Is the Federal Reserve Approaching the Neutral Nominal Policy Rate?

The economist Tom Lawler had an interesting article in the Calculated Risk Newsletter on R* -- the Neutral Interest Rate.

Basically, if one looks at the average best guesses for the current neutral real  rate of interest, a 25 basis point cut in  target federal funds rate range, it would be approximately close to a neutral nominal policy rate.

This would  leave little room to tolerate any future increase in inflation without requiring an increase in the federal funds rate range.

A 25 basis point cut has been baked in the market for this December meeting which would make the federal funds target rate range 3.50-3.75%.  Personally, I would vote to hold for more data as tariffs seep into prices, but the 25 basis point cut is very probable.

Here is the article at Calculated Risk Newsletter. 

 

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Looking for the Missing Economic Federal Data

 During the shutdown everyone has been forced to seek sources to take the place of the US government missing economic data reports and the problem will continue briefly as the White House stated today (Wednesday 12 November) that October labor data may never be released and the Department of Labor is being urged to prioritize November data.

There are a variety of sources for alternative estimates and information and here are a few of them:

for labor market indicators Guy's Substack 

for economic takes on published pieces from variety of sources providing an alternative critical analysis  there is Beat the Press

 for some proprietary economic indicators there is Carlyle

for a variety of very professional economic data with a variety of technical graphs there is Econbrowser

for national and international economic information there is S&P Global 

 Jared's Substack provides professional economic analysis and political economy

the Federal Reserve Beige Report is a useful source of anecdotal economic information from the different Federal Reserve districts 

The Bonddad Blog provides economic analysis from a market perspective

there are several Federal Reserve blogs at different Federal Reserve Districts like Liberty Street Economics, On the Economy Blog, and Macroblog providing economic and macro monetary as well as banking and liquidity information

 CalculatedRisk is a valuable source of economic information and housing information

 for longer professional economic information and analysis there is the excellent Paul Krugman's Substack

 

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SNAP Benefits and the Politics of Cruelty

 To be very blunt, the federal government has the the contingency emergency funds in the amount of 5-6 billion dollars available and the legal authority and historical record to provide funding for SNAP benefits during the current government shutdown.  Any statement otherwise is a lie -- pure and simple deception.

The current budget bill had already cut benefits and the administration's refusal to fund SNAP, which has evolved since 1961 and existed in another form from 1933 to 1943, during the shut down will deprive 42 million Americans of whom approximately 40% are children and further composed of the disabled, senior citizens, and the families which care for them.  This will particularly affect Republican states and their Republican constituents.  It will also negatively affect GDP by approximately $7 billion with reduced spending at local food stores and supermarkets on top of a $7 to 14 billion government shutdown affect on GDP.

Trying to blame Democrats who are trying, in the only way available to them, to condition a new continuing resolution, which is not clean in the actual use of appropriated funds, to continue affordable health insurance under the ACA which were cut in the "Big Beautiful Bill" and would raise premiums an average of 114% if the 2025 subsidies were not continued, affecting 15 million people.  The shut down will also not fund LIHEAP, senior citizen housing subsidies, WIC, and Headstart.

While some states are making efforts to provide some funding and support while others are not, two Federal judges have ordered the Federal government to use the contingency emergency funds.  However, this administration always appeals legal rulings and delays taking action and has ignored the appropriation uses and amounts approved by Congress.  Children, the disabled, senior citizens, and families will go with the economic resources to buy food and stay marginally healthy.

Children, the disabled, senior citizens, and the families which care for them are now being held hostage by a Republican administration, a Republican House of Representatives, and a Republican Senate to deny American families affordable health insurance.  This is the Country in which we now live.

 

 

 

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Medicare Portal Errors Providing Misleading Information on Medicare Advantage Plans

The Washington Post has reported that the Medicare Portal open today is providing misleading information on Medicare Advantage plans and the government is "rushing" to fix it. 

All seniors seeking Medicare Advantage plans should double check by looking at independent comparative sites such as NerdWallet, seek assistance from your state health insurance information program (SHIP), confirm the information with the issuing companies, and immediately review the program plan upon receipt and cancel if it is not what you thought would meet your needs.

