August Jobs Report: Optimism, or a mixed bag?

For those old enough to remember the 1960s sitcom, “The Andy Griffiths Show,” there was the unforgettable character of Marine Sergeant Gomer Pyle, who when surprised, or startled, would yell out "Well, gollee!"; and that was the reaction from many economists, lawmakers, and pundits after Friday’s Labor Department released the August job figures that showed 162,000 non farm jobs; a figure that surprised almost everyone with an anticipated 56,000, or at most 62,000; and, while this was welcomed in many quarters, a closer look reveals much, but it’s important to remember that one report is just a snapshot in time, not a predictor of future outcomes.

Nevertheless there are some notable developments, a rise in manufacturing, mostly attributable to non-residential construction of data centers, and local education, a seasonal bump from the beginning of the school year with teachers and other personnel returning to work after the summer break; but, joined with a slight increase among leisure and hospitality, and stable numbers for health care workers, it does show that the American jobs outlook is stable - perhaps too stable for Federal Reserve rate cuts.. 

“Those sectors added 59,000 and 42,000 jobs, respectively. Payroll gains in August were more than five times the monthly average for the last 12 months, which is 31,000, according to the Labor Department,” reported CBS News

It’s all about wages

But the caveat is that wages are now at 3.4 percent, far less than the rate of inflation of 4.2 percent, forcing many families to struggle with the cost of housing, food and gasoline, now averaging, due to the war on Iran at $4.16 a gallon/

"Slowing nominal wage growth suggests workers don't have the leverage to bid up their wages," Elise Gould, a senior economist at the Economic Policy Institute, a nonpartisan think tank, said in an email. "Even with low unemployment, the depressed hires rate means workers aren't finding new jobs to raise their wages."

“An upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week’s inflation numbers,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, to CNBC, and  “If those come in cooler than expected, the Fed will likely feel comfortable discounting potentially inflationary signals coming out of the labor market.”

Taking it in hand

Revisions to the monthly reports are expected, considering the collection period, from Labor, and there was the good news of an upward revision for June and July to the tune of 55,000. Taking that into account employers added 21,000 jobs in July.

These numbers “may corroborate that recent softness was temporary rather than indicative of a broader deterioration,” Jerry Tempelman, vice president of economic and fixed income research at Mutual of America Capital Management, said in a statement reported by The Hill.

“Net, net, the labor market is alive and well and generating thousands of new jobs to help keep economic growth squarely in the plus column,” said Chris Rupkey, chief economist at Fwdbonds,” according to CNBC reports.

Or does it? All of these reactions give a certain amount of not merely caution, but uncertainty among those on Wall Street, as well as Main Street, as to what the future means for the American economy. We are not in solid enough territory to make these claims, say critics.

Examining earlier reports, the dial has not moved much over the last several months and we are still harnessed to a “low hire-low fire” jobs based employment atmosphere, but also, in general, to the “K shaped” economy, with those at the top of the economic bar spending freely, while those at the bottom are treading water; and, especially with those populations facing cuts in Medicare and Medicaid, not to mention the cuts in the Supplemental Nutrition Assistance Program, that includes not only adults but their children, showing the road ahead is less travelled.

All politics are local

We can’t omit the intersection of politics into the nation’s economy, and we have this: “With two months to US midterm elections, consumers are likely to take grim notice this [Labor Day] weekend of historic pain at the pump,” averaging $4.19 across the country, according to Bloomberg reporting, “and well above the $3.80 per gallon drivers paid on July 4, the usual peak of summer driving season. Meanwhile, diesel prices rose to a record high of $5.85 a gallon; ”the latter affects the delivery of food across the county creating a singular point because for previous Septembers they have never risen that high.

Going even further, “President Donald Trump, who has publicly dismissed consumer concerns about high energy prices amid already elevated inflation, recently began to change his tune, saying gas prices are “important.”

Neale Mahoney, a professor of economics at Stanford University who worked on fuel policy in the Biden administration, appeared to agree: “The fact that we’re heading into the home stretch of election season with gas prices at historically very high levels, with no obvious signs of relief, should be very concerning to incumbent politicians.”

