Jim O’Sullivan discusses the crosscurrents Fed officials are grappling with as they aim for a rare soft landing.
• The ratio of tailwinds to headwinds for U.S. growth has started to decline, but when will it decline enough to stop the downtrend in the unemployment rate? Might it suddenly decline too much?
• Is monetary policy still accommodative, or has tightening already gone too far?
• Is the change of tone in markets a warning sign, or just a bit of volatility?
• Is the drag from trade tensions about to intensify or fade?
• Is the unemployment rate already unsustainably low such that inflation will be biased upward until the next recession? Or will structural forces negate the impact of labor market tightness?
ORIGINAL AIR DATE
December 4, 2018