- Daly noted businesses are optimistic because “growth is good,” consumer spending has been reassuring, the job market is recovering, and productivity gains are curbing costs.
- However, she said the latest sentiment surveys show that Americans are expecting fewer jobs to be available and the unemployment rate to rise.
- She added that with inflation printing above the Fed’s 2% goal, this feels precarious.
San Francisco Federal Reserve Bank President and CEO Mary Daly commented on the economic outlook of America and noted its impact on policy.
Daly said in a LinkedIn post on Friday that while businesses are leaning towards cautious optimism, workers feel differently.
Talking about its impact on policy, Daly said, “We must watch both sides of our mandate. Americans deserve both price stability and full employment, and we can’t take either for granted.”
Labor Market Worries
Daly noted that while “growth is good,” consumer spending has been reassuring, the job market is recovering, and productivity gains are curbing costs for businesses, workers are not as optimistic.
She said the evidence comes from the latest sentiment surveys, “which show that Americans are expecting fewer jobs to be available and the unemployment rate to rise.”
Daly said that the disconnect between businesses and workers makes sense. “We’ve been in a relatively low-hiring, low-firing environment for some time. That may persist, but workers are aware that things could change quickly, leaving them in a no-hiring, more-firing labor market,” she said.
“With inflation printing above the FOMC’s 2 percent goal, this rightly feels precarious,” she added.
Job Cuts
While the latest January jobs report has been delayed due to the partial government shutdown over the weekend, consulting firm Challenger, Gray & Christmas said that 108,435 jobs were cut in the month, hitting highs similar to 2009-levels.
Meanwhile, U.S. employers announced 5,306 hiring plans in January, the lowest level for the month since it began tracking hiring plans in 2009, Challenger said. The job cuts were led by the transportation industry, followed by the technology sector, the firm said.
At the end of last month, Amazon laid off about 16,000 employees. United Parcel Service (UPS) cut 48,000 jobs in 2025 and announced another 30,000 job cuts this year.
Oracle is also likely to cut 30,000 jobs, affecting about 18.5% of its total global strength as of May 2025.
Interest Rates
Meanwhile, the Fed held benchmark interest rates steady at 3.50%–3.75% in its first policy meeting of 2026, noting that “inflation remains somewhat elevated.”
The Fed aims for a 2% average annual inflation rate over the long run, while the inflation rate is currently at 2.7% in the country.
Meanwhile, U.S. equities were trading in green on Friday at the time of writing. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was higher by 1.51%, the Invesco QQQ Trust ETF (QQQ) climbed 1.64%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) was up by 1.99%.
Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.
The iShares 20+ Year Treasury Bond ETF (TLT) was down by 0.22% on Friday, while the iShares 7-10 Year Treasury Bond ETF (IEF) was 0.11% lower.
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