A look in the rearview mirror from The Hill, shows that, “Economists have pointed to lower net migration rates as a cause of stagnant labor data, as the Trump administration has carried out a widespread deportation campaign. The labor force participation rate has also declined by 0.5 percentage points from January, although it ticked up to 61.6 percent in August, the BLS reported Friday, strong numbers for this month’s Federal Reserve meeting.”

“August’s solid job growth is even more notable since the government cancelled Temporary Protected Status for Haitian refugees on July 27, forcing workers who used that status to qualify for authorization to leave the work force,” Bill Adams, chief U.S. economist for Fifth Third Commercial Bank, said in his press statement.

The question remains is how long can that growth last without these workers? Taking into account that in In July ICE arrears topped a record of 50,000 in July. And, If that trend continues the abatement of workers, albeit low income, will have a deleterious effect on the workforce.

“Graeme Blair, co-director of the Deportation Data Project says the uptick is due to [Mark Wayne] Mullin's change in tactics” and, "What we're seeing is an expansion in all of the different ways that ICE is detaining people," Blair told NPR. "They're arresting people at airports, at ICE check-ins, at immigration courthouses and this is the result of that."

AI, love it, or lose it?

Another area of close examination is the rise of AI data centers and the widespread criticism from environmentalists, and local communities concerned about the drain on water and energy sources. But, it’s the seeming drain on employment that is getting an equal share of attention as more and more entry level positions are now being handled by AI. 

In the not too distant past entry level workers were told to learn how to code, but that is now being generated by AI and employers are eager to harness this cheaper and more reliable source of labor. Annenberg Public Policy Center in Mid August found that 61 percent of Americans are opposed to their construction,

In June there was a Reuters/Ipsos poll that noted “Half of Americans fear that the ​rise of AI could put them or someone in their household out of work, according to a new Reuters/Ipsos poll ‌ that also showed widespread angst at how widely the technology is being adopted.”

Using data gathered over six days, it “found that 53% of Americans shared that worry, which was spread fairly evenly across respondents by age, gender and education level. Some 37% of respondents said they did not worry about this at all with the remaining 10% either unsure ​or opting not to answer the question.”

One important caveat: “Skepticism over AI runs higher among Democrats, whose party attracts more college graduates, than among Republicans, ​who have attracted more working-class voters since President Donald Trump's rise. Some 61% of Democrats said they worried about AI coming for jobs in ​their household, compared to 47% of Republicans.”

In a discussion of the effect of AI on American jobs, it was noted  by marketplace.org that AI does not automatically mean a job loss, or that it is a zero sum game.

“AI, as a technology itself, is different from technologies in the past,” said Nigel Melville, an associate professor at the University of Michigan who studies the socio-technical implications of AI. He said agentic AI’s capacity to mimic human behavior does separate it from previous technologies, but it’s hard to know how that will impact the labor market.”

Taking a step back, or perhaps forward, what remains is consumer confidence and The University of Michigan Survey of Consumers for August found that 51.7 pf Americans felt confidence in the economy. 

Surveys of Consumers Director Joanne Hsu wrote, in part, that, “Consumer sentiment confirmed its early month reading, falling about 6% from last month and landing about 11% below a year ago amid continued worries that inflation will remain elevated for the foreseeable future. Sentiment declines in August were seen for all political groups and were particularly acute among Republicans. Moreover, groups who are typically less-equipped to absorb increases in cost of living also exhibited stronger decreases in sentiment, including older consumers, lower- and middle-income consumers, and those with no stock holdings”.

In an August poll from the Economist/You,Gov found that 23 percent of US citizens feel that the economy is weak.

Oh, Canada

Furthermore, “Any re-escalation of trade tensions will likely exacerbate these trends." which brings us to the trade war with Canada, what the Wall Street Journal called, “the dumbest trade war in history,” and which has baffled economists, and as we noted last month, will cost American consumers dearly, especially in border states such as Michigan and Maine, both swing states in the upcoming November midterm elections, and critical for a victory by Trump.

