Cook – Payrolls Strength May Continue To Be Overstated

Fed Governor Cook (permanent voter) says it will be appropriate to cut rates “at some point” in long-awaited monetary policy relevant comments having last earnestly talked on the subject back in March. Full remarks here.

• “I believe that our current policy is well positioned to respond as needed to any changes in the economic outlook. With significant progress on inflation and the labor market cooling gradually, at some point it will be appropriate to reduce the level of policy restriction to maintain a healthy balance in the economy.”
• Bumpy disinflationary path: “My forecast is that three- and six-month inflation rates will continue to move lower on a bumpy path, as consumers' resistance to price increases is reflected in the inflation data. I expect 12-month inflation will roughly move sideways for the rest of this year, with monthly data likely similar to the favorable readings during the second half of last year.”
• Higher payrolls breakeven and overstated data: “With more workers entering the economy, the monthly job gains needed to keep the unemployment rate steady likely has risen from just under 100,000 to nearly 200,000. Although these estimates are uncertain, such a breakeven pace may be a bit higher than the true pace of recent job gains, when taking into account data from the [QCEW]. These data suggest that payroll job gains were overstated last year and may continue to be so this year. Thus, even the robust payroll numbers are consistent with a tight, but not overheating, labor market.”
• The below Bloomberg headline gets some attention but it’s the same rhetoric as her brief comments from early last month "*COOK: RISING CONSUMER DELINQUENCY RATES `BEAR WATCHING'" - bbg