my statements based
on what I'm seeing at the moment that it is
based on balancing risks. But I think it's important not
to forget about the real concerns related to the inflation side,
as well as staying very attentive to what's happening on
the labor market side. And you know, with much slower demand,
(31:00):
much lower hiring, even though the labor supply growth is
clearly much lower as well, there is a risk that
the demand would fall well below the supply growth and
we would start to see more notable unemployment increases. So
something to watch very carefully. And the data from September
that we'll get tomorrow is helpful, you know, the initial
(31:21):
claims unemployment, the other information that many of us are
gathering and looking at as helpful as well, but you
know that's still from September, and so there's more information
to come.
Speaker 2 (31:32):
So one thing I'm wondering about the labor market, and
you know, we've heard the supply argument, you know, the
break even rate argument from a number of policymakers at
this point. But if supply in the labor market is
the issue here because of immigration or whatever, and it's
about that supply rather than a deterioration in demand, shouldn't
(31:54):
we have expected to see some tightness showing up in
other statistics, like we earned hours worked, the quits rate,
something like that, and we haven't really seen that yet.
Speaker 4 (32:07):
So I think it's both okay, right, I mean the
fact I don't think we are seeing significant wage pressures.
I think that's been true for a while. I think
if anything, the more recent data I've seen, but again,
you know, don't have the most recent information. You know,
has come down a bit. It's been higher than it
was pre pandemic. At the same time, given the productivity
(32:27):
that we'd seen, that is consistent, in my view, you know,
with price stability. So I have not been as concerned
about the labor market, and that speaks to both demand
and supply having come down, which is this kind of
unusual balance that I was talking about before. I see,
but looking out ahead, it's hard to really project what
(32:49):
those trajectories will be. Will the labor demand fall more
quickly than the supply has fallen, then you'd start to
see the unemployment go up, but of course it was
the other way around. You tend to see more wage pressures.
Speaker 3 (33:02):
Let's talk about AI for a second.
Speaker 2 (33:05):
What is it?
Speaker 3 (33:06):
What are the businesses that you're talking to say about there?
I don't know, adoption, implementation, investment in AI, I'm all.
You know, clearly it feels like everyone is experimenting everything.
It's very hard to detect whether there are obvious productivity
gains being seen, perhaps outside of coding and engineering. What
are they telling you about their sort of their budgets
(33:28):
and their plans for adoption of this technology.
Speaker 4 (33:32):
Yeah, you know so, if I think back even six months,
it was a kind of interesting piece of the conversation
that I would have when I'm meeting with a group
of different business leaders from different sectors. It's now a
significant share of the conversation, and typically there's not one
of the people around the table who isn't telling me
(33:54):
how they're thinking about it, what they're doing, what they're finding.
It's out there, it's everywhere, and that's true, you know So.
I was not too long ago visiting a lumber mill
in northern Vermont and learned about how they have been
using AI in order to sort planks, in part because
they were having trouble hiring that skilled labor in that
(34:17):
part of the country. But then they told me about
all of the other benefits they were finding in ways
that they were teaching it to do additional things. I
hadn't expected going to a lumber mill that we were
going to spend quite a bit of time talking about AI,
so it's much broader. I am hearing that there are
some ways that the AI is really supporting workers and
(34:39):
enabling them to do more and be more focused, saving
time in terms of reporting and a variety of different
back office kinds of things. I have some people telling
me that they actually expected it to enable them to
grow because of some of the savings in ways that
they're excited about, and then others that are telling me
(35:01):
that it may be enabling them to downsize. I think
it's still early days, and there are many, many different dimensions,
and there's still a lot of experimentation, to your point,
So I'm hearing all of it. It's really interesting, and
I think it's much too early to tell how it's
all going to play out.
Speaker 2 (35:20):
I hate to ask another theoretical question, but I apologize
in advance a research research conference. Why not? But when
you think about AI, does it make you think about
the unemployment side of the mandate and the policy making
capacity at the FED? And what I mean by that is,
you know, traditionally you lower interest rates if you want
to try to boost employment, and that's supposed to encourage
(35:44):
businesses to invest in new capital, and historically a lot
of that capital has meant additional jobs. Although we can
debate automation and all of that, but when it comes
to AI, you lower interest rates people invest in AI,
and I think the concern is that means fewer jobs. Now,
how do you think about that as someone at the
(36:04):
FED whose primary tool is the benchmark rate.
Speaker 4 (36:08):
Lots of pieces to that and a lot of thinking
going on, right, So let me just let me say
a couple of things. So I do think that even
though we're mildly restrictive, we are seeing considerable investments across
a wide range of firms and sectors in AI. That
is one of the things that firms are clearly leaning into.