As has been reported widely this came on the heels of early moves by the president during his first quarter of his second administration; and, while there was a pull back, of sorts, this resurgence seems to have no clear agenda, 

Let’s recall that  in June there was a fresh round of taxes on Canada: three new tariffs for 554 Canadians, “citing Section 338 of the Tariff Act of 1930 for the first time” and covering . .  alcohol, dairy and related goods, wood, electronics, furniture and plastics, hockey equipment, among other goods, including clothing, games, and art, all set to begin August 19 unless reduced, or modified through pending negotiations between the two countries.

At that time American households data research showed they could in effect face a $920 tax rate per household;and, for the bottom quintile the tax rate will rise by 0.8 percent points, and 0.6 percent for the top quintile according to TPC estimates.

The Peterson Institute reported in July that, “Cast aside by the new tariffs is the US promise and legal obligation of zero tariffs made in 2020 when Trump signed the United States-Mexico-Canada Agreement. Prices for the goods affected by these new tariffs, and others in train, could start rising in the runup to the November 2026 midterm election.  Many of the affected goods are currently subject to zero or very low tariffs, under the USMCA, other trade pacts, and the US tariff schedule bound in the World Trade Organization.”

Currently negotiations between the two long term allies is at a stalemate, and Canadian Prime Minister Mark Carney has said,"The attitude of ​the United ⁠States... has been one that the core Canadian industries either would be subsidiaries, effectively, of the United States industries, or (Washington) would put in ⁠place terms ​where those industries would be gradually wound ​down in Canada and wiped out," he said emphasizing that "Of course, we're not going to accept ​those terms."

What will Kevin do?

All eyes are now on the Federal Reserve and whether it will hold interest rates steady, increase, or cut them as the president wants. Kevin Warsh, who succeeded Jerome Powell as Fed Chair, has stressed that he feels the central bank should be independent from the executive branch, but some observers are not so sure.

“Warsh himself has said the president has had no impact on his decisions and, in July congressional testimony, cited the Fed holding rates steady and not cutting as evidence of the central bank’s independence. At the same time, Warsh has said that the president and other politicians have a right to comment on Fed policy,” according to a CNBC report.

What is paramount is how the Fed can meet its twin mandate of full employment and keep inflation below 2 percent, a goal that we have seen is becoming increasingly challenging.

Current rates are between 3.50 to 3.76 and most predictions are for a hike, contravening Trump’s wish and has threatened to cut off trade with several countries unless there are rate cuts, and has said:

“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” he wrote in a post on Truth Social. “A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT.”

“Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE!” he added. “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

“Traders are now pricing in a 60 percent chance that the Fed hikes rates by a quarter point at its next meeting this month, according to CME FedWatch, which tracks bets placed on future central bank decisions,” reported The Hill, and in what appears to be a threat the president added, “The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change,” and “High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”

The next release of the Consumer Price Index will be on Sept. 11 and the Federal Open Markets Committee meets on Sept. 15-16. Till then it's all conjecture.

January Jobs are a mixed bag while CPI brightens

The January Jobs report released by the US Labor Department on Wednesday showed 130,000 non farm jobs that surprised many economists expecting a much lower rate, and while some saw it as an affirmation of the resilience of the American economy, others looking at the annual revisions found it as a mere blip in a troubling pattern for the world’s largest economy; and, central to that concern was the high rate of inflation, 2.7 percent, above the desired rate of 2 percent mandated by the Federal Reserve,

“U.S. jobs data released this morning showed signs of a rebounding labor market in January, with unemployment ticking down and a total 130,000 jobs added in January, driven mostly by hiring in the service sector,” wrote Chris Bangert-Drowns, researcher at the Washington Center for Equitable Growth, a left-leaning research nonprofit,” according to The Hill.

Taking an opposite track is Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets who said, "I am skeptical that the degree of vigor seen in these data will be consistently repeated going forward, but this release should slam the door shut on the narrative that the labor market is on the cusp of falling apart.”

