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May still see pressure on inflation and unemployment, with the balance between the two unclear.
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Fed policy is well positioned to adjust as visibility about the economy lifts.
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For the economy to falter, consumer spending would have to pull back more significantly.
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Though spending has softened, it’s hard to envision a serious pullback given low unemployment and ongoing wage gains.
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Shifts in consumer spending may be helping dampen the impact of tariffs on inflation.
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Employment could take a hit if consumers pull back, but large layoffs are hoped to be avoided.
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Any increase in the unemployment rate may be less than expected due to decreased immigration and lower labor supply growth.
The comments lean modestly hawkish, emphasizing resilience in the labor market and consumer spending despite some softening.
They highlight that low unemployment, ongoing wage gains, and shifts in spending are helping to limit economic weakness Inflation pressures are still seen as possible, and the Fed is positioned to adjust policy as economic visibility improves (data -dependent), suggesting a cautious approach to easing until clearer signs of cooling emerge.
This article was written by Greg Michalowski at investinglive.com.