And you know, I do think of AI as a
(36:29):
general purpose technology, which is like the Internet or like electricity.
And if you go back in history, in those when
those were being adopted, there was also discussion that introduction
of those new technologies was going to, you know, just
really eliminate a huge number of jobs. And what all
the people.
Speaker 2 (36:48):
Lighting gas lamps are going to be unemployed?
Speaker 4 (36:51):
Electricity and guess, you know, and other things were developed
and some of them we don't We're not imagining. Yet,
so I do think that that history is important. At
the same time, it does seem potentially like this general
purpose technology might unfold more quickly and that could create
more transition challenges. Again, it's really early days in terms
(37:13):
of thinking about how that may play out. But I
am expecting there'll be new opportunities in newb you know.
I mean, when women join the labor market, the view
was that will mean there are no jobs for men,
and therefore and on. Obviously, what we've seen is a
significant increase in job opportunities, vibrancy, and the US economy
is a vibrant, dynamic economy in a number of different ways,
(37:36):
but early days important to play out. The other thing
I will say is there are a lot of things
that Fed focuses on and cares deeply about because they
impact economic conditions, they impact employment, they impact inflation. We
need to understand them, we need to follow them, but
they aren't the direct thing that our policy tools are
(37:58):
able to influence. I think I think we need to
kind of recognize and separate those things. You know. One
reason to have you know, eased a bit is it
could facilitate an environment where it's easier for labor to
make transitions to two different kind of areas in places.
So I think there are lots of considerations there. But again,
(38:19):
this one's going to unfold over some period of time.
You know.
Speaker 3 (38:22):
One of the things you mentioned is people don't just
care about the rate of inflation. They care about affordability overall.
So the price level which has gone up very significantly,
and one segment of people's consumption basket that's gone up
a lot in several years at the cost of housing
and so forth. And this is something that comes up
from time to time, which is the rate. Policy when
(38:44):
it comes to housing can sort of cut in multiple
directions because higher interest rates might you know, make mortgages
more costly and you get a depression a little bit
and demand and maybe that helps balance prices. On the
other hand, that could also curtail development, and developers are
very attuned to the interest rates. We have seen a
lot of measures of housing starts come down, housing activity,
(39:07):
et cetera. How do you think about getting that balance right,
and this particularly given the salience of residents when it
comes to the price level, et cetera. How do you
think about optimal policy for housing supply?
Speaker 4 (39:22):
Yeah, housing is really important for variety of reasons. It
is one of the most frequent concerns that I hear,
not just for lower moderate income, right, I mean the
accessibility availability is much broader than that. So you know,
it matters in terms of economic vibrancy individuals households. It
matters in terms of it can be a barrier to
(39:45):
participating in the economy, right, So I worry about that
from a fast standpoint. We got in the context that
we're in now with real challenges with affordability, and there
are lots of statistics that demonstrate the lack of house
and affordability challenges over a long period of time, and
it's going to take a number of different groups working
(40:06):
together to be able to really address them. So you know,
it is true that in the short run higher interest
rates do have an impact. At the same time, of course,
the shorter the longer term rates that are often relevant
there are influenced by a number of different factors. I
would say importantly, I guess two just quick things. One
(40:29):
is that restoring and maintaining price stability and maximum employment
creates an environment that's really conducive to addressing our housing challenges,
and sustaining that environment, that infrastructure over time, and so
it's you know, it's maintaining that broader environment that I
(40:50):
think is what Congress has charged us to do, and
that we'll create that environment. The other thing is that
you know, as a nonpartisan, trusted data geekish, the FED
can help to bring different groups together to share information,
to help be a convener. The Boston FED hosted a
conference this summer with the Harvard Center Housing Studies that
(41:14):
put out their annual report, and we had our colleagues
from eight different reserve banks. All of us are engaged
and interested in working in our communities to support addressing
the housing challenges. So it's top of mind, and there
are things that we can influence, and then there's some
things that, of course we cannot.
Speaker 2 (41:32):
We've been talking a lot about the economy for obvious reasons.
But I am aware that we are in Boston and
you are the Boston Fed President. And if there's one
thing I do know about the city is that it
is a financial center. There are a lot of financial firms,
especially on the buyside over here. Can I ask, very quickly,
how much have you been watching the markets and reflecting
on what's been going on there, because of course we've
(41:52):
had lots of talk about an AI bubble, although maybe
some of the error has been kicked out of that
bubble's tires in recent days and weeks. But we also
have some strains in the funding markets. You know, we've
seen some kerffuffles, to put it mildly, in repot and
things like that. Are you watching those as well as
what's happening with the broader economy.