Investopedia quoted Dante DeAntonio, Senior Director at Moody’s Analytics, who reiterated prior evaluations saying, "The January employment report was a mixed bag. It doubled down on the fact that the economy struggled to add jobs in 2025, while also offering a slightly more optimistic view of job growth to start 2026. ...The stronger-than-expected job growth in January does little to change our view of the labor market moving forward.

As in previous months, in 2025, health care was strong at 82,000 and social services also led at 42,000, the latter an umbrella label for social support from local and state governments as well as social workers. As has been widely reported, and as we have also noted, the aging of America’s baby boomers has increased the need for these services.

One consideration is that the lack of growth in other industries can easily keep the economy in stasis, and the weakness in other jobs is a cause for worry by some economists; and, bankers, even from the White House, who in advance of the release of the report seemed anxious; especially since President Trump has only a 40 percent approval rate with most of the negatives centering on his handling of the economy.

An important note: “The revisions also underscore how dependent the job market has become on hiring in the health care sector. Before the revisions, health care accounted for about 405,000 of the 584,000 jobs added in 2025, or nearly 70 percent of the gains. According to the latest data, health care companies added 391,000 jobs, while employment in other sectors fell by a combined 210,000 jobs.”

The New York Times reported that previous revisions were, “small and attracted relatively little attention, But the 2024 adjustment was the biggest in years, reducing estimated job growth by nearly 600,000. This year’s revisions was even bigger, the largest since 2008 in percentage terms.”

There is another cautionary note: “But the largest increase in payrolls in 13 months . . . likely exaggerates the labor market's health, as revisions showed the economy added only 181,000 jobs in 2025 instead of the previously estimated 584,000. That is a fraction of the 1.459 million jobs added in 2024, the final full year of former President Joe Biden's term,“ said Reuters.

Even more importantly we can also see that with those revisions the US is not keeping up with expected growth, and population size for the last two years and causing future uncertainty.

Trying to make sense of this mixed bag of reports and opinions is not creating easy predictions for the future, but when the Federal Reserve meets in March it is widely expected that interests will remain unchanged, and if true will not please the president.

On Friday the Labor Department released the Consumer Price Index, giving a  mild boost to the economy showing a slow down in inflation to 2,4 percent and, “The slowdown in overall inflation was cheered by the White House, with a spokesperson posting on social media that "America's economy is set to turbocharge even further through long-overdue interest rate cuts from the Fed." Americans anxious about the labor market and affordability have soured on President Donald Trump's handling of the economy,” reported Reuters.

“But just because the job market is strong doesn’t mean that there isn’t more room to cut interest rates," Fed Governor Stephen Miran told Fox Business after Wednesday's jobs numbers were released.

Bets are on that the Federal Reserve are unlikely to cut interest rates with this stranger than expected job report, and the markets did rise with the better than expected news, making Miran a possible outlier, again, when the Federal Opens Market Committee meets in March, as inflation  inches closer to the 2 percent target.

"Overall, the data suggest that price pressures remain a little too hot for comfort for the time being, but the direction of travel for inflation continues to look to be lower, even if this has proved a bumpy and slow process," said James McCann, senior economist, investment strategy at Edward Jones. "For the Fed, this probably doesn't change much in the near term."

“Miran has pushed for larger interest rate cuts since President Donald Trump appointed him to fill a vacancy at the Fed last year. He said on Wednesday before the CPI report that fewer regulatory burdens on the U.S. economy would help it produce more, which would lower prices and give the Fed the opportunity to further cut rates,” according to Investopdia.

Which brings us to prices, a constant worry for all but the wealthiest consumers who as we saw last month are largely supporting the US economy, while middle and lower consumers are feeling the pinch and holding back.

Federal Reserve Bank of San Francisco President Mary Daly in a blog post wrote “highlighted that working households don't feel optimistic these days, cautiously or otherwise, [R]ecent surveys of consumer sentiment show that people expect unemployment to rise and jobs to become more scarce over the next six months. And open positions are already pretty hard to come by, having fallen to their lowest since the pandemic in December.

