81 minutes (with Q&A)
âź Ended MON AUG 25, 2025 5:25 PM CDT (Chicago)
đ« Video replay available to registered attendees and subscribers only
In case you missed it, please enjoy the video from our recent panel discussion focused on the papers and speeches presented at Jackson Hole last month. This yearâs theme: Demographics, Productivity and Macroeconomic Policy.
Our panelists â Michael Lewis, Michele Wucker, Mark Roeder, Karim Pakravan, Gordon Parrish, and Kathleen Graham â offered distinct perspectives, with a special focus on AIâs impact on labor markets, productivity, and the potential need for a new social contract.
Audience members (and econVue contributors) Rick Katz and David Johnson enriched the discussion with insights on the global context and the scale of the US health care industry, both valuable topics for future panels.
My Takeaway: Itâs Complicated
What do all of these factors portend for monetary policy? The BLS jobs report this morning was very weak. Did the Fed wait too long to begin easing?
In spite of labor weakness this summer, JP Morgan upped its US GDP forecast for Q3 from 1.5 to 2.5%, a sharp upward revision of more than 66%. Could it be that recent hesitation is transitoryâa result of policy confusion over tariffsâand that as all of that settles down and tax incentives kick in, companies will suddenly begin hiring again?
đ Our Poll Results Were Surprising
As the conclusion of the panel, and before the jobs report, we asked our audience where they thought the Fed would land in September. A surprisingly large numberâ44%â expected no change by the Fed on Sept 17th, while 56% anticipated a modest 25 basis point cut. Only one participant foresaw a 50 basis point move. The message from the group was clear: not so fast. That hesitation could have major implications for markets. Fridayâs jobs report will play a critical role in the Fedâs decision, and markets will react.
đłïž Subscriber Poll
Our panel and audience were divided on the Fedâs next move before todayâs jobs report â now we invite our subscribers to weigh in:
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Weâll share the results with our subscribers ahead of the Fedâs September 17th meeting.
In July, I had the opportunity to visit an old haunt, the Grand Teton Lodge, where every year in late August, the Kansas City Fed holds the Jackson Hole Economic Symposium. The ghosts of central bankers past walk the halls here. They wrestled with the with the very questions we discussed on our panel: growth, stability, and uncertainty.
The Pioneer Grill at the Grand Teton Lodge, Jackson Hole
The Fedâs 2% inflation target remains central, but Powellâs dovish leanings are balanced by his legal obligation to follow the data.
Markets expect a cut, yet Powellâs data-driven caution suggests he may not move as quickly as anticipated.
Leadership changes ahead could make monetary policy more vulnerable to politicization, raising risks of volatility.
Audience poll showed a majority expecting a modest 25 bps cut, but with strong support for holding steady â reinforcing the theme of caution.
â Weâre going to see disruptive change in the FedâŠThe question is whether whoever is in place will be doing Trumpâs bidding, or whether they will be data driven.
Headline jobs numbers can be noisy, with monthly swings often within statistical error.
The JOLTS survey (job openings, quits, hires) may currently give the clearest signal on labor market normalization
The CES benchmark revision is the gold standard: reconciled with tax records, it is â99.5% accurate,â reminding us that short-term noise shouldnât distract from reliable long-term trends.
â The BLS payroll benchmark is 99Âœ% accurate or better every year⊠thatâs 160 million jobs, and they came within half a percent of what we know to be the truth, because people have paid taxes on that money.
âGordon Parrish, Freemarkets, Inc.
Fiscal & Political Risks
Rising federal debt and recurrent shutdown threats erode confidence and increase systemic risk.
Interest payments now rival major budget categories like defense, raising long-term fiscal sustainability questions.
Central bank independence is crucial; its erosion would magnify financial fragility.
â Every time we have one of these shutdown threats we come closer and closer⊠the more times the bad thing doesnât happen, the more likely it is that the unthinkable will happen.
AI and demographics are reshaping employment decisions more profoundly than short-term economic cycles.
Employers are reacting with freezes, layoffs, and new workplace behaviors â a signal of worker anxiety and disengagement.
The disconnect between financial markets and real economy stressors (bankruptcies, trucking distress, debt burdens) could be a major vulnerability.
â Monetary policy can work to stabilize cyclical fluctuations, but can do little to alter structural changes. Thatâs what makes 2025 such a year of uncertainty â a mixture of cyclical fluctuations with very big structural changes like AI and demographics, all happening at the same time.
AI represents a structural shift that could disrupt the very idea of âa fair dayâs pay for a fair dayâs work.â
A new social contract may be required as AI challenges the current economic compact between labor and capital.
The energy demands of AI infrastructure are immense and underappreciated in policy debates.
AIâs trajectory raises questions of governance: its scale could align better with authoritarian models than with democratic processes unless carefully managed.
â Itâs a sea changeâstructurally, economically, socially⊠It challenges a fundamental tenet: a fair dayâs pay for a fair dayâs work.
