Fed Watch – 11/14/2025

The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.

Hi, I’m Lauren Saidel-Baker, and thank you so much for joining me for this November 14th edition of Fed Watch. The big news this week is that the government is turning back on. After this longest shutdown in history, we are getting movement.

We will again get data, although it’s not clear how long these data delays are going to take for us to finally get the releases that we didn’t get. Will we ever get some of them? It remains to be seen, but the good news is we’re flying less blind than we had been before.

The data delays, the lack of new economic evidence coming from those gold standard U.S. sources have been a critical concern just for how much information the Fed has to work with as they head into this critical December meeting.

In fact, in a recent press conference, Powell called it driving in the fog where you don’t have full information of what’s going on around you in order to make these important decisions. So more data is a good thing here.

We want to see how the balance is shaping up between inflation on the one hand and labor on the other side, because at present there’s very mixed messaging from members of the Federal Reserve. On the one hand, we have someone like Myron who’s saying that there should be a 50 basis point cut in December or at the very least 25 basis points.

And on the other side, we recently got some acknowledgement from Susan Collins of the Boston Fed who said she will oppose a cut and other folks like Jeff Schmidt of the Kansas City Fed who did oppose the last cut who who voted in dissent.

So we’ll see where all of these voices shake out as we do get some additional data points finally. Additionally, this week, news broke that Atlanta Fed chair Bostick is going to step down in February.

That does create one new opening, although, as we’ve said in the past, there’s no key man risk at this point while we might see. some new nominations come into a more dovish side of consensus, we don’t see the Federal Reserve turning on a dime.

And there is a lot of discussion going on, even amongst these existing members or potential new ones coming in, about where this balance breaks down, which risk is the greater, the labor market side of things, or the inflation side.

I really want to focus on the former of those two sides of the dual mandate today, talking about the labor market and specifically one of the biggest issues of the moment, which is AI. We at ITR Economics get so many questions about how AI is impacting the labor market, and more pertinent to our purposes here today, does the Fed need to look at data differently because of these impacts of AI?

I recently read a very interesting study that came out of Yale’s Budget Lab. This was about the actual impacts. is AI eroding the demand for cognitive labor in the workforce? Now they specifically looked at chat GPT so they took the announcement right the release of chat GPT as the starting point for the comparison going forward and backward and it was fascinating to note they found no discernible disruption to the labor market as exists today.

So what they did more specifically is they looked at changes in the occupational mix so the change over in jobs right the types of jobs that are out there they looked at this a number of different ways including generationally so our younger workers those folks who are just now entering the labor market going into different types of careers because they see longevity there versus maybe baby boomers are more concentrated in these legacy sectors.

It was interesting to note that the chat GPT or the generative AI case more broadly it was a slightly more disruptive so slightly higher than previous cases like the adoption of computers which became widespread in the 1980s and the internet in the 1990s but it wasn’t leaps and bounds above these prior examples so we have seen previous rounds of technology come out and businesses and consumers adapt to them.

What was really most interesting to me is that the occupational mix actually changed the fastest back in the 40s and 50s and if you well I don’t think many of us were there then but if you could remember back to that case you would remember that there was a lot of technology a lot of disruption happening at that time we just don’t tend to think of it in the same lens as something like chat GPT does today.

So more broadly what’s happening across the labor market is incremental change things like chat GPT can be very impactful to especially an individual business but also our overall productivity our overall efficiency it just doesn’t happen overnight.

We’re still finding that companies haven’t harnessed the power of this technology and aren’t using it in a concrete and proactive way. The widespread impacts are just going to take much longer. We’re talking years to decades, not a very short months to years type of framework.

So as someone like the Fed is looking at the impacts more broadly on the labor market, there’s no reason to think that we need to make a complete 180, that we need to view this data differently today.

There are many more broad impacts that are affecting labor market trends. A lot of them we’ve talked about in the past, labor availability, immigration for one, demographics for another. Those in the very short term are going to have much more important implications as the Fed is analyzing this labor market.

So we will keep analyzing it there right there with you. We hope you stay tuned. Join us again next week right here on Fed Watch. Thanks for watching!