Further expanding, she added, "We’ve been in a relatively low-hiring, low-firing environment for some time," Daly wrote. "That may persist, but workers are aware that things could change quickly, leaving them in a no-hiring, more-firing labor market. With inflation printing above the FOMC’s 2% goal, this rightly feels precarious."

The CPI did give some good news according to Reuters: “Eggs and coffee were also relatively cheaper last month as were fresh fruits and vegetables. The Trump administration has rolled back and cut tariffs on some imported foods. Still, food prices increased 2.9% from a year ago.

Consumers also got more relief at the pump, with gasoline prices dropping 3.2% in January from December. Though electricity prices dipped 0.1%, they surged 6.3% year-on-year, reflecting demand from data centers to power artificial intelligence.”

Affordability. The buzz word of the momentum shows more clouds, “The cost of shelter, which includes rents as well as motel and hotel rooms, increased 0.2% after surging 0.4% in December. Food prices rose 0.2% after accelerating 0.7% in the prior month. Grocery store prices climbed 0.2% as more expensive cereal and baked goods were partially offset by a 0.4% easing in the cost of beef and veal.”

Hovering in the background before the March FOMC meeting is the Personal Consumer Expenditure Price Indexes (CPE) which track consumer behavior, for example seeking cheaper alternatives be they generics, in the case of groceries, or more meals prepared at home versus dining out; and, is a key indicator for any moves from the Federal Reserve.

Of note: Wholesale inflation climbed to 0.5 percent in January, reported in late February by the US Labor Dept., and according to the Associated Press: "prices came in hotter than expected," and on a year over year basis, were led by an "increase in the wholesale prices of services, led by higher profit margins for retailers and wholesalers" with the suggestion that the Trump tariffs are being passed onto consumers.

While energy prices were down with gasoline dropping 5.5 percent from December; now, with the Israeli and American war on Iran, the price of gasoline has increased by 20 percent in the first 5 days of the aggression.

Updated March 5th 2026

Fed keeps interest rates the same frustrating Trump

Wednesday the Federal Open Markets Committee of the Federal Reserve Board, as expected, voted to keep interest rates the same from 3.5 percent to 3,75 percent citing the resilience of the United States job market among other key components, with Chair Jerome Powell saying, the economy “expanded at a solid pace last year and is coming into 2026 on a firm footing."

All of which follows a steady pattern,well established during his tenure, using established criteria of looking at the data on inflation and unemployment to meet the twinned mandate of the Federal Reserve, inflation at 2 percent, and full employment. But, despite  this traditional approach, President Trump has been not just unhappy with it, but has made disparaging remarks about Powell and his intelligence, and wants to see greater rate cuts; and, in the recent past has called for cuts as deep as 3 percent, a figure that many economists believe could lead to inflation, and possibly a recession.

The traditional independence of the Fed has been in the public eye especially since Trump’s second term, and in response to questions asked at the press conference, after the meeting, about the implications of politics in FOMC decisions, the Chair replied, “It’s just an institutional arrangement that has served the people well,” he said, “and If politics get in the way, it would create the perception that the bank would act in the interest of one group or another, rather than the broader public,” adding that, “If you lose that, first of all it would be hard to restore the credibility of the institution.”

There were two dissenters, supporting the president in wanting at least a quarter point cut, and they were Trump’s handpicked board members, Stephen Miran and Christopher Waller.

While inflation has cooled to 2.7 percent, it is still a matter of concern for the Fed but Powell said to the media, and reported by The New York Times,"We still have some tension between employment and inflation,” and noted, “but it has waned a bit. That means there’s less risk of an acceleration in inflation and also of a serious deterioration in the labor market.”

Core inflation as measured by the PCE, the Fed’s “preferred inflation measure — is just above 2 percent, stripping out tariff effects,” they added; but, “Powell said he takes a lot of solace from indications that consumers think inflation won’t be too hot either over the short or the longer term. “Expectations have been solid, and they reflect confidence in the return to 2 percent inflation,” and in an opined they reported, “If consumers start to think that prices will rise, it’s more likely they will, because workers will demand higher wage increases to compensate.”

