Terms like unemployment are so one dimensional when we’ve reached this period in time where the sheer variety of internal/external factors aren’t easily captured in calculations. Expectations are rooted in predictability, normalcy and stable, good faith actors. How do you control for destabilizing actors who have upended normal order?
We’ve entered a period where the shot callers have personal enrichment in mind, and look poised to practice “creative accounting” to ‘pay off’ the debt while buying theirselves 20M pairs of shoes. Traditional measures seem so inadequate! Is anyone considering modernizing economic theory??
There is traditional inverse relationship between inflation and unemployment is illustrated by the Phillips Curve. When the Federal Reserve raises rates to pull down inflation, a rise in unemployment is the standard structural trade-off.
Considering the context of the August 2026 data—where the labor force participation rate has dropped to 61.6% and wage growth is already decelerating—further rate hikes risk compounding structural softness. If consumer demand drops sharply while labor participation is already low, the current 4.1% U-3 unemployment rate would likely face swift upward pressure as companies transition from slow hiring to active workforce reductions. 12-month change in the labor force participation rate is a decrease of 0.7 percentage points, falling from 62.3% in August 2025 down to 61.6% in August 2026.
Summary of Economic Projections (SEP) released on Wednesday, September 16, 2026, the median forecast showed the unemployment rate holding steady at 4.1% for both 2026 and 2027 The Fed is forecasting a "Soft Landing": a rare economic scenario where they can hike rates to choke off inflation without causing companies to fire workers. While resilient GDP growth projections (+2.4% for 2027) give them hope, economic history suggests that maintaining a 4.1% interest rate through 2027 will inevitably trigger a rise in layoffs, making an flat 4.1% unemployment rate through 2027 structurally unlikely.
Therefore in my opinion the FOMC and in particular "rookie" Chair Warsh are ignoring economic reality of the labor market (and bankruptcies in small businesses) by hiking short term rates in order to make a political statement of being "independent" but they risk if there is recession and stock market drawdown of 20% in 2027 the FOMC and Chair Warsh will be blamed like a "rookie" Chair Greenspan was in 1987. for the stock market Crash.
So if you want people to keep buying cars and houses they have to remain employed. If you want to lower inflation even more then more jobs are needed so that buying continues. Did I get that right? So if people aren’t spending in America because the little dicktator makes it bad for their health then workers get laid off. If other countries aren’t buying what you make then more workers get laid off. Sounds like trouble ahead.
Terms like unemployment are so one dimensional when we’ve reached this period in time where the sheer variety of internal/external factors aren’t easily captured in calculations. Expectations are rooted in predictability, normalcy and stable, good faith actors. How do you control for destabilizing actors who have upended normal order?
We’ve entered a period where the shot callers have personal enrichment in mind, and look poised to practice “creative accounting” to ‘pay off’ the debt while buying theirselves 20M pairs of shoes. Traditional measures seem so inadequate! Is anyone considering modernizing economic theory??
There is traditional inverse relationship between inflation and unemployment is illustrated by the Phillips Curve. When the Federal Reserve raises rates to pull down inflation, a rise in unemployment is the standard structural trade-off.
Considering the context of the August 2026 data—where the labor force participation rate has dropped to 61.6% and wage growth is already decelerating—further rate hikes risk compounding structural softness. If consumer demand drops sharply while labor participation is already low, the current 4.1% U-3 unemployment rate would likely face swift upward pressure as companies transition from slow hiring to active workforce reductions. 12-month change in the labor force participation rate is a decrease of 0.7 percentage points, falling from 62.3% in August 2025 down to 61.6% in August 2026.
Summary of Economic Projections (SEP) released on Wednesday, September 16, 2026, the median forecast showed the unemployment rate holding steady at 4.1% for both 2026 and 2027 The Fed is forecasting a "Soft Landing": a rare economic scenario where they can hike rates to choke off inflation without causing companies to fire workers. While resilient GDP growth projections (+2.4% for 2027) give them hope, economic history suggests that maintaining a 4.1% interest rate through 2027 will inevitably trigger a rise in layoffs, making an flat 4.1% unemployment rate through 2027 structurally unlikely.
Therefore in my opinion the FOMC and in particular "rookie" Chair Warsh are ignoring economic reality of the labor market (and bankruptcies in small businesses) by hiking short term rates in order to make a political statement of being "independent" but they risk if there is recession and stock market drawdown of 20% in 2027 the FOMC and Chair Warsh will be blamed like a "rookie" Chair Greenspan was in 1987. for the stock market Crash.
So if you want people to keep buying cars and houses they have to remain employed. If you want to lower inflation even more then more jobs are needed so that buying continues. Did I get that right? So if people aren’t spending in America because the little dicktator makes it bad for their health then workers get laid off. If other countries aren’t buying what you make then more workers get laid off. Sounds like trouble ahead.