前波士顿联储主席：消费疲软但投资驱动经济，通胀仍是焦点

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Let's bring in Eric Rosenr. He's the former president of the Boston Federal Reserve. And Eric, I do want to start with the state of the consumer. And we'll get to inflation in a second. But I was looking at that retail sales number today, that contraction overall. Gas and autos obviously dragged down a lot of it. Online sales, too. But I looked at restaurants. That was up. So, we're still spending somewhere. And there were a lot of other categories that seem to suggest the consumer is still spending.

H how what does a debate look like amongst Fed members when you kind of have data even in one report and even the trend line that seems to kind of uh let's just say conflict with each other.

So the Fed doesn't focus just on one number. It does tend to focus on a trend. But I think a a weaker retail sales number is consistent with what we've been seeing in consumption for the first half the year. So if you look at consumption over the first two quarters, it only grew at 1 and a.5%. So uh that's weaker than the overall economy. It's a lot weaker than what's been happening investment. So we have an economy where kind of AI and tech investment are are driving investment spending, but the consumer has been buffeted by higher oil prices, maybe some concerns about what's going on in the Middle East.

And as a result, they've been somewhat more reluctant to buy, particularly for those lowincome individuals who are likely to be more strapped by uh the oil prices going up. So I think the picture that this retail sales uh provides is pretty consistent with consumption that's not really driving the economy uh right now. What's really driving the economy is investment spending.

Well, I'm curious, does that worry you at all or is this just sort of the natural cycles that the economy goes through uh from time to time? Well, if the consumer was a little bit I mean consumption is an important component of GDP. It's roughly twothirds of spending is 2/ird of all GDP. So anytime consumption slows down uh economists tend to pay attention. But I think what we have is a somewhat different balance than we normally see particularly in an environment where the stock market has been going up so strongly.

So, uh, the economy is growing probably at the appropriate rate overall, maybe a little bit weaker than we'd like, and a lot of that is because the consumer has, uh, continue to be somewhat lethargic.

What about inflation? It's now at at around 3.4%. I mean, that's well above the Fed's 2% target. How do you make the case of why the Fed should cut rates with inflation this sticky? So, I think the the debate is really going to be about whether the Fed should raise rates or or leave them the same. As you point out, the CPI number that came out in the beginning of this week at 3.4% is well above the Fed's target. Uh I think those that are willing to wait are arguing that when you take out food and energy uh shelter has met not been going up nearly as rapidly and it's not widespread increases.

So they think as oil prices come down uh we'll see the overall inflation rate come down. I think the other side of the argument is that the Fed has been hoping that um inflation would come down more naturally by waiting for five years now and it hasn't happened. And so I think there's a subset of the committee that is concerned that we keep expecting inflation to come down but uh you know when we get through a couple quarters we find out once again the Fed has missed its target by a significant amount.

So, I think uh for those that are concerned that inflation has been quite high, they're probably uh still going to have that concern. And for those who want to wait, I think they're still going to argue that it's being driven primarily by oil prices and that when oil prices come down uh that uh there'll be less concern about inflation.

And you made the point that the Fed usually takes a look at the data in their totality. But then on one hand, you have higher inflation and on the other you have a weakening consumer. Which do you think, if you were just to pick between the two, is scaring the Fed more?

Well, I think right now they're pretty focused on inflation. So, if you look at the uh press conference that the chair provided after the FOMC, he emphasized that the committee was quite focused on getting an inflation rate back to 2%. So, they're never going to be happy when we get weak real economic data in, but I think right now they're going to be primarily focused on what are the expectations for how long it takes inflation to come down to the 2% inflation target.

I

I want to get your thoughts though also on this idea of how the market reacts to this and particularly with some of the uh the the moves that we've seen in the bond market, particularly on the longer end of the curve with that 30-year yield going up. uh obviously a reflection of longer term concerns certainly about inflation, fiscal deficits and the like here. Uh does that I mean not to be glib about it but that does that kind of do some of the work for the Fed if the bond market continues to repric uh down the price down yields up on the longer end.

So it does slow down the economy if we have higher rates and that's whether the it's initiated by the Fed or other conditions. But if the reason the long rate is up is because they're not confident that the Fed will bring inflation down, uh that's a problem for the Fed. That's really not the way they want the market to to to tighten because they have less confidence in the Fed doing what they're saying they are supposed to do.

Um, I think that the deficit obviously is an issue and uh, as we've seen in Japan, uh, there's been concern about interest rate differentials uh, between the Japanese and the United States and they're worried that they're going to be selling Treasury securities in order to be able to defend their currency. So, I think there are variety of factors going on for why the long end is up. Uh, but I don't think it's a little bit glib to just say that the market is doing the Fed's work for it.

I think you have to interpret why it's moving. And um I think the reasons why it's probably moved up. It started moving up at the press conference. Uh that was an indication that they weren't as confident that the actions of the Fed were going to be commensurate with uh how they described what they're planning on doing on inflation. Based on what we learned out of the last meeting with Fed Chair Worsh, the idea is that communication certain at least from him is likely to be a little bit less than maybe what we got out of his predecessors.

Does that complicate things for the market and for that matter in turn back on Kevin Worsh?

Well, there are other Fed presidents and governors who are speaking and I think there were people speaking on both sides of the last decision. I think the challenge is that there's only one person who can speak for the entire committee and that's chair WSH and if he doesn't speak for the whole committee then you have a bunch of people speaking from their own viewpoint and um I think it would actually be good you don't have to provide forward guidance but I think it is important to provide a little bit of context for why decisions are being made and since uh especially coming out of an FOMC C meeting.

I think it's important for the chair to basically say the reason the committee made the decision they did is the following. And that doesn't have to be forwardlooking. It doesn't have to say anything about what they're going to do in the future. But I do think it is important to justify what the majority of the committee decided at each meeting.

All right, Eric, always appreciate it. Eric Rosenrren, former Boston Fed president