NEC Director Kevin Hassett: The Fed's 25 bps cut is a 'good first step' towards much lower rates

Economic Outlook - The Federal Reserve raised interest rates by 25 basis points, which is seen as a consensus decision among policymakers [2][10] - Current economic indicators suggest strong growth, with a GDP growth rate of 3.3% for the second quarter and retail sales up 6% year-over-year [6][15] - There are mixed signals regarding inflation, with current rates around 2.9%, which is above the Fed's target of 2% [5][10] Monetary Policy - The Fed's approach to monetary policy is described as cautious and data-dependent, with a focus on balancing growth and inflation [10][12] - There is a debate among Fed officials regarding the appropriate level of interest rate cuts, with some advocating for more aggressive cuts [10][11] - The Phillips Curve is mentioned as a flawed model for understanding the relationship between unemployment and inflation, suggesting a need for diverse economic models [9][10] Income Inequality - The discussion highlights a widening gap between the wealthy and low-income consumers, with concerns about the distribution of economic growth [13][14] - Despite income inequality, there has been notable growth in retail sales, indicating optimism among lower-income consumers [15]