00:00For more, let's bring in Stuart Paul. He's Bloomer Economics, U.S. and Canada economist. He joins us here in the studio. So Stuart, thanks to you, I was able to go through some of those Beige Book headlines. But what sticks out to you? The resilient spending among the higher income consumers is notable and then weaker labor demand or weaker labor in the market is notable to me, too.
00:19Yeah. So when I saw the line about resilience at the upper end of the income distribution, of course, I'm thinking about this K-shaped economy narrative that's so pervasive. But when it comes to policy, we know that FOMC members need to think about the economic aggregates.
00:34So then when we scroll down to the labor market, seeing employment declining, I think matters way more than resilience at the upper end of the income distribution.
00:43So if we have both spending in the aggregate declining, we have employment in the aggregate declining and firms feeling as though they can only pass through about 20 percent of higher input costs, which we saw reported in the Kansas City district, my favorite district in the Beige Book.
01:00I think that, again, the balance of risk is skewed towards the Fed needing to undergird the economy, maybe needing to take that additional rate cut December.
01:09And in fact, I think they're going to deliver it. Does that say to you that the Fed has to cut come December?
01:14I don't think that the Beige Book is is a deciding factor.
01:18But I think when we see the unemployment rate rising in the September report, when we see employment declining through early November, which is what the Beige Book's survey period includes, when we have those factors front of mind for policymakers, I think that it's enough to get that cut.
01:37Yeah, I'm seeing like things kind of hitting on both the dual mandate that maybe things need to be addressed.
01:42Yeah, it's it's tricky. The Fed, we know, is not is not rushing to move into accommodative territory.
01:49And when we see the Beige Book citing prices rising moderately during the reporting period, including input cost pressures that are widespread among manufacturers, retailers.
02:00And when those are related to tariff induced increases in input costs, it's no surprise that the Fed is trying to maintain this balance as best as it can.
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