Ben and Dominique examine the “Goldilocks” labour market, where strong employment growth and subdued wages are currently supported by an influx of non-US-born labour. They analyse the friction between this short-term resilience and the long-term risk of a recession triggered by energy shocks and supply chain disruptions if the Strait of Hormuz remains closed. As the Federal Reserve prepares for incoming Chair Walsh, the focus shifts to internal debates over removing the “easing bias” from policy statements and the increasing importance of “trimmed mean” inflation metrics. Dominique notes that upcoming retail sales may signal a contraction in real terms and highlights how recent tariff policies are negatively impacting corporate cash flows.
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