The December 2025 Index increased on a seasonal basis to 0.3 percent, and over the last 12 months increased 2,78 percent, again seasonally adjusted, with the largest increase to 0.4 percent was for shelter and “was the largest factor in all the time's monthly increase,” in the Bureau of Labor Statistics report released last month.

Taken together there is cause for vigilance by the Fed, and of course the White House.

With eyes set on future developments Powell said, “We don’t take things off the table but it isn’t anybody’s base case right now,” in response to questions of a rate hike.

It’s been widely reported that Trump is focused on Powell’s replacement after his term empires this May, and he said on Thursday at a Cabinet meeting, "Next week ... we're going to be announcing the head of the Fed, who that will be, and it'll be a person that will, I think, do a good job."

On Friday he did just that, selecting former Federal Reserve Governor Kevin Warsh to be the next chair, and as reported by Investopedia, “Warsh, who served as a Fed governor between 2006 and 2011, beat out several finalists for the job, including Trump economic advisor Kevin Hassett and BlackRock executive Rick Rieder. Warsh will take over as Fed chair after Jerome Powell's term expires in May, assuming he is confirmed by the Senate.

"I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best," Trump wrote in a social media post Friday morning.”

Warsh, a former Morgan Stanley banker, “had long been considered one of the front-runners for the president’s nomination. And, during his tenure he became “the youngest governor in the bank’s history, and served as its liaison to Wall Street during the 2007-08 financial crisis,” according to The Hill.

Warsh needs Senate confirmation, and this is not a slam dunk, and “Republican Sens. Thom Tillis (N.C.) and Lisa Murkowski (Alaska) have vowed to oppose anyone the president nominates to the role while the Justice Department is conducting a criminal probe into the bank and Powell,

Tillis could also use his perch on the Senate Banking Committee to hinder Trump’s Fed nominees from being approved by the panel, which is a key procedural step on the way to a full Senate confirmation vote,” they added in their reportage.

In what is now apparently a full blown political tempest, “Tillis and Murkowski’s support could be critical for Warsh with Senate Democrats unlikely to give him much, if any, support. Democrats are also fuming over Trump’s attempt to fire Fed board member Lisa Cook, whose challenge to the president’s order was heard last week by the Supreme Court.”

He has “accused the Fed under Powell of using independence as a shield from accountability, and said members of the bank should “grow up” and “be tough” in the face of criticism.”

There is more than affinity for interest rate cuts and a record of critiquing the Fed under Powell, there is this: “The nominee also shares close political connections to Trump. His father-in-law, cosmetics heir Ronald Lauder, has donated millions of dollars to Trump and Republican candidates, and was reportedly behind the president’s quest to purchase Greenland.”

Some economists according to  USA Today said that Warsh may not be as docile as expected, leading us to think that in the foreseeable future, could Warsh turn out to be like Powell?

December rate cut: A holiday gift from the Federal Reserve

Wednesday's rate cut by the Federal Reserve had been anticipated by some in our earlier coverage, but seeing is believing, and that news came with no data from the Bureau of Labor and Statistics due to the government shutdown, so the Federal Opens Market Committee made the decision with one armed tied behind their collective backs.

Consequently they also faced the dilemma of trying to meet its mandate of full employment and inflation at the rate of 2 percent creating division among its members, with some saying hold back on a cut, and full steam ahead by others, creating a first for that body.

The drop in the rate went down to a range: 3.5 to 3.75, to 0.25 percentage points. And The Hill reported that, “The FOMC approved the rate cut by a vote of 9 to 3, a smaller margin than the typical Fed rate decision. Fed board member Stephen Miran preferred to cut rates by 0.5 percentage points, while Federal Reserve Bank of Chicago President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid called for no cut at all.”

It should be no surprise that Miran, an ally of President Trump, wanted the larger cuts a bone of contention between the president and Federal Reserve head Jerome Powell.

