Chicago Fed President Goolsbee: I'm a little wary about front-loading too many rate cuts

Labor Market Assessment - Chicago Fed is trying to get better real-time measures of what's happening in the job market, rolling out the Chicago Fed labor market indicators using 11 different data sources including official data and high-quality private sector sources [3] - Chicago Fed estimated the unemployment rate to be 43%, unchanged [4] - Goldman Sachs estimated that in the absence of two states' data, the jobs number would have been 224,000 [5] - The best jobs data comes from the Bureau of Labor Statistics (BLS), and the economy still continues to point to a pretty stable labor market [6][7] Monetary Policy Implications - The market believes the trajectory is to cut interest rates, but the Fed's job is to act based on economic conditions on employment and inflation, not just react to market expectations [9] - The underlying economy can afford rates to come down over time gradually, but the uptick of inflation coupled with deteriorating jobs numbers puts the central bank in a sticky spot [11][12] - If inflation looks transitory, the employment side of the mandate would be dominant, but the uptick in services inflation makes the speaker wary about frontloading too many rate cuts [12][13] Data Reliability and Interpretation - BLS is considered the best data source, but all data, both private and public, are subject to bigger revisions and more noise due to falling response rates and question marks on immigration and labor force participation [6][14][15] - Overindexing on monthly aggregates like BLS payroll numbers or ADP as a measure of the business cycle can lead to mistakes, as seen in 2023 and 2024 [15]