Speaker 4 (42:13):
Absolutely so. You know, our teams are also very carefully
watching developments in financial markets, and you know, we are
seeing some more volatility certainly, you know, compared to the
beginning of the year. Markets are still up, but spreads
are still relatively low, and so there are a number
of things to be focused on and to be aware
(42:33):
of as we think about our broader responsibilities and charge.
Speaker 2 (42:37):
All right, Susan Collins, Boston FED President, We're going to
try to grab you later at the conference after the
jobs numbers come out and see if anything has changed.
But thank you so much for coming on all thoughts,
really appreciate.
Speaker 4 (42:48):
It a pleasure. We're delighted you're here.
Speaker 2 (43:03):
Joe, I really enjoyed that conversation. I think it is
such an interesting time to be talking with anyone on
the FED. I guess I'm still trying to wrap my
head around whether the division among policymakers currently whether it's
about how they see the state of the economy right now,
because actually, there does seem to be a lot of
(43:24):
consensus the labor market is deteriorating and inflation, you know,
you can't deny that it is above target, or whether
it's about which side of the mandate they want to emphasize,
or whether it's about which side of the mandate has
the potential to get out of hand basically, and you know,
either rise or decrease exponentially the inflation rate or the
(43:46):
unemployment rate.
Speaker 3 (43:47):
Yeah, I think that's a very good way of summarizing
why there is so much debate and disagreement because a look, again,
even setting aside the data blackout from the official sources,
there's confusion. But then you add in the data blackout
and then the questions about look, I mean, the labor market.
(44:08):
The risk to the labor market is that sort of nonlinearity,
right that you get an increase and then an increase,
and then an increase, and then suddenly you have very
severe unemployment, you're very far away from your mandate. The
risk to the inflation is that, yeah, as Susan and
others have noted, they've been missing for a long time,
they're still not back to their target. Even in Susan's
(44:28):
base case, they don't get back to their target for
a while, and there are concerns about something more deeper
becoming embedded. I thought it was very interesting that she
said that the context that she talked to have been
surprised by the degree to which they can pass price
in this environment, and so yeah, very easy to see
all the different ways that you could derive uncertainty. Now
(44:52):
to mention the fact that policy itself, the fiscal policy
through tariffs and so forth, remains uncertain there absolutely.
Speaker 2 (44:58):
I thought it was also really interesting she was talking
about the idea that the one off tariff price increase
can take some time to materialize, and she called back
to the research paper that they're going to be discussing
at the Boston FED about the twenty eighteen tariffs and
this idea that even those which we're you know, looking
back fairly straightforward, took months to actually work their way
(45:21):
through the economy. Now we're in a place where the tariffs,
you know, they've been on and then they're off, and
there's some discussion about what's going to happen. Now, it
seems likely that you could see that those would take
even longer to work their way through. I should just
say we are going to be releasing a special episode
of the podcast where we talk to a lot of
(45:41):
the researchers who are presenting at this Boston FED conference,
So look out for that. And also, if you're interested,
the Boston Fed will actually be live streaming this conference,
so you can follow along in real time on Friday
and Saturday and listen to all the papers actually get toss.
Speaker 3 (46:00):
Yeah, all the PDFs are there, and so that's what
Tracy and I are going to be doing on Friday
and Saturday. We're going to be listening to speakers. We're
going to be reading their PDFs, so you can virtually
join with us, read all the PDFs yourself, and talk
about them in the discord with us.
Speaker 2 (46:14):
We should actually outsource some of our work and just
ask people read this paper and then tell us what
questions we should ask about it.
Speaker 3 (46:20):
No, no, no, that's what cha GPTs for.
Speaker 2 (46:22):
Yeah, all right, Well, we'll be in a Both of
us are probably going to be in a Boston bar
in the next day or so, eating beans and reading
research papers, So that's what we'll be doing. Shall we
leave it there for now?
Speaker 3 (46:33):
Let's leave it there.
Speaker 2 (46:34):
This has been another episode of the aud Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 3 (46:40):
And I'm Joe wi isn't Thal. You can follow me
at the Stalwart. Follow our producers Carman Rodriguez at Carmen
armand dash Ol Bennett at Dashbot and Kilbrooks at Keil Brooks.
For more odd Lats content, go to Bloomberg dot com
slash odd Laws. We have the daily newsletter and all
of our episodes, and you can chat about all these
topics twenty four to seven in our discord discord do
(47:00):
gg slashd loots.
Speaker 2 (47:01):
And if you enjoy odd Lots, if you like it
when we go to regional FED conferences, then please leave
us a positive review on your favorite podcast platform. And remember,
if you are a Bloomberg subscriber, you can listen to
all of our episodes absolutely ad free. All you need
to do is find the Bloomberg channel on Apple podcasts
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Hosts And Creators
Joe Weisenthal
Tracy Alloway
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