Here is the Washington Post article which is paywalled.  I no longer subscribe to The Washington Post as it has abandoned journalistic ethical independent editorial policy.

 

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Fed Chairman Powell's Speech and Today's Beige Report on Economy

Yesterday, 14 October 25, Fed Chairman Powell gave a speech the stock market interpreted as an indication the Fed will cut rates again.  In actuality, he said inflation is trending up short term goods prices reflecting tariffs but not yet effecting long term and employment remains low despite wage gains likely due to lower immigration and labor force participation.  This indicates no risk-free path between inflation and employment and a need to base future monetary action on economic data every month.  Here is his speech.

Today, the Fed Beige Report  on the economy came out showing muted employment demand and increased input costs from a variety of sources including tariff input increased costs, of which not all are being passed through to prices.  The gives a brief overview and then Fed District by District particulars.  Here is the Beige Report.

 Give the missing government economic information not being issued during the government shutdown and a purposeful deconstruction of governmental services, anything helps.

The September BIS Quarterly Report provides some global economic insights. 

The IMF World Economic Outlook for this month is out providing some GDP and inflation data.  The Global Financial Stability Report is also available.

It preferable to read the actual speeches and reports than rely on news interpretations.  Unfortunately, the stock market is more easily moved by "news" than the hard data and context. 

 

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IRS Increasing 2026 Tax Brackets and Standard Deductions

 The 2026 IRS tax brackets, standard deductions, and long term capital gains have been inflation adjusted.

Married filing jointly standard deduction increases to $32,200.

All gold profits are taxable up to 28%, which is higher than the capital gains tax. The net investment-income tax is not inflation adjusted.

 

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EJ Antoni BLS nomination withdrawn

 AP is reporting that the nomination of EJ Antoni as Chief of Bureau of Labor Statistics has been withdrawn by the White House.

As we, and many economists, have written is was particularly unqualified.  

Considering he was nominated because Trump was unhappy with accurate statistics, we can only wonder if someone worse or more nefarious will be nominated in place of Antoni.

 

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Federal Reserve Jackson Hole Symposium 2025

 Here are the speeches, video remarks, papers and handouts as well as handouts and remarks by the ECB, Bank of England, and Bank of Japan to supplement panel discussions.

Expectations based on Powell's presentation  will result in rate cut at the next meeting is probably over exuberant.  It will be data driven and, if inflation is up and employment is down, it will be a fifty/fifty call for a 25 basis point cut or a hold.

I particularly like the Saturday papers, especially the one on the Taylor rule.

 The Powell, Lagarde, and Ueda comments are instructive.

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Krugman on Understanding Inequality

 On Paul Krugman's substack, he has seven posts on Understanding Inequality which are paywalled.

Inequality has been a intrinsic economic interest of mine as well as social economic change, however peaceful, evolving, or violent it might be.  You can read Saez, Zucman, Piketty, Stiglitz, as well as others and they are all struggling with multiple interacting variables which change in real time.  I wish I had had the opportunity to study with James Tobin.

Consequently, understanding economic inequality causes and consequences is an unending project requiring different inquiries and perspectives.

Paul Krugman is adding his voice in a mainstream format for everyman to think about inequality and his seven posts, not paywalled, can be found  at the CUNY Stone Center.  When you follow the redirect and page down on Krugman's page you will come to Selected Work where you will choose News and Commentary.  There you will find the posts listed down from the seventh.

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Trump Savings Account Rules, Limits, and Deadlines

The Trump Savings Account is limited to children born between 1/1/25 and 12/31/28 to maximize the political brand advertising.

Contributions cannot begin until July 4, 2026. Annual contributions must be made by 12 /31 of each year.

Contributions by parent, guardians, and other individuals are not tax deductible and create a non-taxable basis when withdrawn. Contributions by employers, federal government, or charitable gifts are create a taxable basis when withdrawn.  Investment earnings are taxable when withdrawn. There are annual limits.

At age 18 it becomes an IRA with mixed basis assets.

The accounts must follow typical IRA format and investments are limited to mutual funds and etfs tracking a qualified index with a fee no larger than 0.1% of total assets.

For a concise explanation of the ten things you should know about Trump Savings Accounts, here is a  Morningstar article.

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