At least two more Fed cuts likely in 2026, says Moody's Mark Zandi

Economic Outlook - The current unemployment insurance claims are stable at around 225,000, which is considered a positive sign, as claims above 250,000 would warrant closer scrutiny [2][3] - Job growth is flat, with the potential for a downward revision, indicating that businesses are not hiring significantly, which is crucial for economic stability [3][5] - The year-over-year GDP growth rate is approximately 2.3%, with expectations for Q4 to be weaker, potentially closer to 1% due to factors like the government shutdown [4][5] Job Market Dynamics - The unemployment rate is currently at 4.6%, which is above the estimated full employment rate of around 4%, suggesting a fragile job market [6][7] - Wage growth is slowing, which aligns with the rising unemployment rate, indicating potential economic fragility [7][8] Economic Risks and Opportunities - The economic growth is described as fragile due to the lack of job creation, which could lead to layoffs and an economic downturn if consumer spending decreases [8][12] - Potential upside factors include monetary and fiscal stimulus, possible tariff reductions, and increased Federal Reserve support, which could positively impact the economy [9][10] - Conversely, risks include the impact of AI on productivity without corresponding job growth, which could lead to market corrections and affect economic stability [11][12] Inflation Insights - The Consumer Price Index (CPI) is estimated at 3%, which is above the Federal Reserve's target of approximately 2.2% to 2.3%, indicating ongoing inflationary pressures [15][16]