MacroPolicy Perspectives President Julia Coronado Talks Fed Strategy
episodePreviously titled “Julia Coronado, president and founder at MacroPolicy Perspectives, Talks Fed Strategy” — renamed by the publisher on Aug 3, 2026
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Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussein Show from Bloomberg Weekend, wherever you get your podcasts.
You certainly ask interesting questions.
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Joining us now, I'm really anticipating this with the Dow up 100 points. Julia Coronado was iconic at BNP Paribas during the crash where she said, no, GDP isn't going to be as good as it's going to be. She nailed that call. Now with macro policy perspectives, one of our most astute Fed watchers as well. Julia, is the next thing we're going to get wrong the certitude that it's one and done on a rate cut? And what we really need to think about is sequential rate cuts into next year?
Well, Tom, I think actually the possibilities are fairly bimodal. So if you look at the market and what it's priced for, it's priced for several rate cuts next year. But I think either we're gonna get one and done because things are stabilizing and growth is gonna be okay and the AI story has enough legs to power the economy, or we're really starting, we're in the early game turning of the labor market and the Fed's gonna have to cut not just to neutral, but through to neutral to an accommodative stance. So it's one or the other, it feels like to me.
You're so good at gaming GDP. My head is spinning. Paul Sweeney's head is spinning over nominal GDP. I got a 4% Atlanta GDP. Now maybe it's 3.8%. I got half of America flat on their back. What is the Coronado call for 2026 real and nominal GDP?
So first, if we start with the second half of this year, we have a read on Q3, and by all indications, it's very solid. But early indications are Q4 is that it's kind of squishy. The consumer auto sales have dropped. I'm not sure what Dana told you on the holiday season, but people seem to be price sensitive, price conscious, budget conscious, not hunkered down in a corner, but not booming. And so I think we're going to see Strong Q3, subdued Q4. On average, we'll see an economy that has downshifted from last year on balance in 2025. And one of the reasons this is happening is structural. We've chosen a restrictive immigration policy that means basically no labor supply. So no labor supply, no jobs, less growth in paychecks.
and income and a slower economy. And I think that that will prevail into 2026, a lower trend growth rate for the US, even assuming some solid productivity tailwinds, you're still looking at growth with a one handle, maybe a low two handle, not a three handle.
Julia, so what do you think is receiving the priority from the Federal Reserve these days, the labor market, the inflation environment here?
What insights does Julia Coronado provide on Fed strategy?
Is there one thing that's front and center for the Fed here today?
Well, it depends on who you ask, doesn't it? So there are a lot of people. There's 19 people on the committee, and they all have very different views of the world. It looks like the leadership, Chair Powell, President Williams, are coalescing around one more rate cut this year, an insurance rate cut, because you're highlighting the tension they face. You've got inflation that's not soaring or even necessarily accelerating in a meaningful way like we saw in the pandemic, but it's too high. It's running it closer to 3% than 2%, and it's not making any progress, and we don't expect any progress in the foreseeable future, or at least not next year. not much progress given the tariffs are still coming through uh and that's a worry not not that inflation is getting out of control but it does it's going to get embedded in the economy and people's behavior and people's psychology and we'll get stuck at three and not get to two uh on the other hand the unemployment rate's been creeping higher by a tenth each of the last four months
Usually when we see this kind of movement, we get a break higher in the unemployment rate.
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