Fed’s Powell cautions economy squeezed between risks to growth, labor, inflation

 

Fed’s Powell cautions economy squeezed between risks to growth, labor, inflation
FED Chair Jerome Powell warned that the U.S. economy is being tugged in opposing directions — balancing risks to growth, labor markets, and price stability — amid global uncertainty.

🇺🇸 What Powell Said: Key Highlights

• Powell spoke at a business economics conference in Philadelphia, emphasizing the delicate balancing act the Fed faces as it weighs conflicting signals in the data. Reuters+1

• He noted that while economic activity has surprised to the upside in recent quarters (Atlanta Fed’s GDPNow model even suggests ~4% growth for Q3), that strength hasn’t translated into robust hiring. Reuters+1

• On the labor market: hiring and firing are both weak — a sign of stagnation rather than vigorous expansion. Reuters

• On inflation: Powell reaffirmed that inflation remains “sticky,” with tariffs and supply chain pressures complicating the outlook. AP News+2Reuters+2

• He warned there is no “risk-free path” — going too fast on easing could let inflation rebound; holding rates too high too long could strangle jobs. Investing.com+2Reuters+2

• Given the ongoing U.S. government shutdown, the release of key data (e.g. inflation reports) has been delayed, complicating the Fed’s view. Powell said he still believed there was enough alternative data (private, regional, business surveys) to act prudently. Reuters+2AP News+2

The Tension: Growth vs. Jobs vs. Inflation

Here’s how those three forces are clashing:

Force / Risk	Description	Implications
Stronger output but weak hiring	GDP models point to solid growth, yet payroll and hiring data are muted.	It suggests demand exists, but capacity or confidence constraints (labor supply, regulations, skills) are holding back jobs.
Labor softening	Job creation is below the “breakeven” level needed to keep unemployment steady. Reuters+1	If layoffs accelerate, unemployment could rise and twist the Fed’s calculus toward more aggressive easing.
Sticky inflation	Tariffs, goods inflation, and bottlenecks are still feeding upward price pressures. Reuters+2Reuters+2	The Fed doesn’t want to undo inflation gains — moving too fast could unravel that progress.
Data uncertainty	The government shutdown is delaying regular releases of CPI, jobs, etc. AP News+1	The Fed must rely more on private and regional data, which increases uncertainty and risk in decision-making.