A successor named

Last week’s decision to keep rates on hold was widely expected. The bigger news came from a social media post where President Trump nominated Kevin Warsh to be the next Federal Reserve chair in May. Warsh served as a Fed Governor from 2006-2011, and has long been viewed as an inflation hawk, though he has argued for lower rates in recent months.

Which consumer to believe?

Two weeks after the University of Michigan showed improving consumer sentiment, the Conference Board’s confidence data painted a far less upbeat picture. In fact, the latest score plummeted to the lowest level since March 2014. Consumers noted pressure from increasing prices, specifically highlighting energy and food. They also grew wearier of the job market. The labor differential, which measures the net share of consumers saying jobs are “plentiful” versus “hard to get,” also declined and is now at its weakest level since February 2021.

From the Fed’s perspective, the economy appears stable. In his press conference following the Federal Open Market Committee meeting last week (which resulted in no rate change), Chair Jerome Powell chose the phrase “firm footing.” He said that labor market risks have eased, reflected in a stabilization of the unemployment rate, and that he believes that underlying inflation, ex-tariffs, is close to target. He thinks the brunt of the tariff impact is being absorbed by corporates, which will look to pass that on to consumers. Interestingly, last week’s PPI, which measures producer-level inflation, came in hotter than expected, signaling more tariff pressure may be building within companies.