Fed Governor Michelle Bowman is an interesting case as she turned dovish last year as she as being considered for Fed Chair. She hasn’t abandoned that position but highlighted something that many in the market are puzzled by.
A number of US labor market indicators have shown weakness lately but then last Wednesday there was a strong non-farm payrolls report. That initially triggered a hawkish response in the market but since then we’ve seen that unwind. Bowman is among the skeptics and said she remains concerned about the labor market. She called the latest one “a bit strange” and highlighted softness in other indicators.
The thing is, that stance raises the stakes for the next round of data as it would be hard to maintain that stance if unemployment falls further to 4.2%.
I tend to agree with Bowman but it’s really tough to read the jobs market and economy right now. The AI changes have everyone on edge about a jobs cliff. The JOLTS job openings report has fallen to 6542 from 7658 in March.
At the moment, there is no really telling but I continue to believe that the US running a 6% deficit to GDP along with deregulation, a tax cut and equities near a high isn’t going to cause a jobs-led recession. Maybe we get the AI bubble popping or equities take a rout and then we see the layoffs but I just don’t see it starting right away.
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