Labor Market Analysis - Private sector job growth swung positive in October to 42,000 from negative 29,000, with larger companies contributing more than midsize and smaller companies [1] - Alternative data, like that from ADP, suggests pre-existing trends in the labor market are continuing at a similar rate, with modest job creation and moderating wages [3] - Labor demand may not be as strong as desired from a cyclical perspective, indicating rates could be lower [4] - Changes to job creation levels due to policy changes like immigration are considered output gap neutral, as additional people both work and consume [6][7][8] - Low levels of growth may result from changing border policy, but monetary policy doesn't automatically respond to this [9][10] Monetary Policy Considerations - Monetary policy aims to balance supply and demand, avoiding both inflation and deflation [7] - Expansionary supply-side policies, like full expensing provisions from the tax bill, incentivize investment in new factory equipment and structures, pushing demand higher in the short run and expanding the supply side in the longer run [12][13][14] - Regulations shape the structure of the economy by influencing production possibilities and industry composition [15] - Monetary policy responds to the output gap, the outlook for inflation, and changes in the neutral rate [18] - An increase in national savings typically leads to lower interest rates [23] Inflation and Interest Rates - One perspective is that current policy is too restrictive, and a faster move to a neutral rate is preferred to avoid undue harm to the job market [25][26][28] - Tariffs are not viewed as a significant driver of inflation, and shelter/housing market inflation is expected to decrease more quickly than some colleagues anticipate [27][28] - High interest rates may already be causing a recession in parts of the economy, particularly housing [30] - The median projection from the September meeting suggested a third rate cut this year, implying a cut in December [35] - Core services inflation, when adjusted for imputed services like portfolio management fees, is closer to 2%, specifically 23%-24% [39][46] - Shelter disinflation is a critical factor in the inflation outlook, with expectations of benign shelter inflation due to market rents running at approximately 1% [47][49] Trade and Economic Uncertainty - Increased uncertainty over the tariff and trade environment could negatively impact the economy [21] - A ruling against the president's authority to issue tariffs could increase uncertainty, potentially pressuring growth and hiring [20][21]