On the margin, they can still use private sources and they can talk to businesses. The sense is that hiring is sluggish. I think you hear that from business. We're not firing significantly either. The unemployment rate's not going up because supply of labor is flat to down. The Fed would benefit from more formal data as they get closer to neutral, which is estimated in the range of 3.5 to 3.75. They are getting closer. The real Fed funds neutral rate is about 0.75. Inflation is currently 2.75 to 3%. With inflation above target, moving to neutral shows some risk, and the Fed must guard against labor weakening. The Fed will likely cut in October but be vigilant beyond that.

The debate about neutral rate depends on inflation assumptions. With inflation still above target, scrutiny of labor market developments is important. Trading off risks of weakening labor market. The pursuit of 2% inflation remains credible despite years above target due to factors like Chinese overcapacity and AI causing disinflationary pressures. Inflation above target is a regressive tax affecting many Americans.

Fed benefited from service sector inflation running in mid-threes, but goods inflation disinflated fueled by China. Tariff episode stalled disinflation at least in the US, but over time disinflation may seep back in. Tariffs have slowed growth and pressured margins for companies, with price increases difficult strategically. Companies are taking margin losses for now but may raise prices later.

Global economy faces tailwinds like AI and data center power boom potentially boosting productivity. Challenges include aging populations and overleverage. Regulatory relief and tax incentives in US hopeful to improve growth, but de-globalization raises costs and complicates problems for countries outside US.