Even allowing for a plurality of views, “The unusual number and nature of Wednesday’s dissents revealed how hard it could be for Fed Chair Jerome Powell — and his eventual successor — to keep the FOMC united with the economy at a foggy crossroads” reported The Hill and added,”The last time three FOMC members voted against a Fed move was in September 2019, when the Fed cut interest rates to unwind a series of previous increases meant to stave off inflation that never materialized."

At Wednesday’s press conference, Powell said,“Everyone agrees that inflation is too high, and we want it to come down, and agree that the labor market has softened and that there’s further risk. Everyone agrees on that.” 

Other reports from officials say that inflation might be acceptable at 3 percent as a new standard, yet that shift might be more philosophical than reflection of a true policy, beyond the traditional mandate of the Federal Reserve.

With perhaps the greatest understatement he added: “Where the difference is, is how do you weigh those risks? And what does your forecast look like?”

Powell’s term ends in May of 2026, and Trump is expected to name his successor in the near future; and, it’s no secret that the two have differed on the role and size of rate cuts, and the president did give some of his characteristic verbal bludgeoning to the Chair for the past several months.

The dilemma that Powell has faced, as we have noted many times before, is the balancing act between meeting the mandate and taking stock of inflation, plus the adjoining employment rate. While inflation has rebounded from earlier years when it was over 3 percent, especially in a post pandemic world, the current rate is still high, and is especially felt by low income Americans during their weekly grocery shopping; and, many are feeling that the president has not kept his campaign promise of lowering those prices, inasmuch as any president can.

Meanwhile employment has remained resilient, if shaky, in the face of economic uncertainty, mostly attributable to the billions of dollars in tariffs imposed by the president, what an earlier era called protectionism; and, the effect on hiring is significant as employers are trying to make do with what they have on payroll, and increasing hiring only when necessary, creating a slowdown in many areas, health care and hospitality excepted.

Consumer confidence has taken a hit, as are the poll ratings for the president now at 36 percent. And, while he has portrayed affordability as a Democratic hoax, the reality of higher prices and the ever increasing costs of housing have many American working families deeply worried about their economic future, not to mention meeting monthly bills, and feeding their children.

There is some optimism by some economists that consumer spending is steady but it;s important to note, as we did last month, that the increased spending is supported by high income earners, but lower income individuals and families face the above challenges, thus the infamous K shaped economy.

Currently it is estimated that there is $150 billion in tariff money sitting in reserve and the the president has said that some might be given to Americans in the form of a check, or to help pay for health care, but economists don’t see that as a viable option in either case, with the latter forcing people to confront, on their own, the behemoth of American health care giants.

The role of politics cannot be underestimated in examining the American economy but there are fears that many hardworking Americans may be caught in the middle.

On Thursday there were the initial jobless claims and while there was an increase to the tune of 236,000 and allowing for some holiday volatility, following previously lower numbers of 191,000, there are cautionary notes, according to Claudia Sahm, a former Fed economist, who told Fortune magazine that, “Initial claims don’t give you a sense of what’s coming,” she said. They’re what economists like to call a lagging indicator, meaning they tend to spike after a recession is underway, not before it. Recent weekly readings, distorted by holidays and special factors, are even less informative.”

Nevertheless, as Yahoo Finance reported, “Weekly initial claims tend to be choppy around the holidays and will likely continue to fluctuate through the end of the year, but Thursday’s figures are toward the higher end of readings seen in 2025. Companies like PepsiCo Inc. and HP Inc. have laid out plans to reduce headcount in recent weeks, and nationwide layoffs in October were the highest since early 2023.”

The future is on the minds of many and Powell, playing close to the vest, feels at best that shifting into neutral gear may be the best option but then again, as The New York Times opined, ”If there are signs that the unemployment rate might surge, that would probably prompt more officials to embrace the need to cut rates. So far, though, most policymakers do not appear worried, nor do they appear to be downbeat about growth. Projections released on Wednesday showed that most officials expected the unemployment rate to peak at 4.5 percent in 2025, before declining.”

Tariffs are still on the chart and it seems that Powell, and others, are waiting for the first quarter of 2026 to make an assessment, perhaps a code word for “wait and see.”

Updated on December 15, 2025

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