Fed has a tough balance of risk here with inflation and employment, says Jefferies' Richard Fisher

Labor Market Assessment - The labor market is experiencing reduced supply, which may make weaker job growth more acceptable to the Federal Reserve and others [1] - There is a potential shedding of jobs due to overhiring during the pandemic [1][3] Productivity and AI Impact - Current productivity levels are uncertain, and many companies have not seen cash flow or profit boosts from AI investments, with 80% reporting no benefits [3] - The anticipated increase in productivity from AI has not yet materialized, leading to a realization among companies that they may be overstaffed [3][4] Cost Pressures and Margins - Companies are facing margin pressures from tariffs and other costs, which may lead them to either pass on costs to customers or cut costs elsewhere [2] - The balance of risks for the Federal Reserve is challenging, with no clear advantages from AI investments yet [5][6] Federal Reserve Dynamics - The Federal Reserve committee is currently balanced, with more hawks than doves, indicating a cautious approach to policy decisions [7][8] - The absence of timely official data on employment and consumption may not lead to a dovish bias, as the Fed seems confident in overall growth despite some negative indicators [11][12]