Fed’s Jerome Powell Just Painted a Grim Picture of the U.S. Economy After GDP ‘Slowed Notably’ and Job Growth Stalls: Here’s Why It’s Bullish

Federal Reserve Chairman Jerome Powell used his annual speech to the main speech of Jackson Hall to draw a picture of an economy facing policy -based winds and high uncertainty. He pointed to a sharply higher tariff “through our trading partners” that reshape world trade, and the most strict migration rules that suddenly slowed the growth of the workforce.

Powell added, over a longer period of time, transformations in taxes, spending and organizing can affect productivity – yet no one knows where these policies will lead to decline or what are their permanent effects. The instant line was caution, as multiple shocks reach both demand and supply, and the Federal Reserve cannot easily compensate for structural changes.

The Powell Economic Diagnosis bowed unambiguously. The growth of salary statements has faded significantly – with an average of about 35,000 per month over the past three months after large declining reviews – while the unemployment rate reaches about 4.2 %. This is not an invitation to stagnant, but it is a remarkable slowdown from the pace of 2024, and a note that the labor market is losing Steam for reasons that include the displays that depend on immigration. By synonym, the passage of customs tariffs raises the prices of some goods, which complicates the image of inflation just as the growth cools.

This mixture of softer growth with pockets of price pressure is exactly a type of cross -current that forces the central bank to the weight of its double mandate. Powell explained that the Federal Reserve sees the risks of upwardness, but the negative risks of employment, and that this policy is already restricted. It is worth noting that the policy average now sits about 100 basis points closer to a neutral more than the past year and that officials can “carefully move carefully” while considering the amendments. Translation: If work data persists in weakness, the ribbon for mitigation is not high.

I heard the hint. In the aftermath of speech, investors were based on bets that the price cuts may start soon, and the main indexes have risen on the idea that relief from politics is at hand – even with inflation still hovering over the central bank’s goal. This is the moment of “bad news”: a darker Macro background that supports the federal reserve towards low prices, which can maintain stocks in the short term by reducing discount rates and supporting complications. News coverage captured this reaction, with the prospects for reducing the period in the short term and the stocks end of the day.