- The end of the port strike is another piece of very good news
- The Fed does not want to react too much to one data point
- If we get more jobs reports like this, we will be more confident we are settling at full employment
- Strong jobs report is likely to mean strong GDP
- We are still a ways off from having to sort out where neutral rate is
- We have time and runway to figure out where the settling point on the Fed policy rate is
- We need to try to maintain conditions like they are now
- It's hard to say where the neutral rate is but it's definitely higher than zero
- The bulk of FOMC participants see it in the 2.5-3.5% range. We're still a ways off from having to sort that out
- Contacts mostly say 'steady as she goes' not a re-acceleration and not a drop-off
- If productivity keeps booming, that implies higher growth, higher neutral rate but only because the economy can handle it
- A broad set of data shows the labor market is cooling
- The problem with a soft landing analogy is that it implies stopping; the economy keeps going
- If we could keep unemployment at 4% to 4.5% with inflation around 2%, that's exactly what the Fed wants, everyone should be happy
He's happy with the jobs report but certainly not indicating the Fed doesn't need to cut rates.
