Federal Reserve Vice Chair Philip Jefferson confessed he cheered the latest rate cut amid job market wobbles, but now he’s whispering “slow down” like a designated driver at a wild party.
The timing? Perfectly awkward, with a government shutdown gatecrashing the data party and leaving economists squinting at private-sector scraps.
Jefferson declared the Fed’s policy stance “somewhat restrictive” but inching toward neutral—like a diet that’s mostly working but still sneaks in midnight snacks. “It makes sense to proceed slowly,” he said at the Bundesbank, as if advising a friend not to text their ex at 2 a.m.
Picture the Fed’s benchmark rate tiptoeing closer to that mythical neutral zone, neither goosing growth nor slamming on the brakes. Jefferson’s vote for the recent cut stemmed from job jitters, but now? He’s all about the glacial pace, lest they overshoot into stimulus overdrive.
Enter the government shutdown, that uninvited guest turning October’s jobs report into a no-show. Twice in a row, official data’s playing hooky, forcing the Fed to lean on private intel like overeager spies swapping whispers.
ADP chirped that private jobs bounced back by 42,000 last month—a modest rebound, like a cat landing on its feet after a half-hearted leap. But Challenger, Gray & Christmas? They dropped a bombshell: layoffs soared to October’s highest in 22 years, with over 150,000 jobs axed in a frenzy of cost-cutting and AI’s relentless march.
AI is apparently now drafting pink slips with ruthless efficiency. Employers, eyeing budgets tighter than skinny jeans after Thanksgiving, are slashing headcounts faster than a bad haircut.
Jefferson’s not alone in this Fed family feud. He’s syncing up with a chorus of officials dithering over December’s big decision, like a group chat blowing up over pizza toppings.
Governor Lisa Cook chimed in this week: no preset path, every meeting’s “live”—code for “anything could happen, pass the popcorn.” San Francisco’s Mary Daly? She’s keeping an open mind, juggling inflation gremlins against job growth’s limp shuffle.
Chicago’s Austan Goolsbee upped the ante in a Yahoo Finance chat, warning the bar for another cut is sky-high now that inflation’s doing the cha-cha in the wrong direction. Core inflation’s clocking 3.6% annualized over three months, services at a cheeky 4%—miles from the Fed’s 2% dream date.
Goolsbee’s fretting “front-loading” cuts, lest they wake the inflation beast from its reluctant slumber. Cleveland’s Beth Hammack piled on Thursday, eyeing inflation’s stubborn distance from target more warily than unemployment’s mild sulk.
And Chair Jerome Powell? Last Wednesday’s presser was a masterclass in diplomatic dodgeball. He admitted the division’s real—”a December cut? Not a slam dunk, far from it”—as the Fed’s edged 150 basis points nearer neutral than last year.
Some officials sense a vibe shift: maybe hit pause, let the dust settle. It’s like finally reaching the buffet after a long line, only to realize you’re full from appetizers.
Meanwhile, New York’s John Williams tossed in a curveball Friday: time to flirt with bond-buying again? The Fed’s freezing its balance sheet December 1, but to keep it steady, they might need to play shopping spree with Treasuries.
In this data drought, Williams’ nod to potential purchases feels like stocking the fridge during a blackout—practical, but who knows what spoils first.
The Fed’s huddle evokes a poker game with half the cards face-down: job reports MIA, inflation teasing, AI lurking like that one coworker who optimizes everything to death. Jefferson’s call for a “meeting-by-meeting” crawl? Prudent, sure, but it leaves markets dangling like piñatas at a kid’s party—full of promise, zero whacks yet.
As December looms, one thing’s clear: the Fed’s not rushing the sequel to their rate-cut blockbuster. Will inflation behave, or will jobs data eventually crash the gate? Stay tuned—economy’s improv night is just getting started.
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