-
Economic activity appears stable, not now increasing or decreasing
-
Bankers report that funding pressures have diminished, credit quality is good
-
Companies continue to report a shortage of skilled labor
-
Firms remain cautious on capital spending and hiring
-
Companies are using different strategies to adapt to tariffs, including cost-cutting and negotiating with suppliers
-
Companies are not yet resorting to layoffs to reduce costs
-
Companies that are most dependent on imports are passing along costs; those closer to consumers are less likely to raise prices so far
-
The Fed is now missing on its inflation target but not missing on its employment mandate; labor market around full employment
-
Looking ahead there is a risk that the Fed may miss on both inflation and employment, with downside risk to jobs
-
Likely that most of the impact of tariffs on inflation will fade
-
There is a reasonable probability that there may be some inflation persistence
-
Labor market is in balance, but economic activity has been weaker and that poses risks to jobs
-
The Fed is balancing risks to both sides of its mandate right now
Fed voter Musalem’s comments present a cautiously balanced view, with a lean toward hawkishness as he sees the Fed missing on inflation and not on employment target. He favors keeping policy where it is
