00:07The unanimous view of the FOMC, labor markets were stable, output solid, but inflation remained
00:17too high.
00:18A good majority of my colleagues and I thought the wiser course was to await new information
00:24in the intermeeting period, especially given possible developments in supply chains, investment
00:30flows, and geopolitics, before deciding whether a change in interest rate policy was advisable.
00:37And we expressed our joint readiness to act as circumstances require.
00:46The Fed's preferred measure of inflation, the one I talked about earlier, the 12-month
00:51change in the PCE price index stands at 3.7%, with the six-month change a little above four.
01:00The comparable measures from the CPI index are also elevated, as are core measures both
01:06of PCE and CPI inflation.
01:08None of these measures are perfect, but they all tell a similar story.
01:14Inflation is running above our 2% target.
01:17So the Fed's predominant focus right now should be on prices.
01:26I'm impressed by the overall performance of the economy, which appears to have strengthened.
01:32One indicator of strength is how well an economy holds up under stress, how well it holds up
01:38under shocks.
01:38On that score, both Main Street and Wall Street have been remarkably resilient.
01:45Several other observations.
01:48Business capex is rising rapidly.
01:51The four-quarter change in investment in equipment and intangibles has been around 9%, its highest
01:58growth rate since 2021.
02:00And more than half of the capex growth can likely be ascribed to the build-out related
02:07to AI.
02:09For the firms in the S&P, profits have grown more than 20% over the past year alone.
02:15Profit margins are quite elevated relative to history.
02:19Overall equity and market volatility, quite low.
02:23We're staying keenly focused on market internals, watching performance across sectors.
02:33So on the employment side of the Fed's dual mandate, are countries doing well.
02:38Labor markets are quite stable.
02:40The jobless rate at 4.1% remains low by historical standards and hasn't changed much in a couple
02:47of years.
02:49Unemployment claims on a four-week moving average, an empirically robust real-time indicator, are
02:56near their lowest level in decades.
02:58In my view, the relatively low turnover in today's labor market is partly a result of
03:04the significant rematching between employers and employees that happened in the post-pandemic
03:12environment.
03:15There are always areas of concerns in the labor market, for example, among recent graduates.
03:20In general, though, people who want to work, by and large, are holding or finding jobs.
03:27They may well be concerned about future labor disruptions, but as of now, I believe the labor
03:34labor markets are broadly consistent with full employment.
03:37Do not feel the labor markets'
03:37in the U.S.
03:38Satsang with Mooji
