Eric Rosengren

Eric Rosengren joins us right now, former Federal Reserve president of Boston.

And Eric, I do want to start off with the general idea of what the Fed can do next, given the economic data that we've seen that seems to suggest a labor market influx, but still stable and inflation.

Well, still a question mark, but not necessarily hot as it was just a year or so ago.

Yeah, so I agree with you that the conditions for easing right now are not nearly as strong as they might have been a quarter ago.

The CPI at 2.7% is substantially above the 2% inflation target.

It was 2.7 last month as well.

And if you look at the PCE measure of inflation, it's been gradually rising.

So the result is that the inflation news has not been such that you can have

a great deal of confidence that the Fed's going to get back to target, particularly as you know, they've missed their 2% target for almost five years.

On the labor market side, there were only 50,000 jobs created, but that's the average that we've seen over the last year.

And part of that is because of immigration.

With much less immigration, we don't have as much growth in the labor force.

In fact, labor force has been pretty much flat.

And so 50,000 jobs isn't that far out of the ordinary, given the slow growth in the labor force.

The unemployment rate's at 4.4%.

That's very close to what the Fed thinks it will be in the long run.

It's a little bit above, but only a little bit above.

So I think that the Fed is well situated to wait and see and see if the economy picks up.

There is reason to believe that next year GDP will be stronger.

Fiscal policy is going to be stimulative because we're running large deficits.