Author: admin

Thank you, David. I appreciate the opportunity to speak again at the Brookings Institution.¹ It is always an honor for me to return to the place where I held my first job as an aspiring economist. I had the good fortune to be a research assistant for the eminent economist and public servant, including as Vice Chair of the Fed, Alice Rivlin early in my career. It was a formative, if not transformative, experience for me, and I remain grateful to her and Brookings for it.

Today, I would like to speak to you about how I see the U.S. economic outlook evolving, specifically through the lens of the dual mandate given to the Federal Reserve by Congress to promote maximum employment and price stability. Then, I will discuss how my assessment of the outlook guides my thinking on monetary policy.

I will start by acknowledging that, due to the government shutdown, this is a challenging time to give an economic outlook speech. Federal statistical agencies, including the Bureau of Labor Statistics, the Census Bureau, and the Bureau of Economic Analysis, have not produced many of the data I regularly use in assessing the economy, such as monthly employment data from BLS and the personal consumption expenditures (PCE) price index from BEA. The longer the shutdown lasts, the more data could be disrupted.

Economic Outlook

However, we are not flying blind. The staff at the Federal Reserve and I use a wide variety of data from administrative sources and various private-sector providers to continually evaluate the state of the economy in real time. That practice has become essential in recent weeks given the lack of official releases. These data include alternative measures of inflation, labor-market activity, and production and spending, inflation. For example, states continue to report data on unemployment insurance (UI) claims, and online job boards provide data on available positions. Various firms provide pricing data on a variety of products and services, including housing and vehicles, and offer information on credit card spending, the moods of consumers and employers, and manufacturing and service-sector output. In my first speech as a Governor in 2022, I encouraged the use of more high-frequency, real-time data from the private sector, and I think this has borne fruit.² And, of course, the Reserve Banks in the Fed System are a rich source of statistical and anecdotal data, some of which are documented in the Beige Book report policymakers receive before each Federal Open Market Committee (FOMC) meeting.

In addition, I find broad outreach to business leaders, workers, nonprofits, and families around the country essential in understanding the state of the economy. I will rely on this outreach, these alternative data sources, and the latest available federal data when discussing my outlook today.

Inflation

First, I will turn to inflation. Based on the available data for September, it is estimated that the PCE price index rose 2.8 percent in the 12 months ending in September, significantly above our 2 percent target. Core inflation, which excludes the volatile food and energy categories, was also estimated to be 2.8 percent. Both of these readings are as high or higher than their readings a year before, propped up by an increase in tariff-affected goods prices.

My outreach to business leaders suggests that the pass-through of tariffs to consumer prices is not yet complete. Many firms have adopted a strategy of running down their inventories at lower price levels before raising prices. Others have reported waiting until tariff uncertainty is resolved before passing increases on to consumers. New car models, clothing lines, and other products will be coming onto the market, and that process will continue to provide firms with an opportunity to level set prices. As such, I expect inflation to remain elevated for the next year.

Nonetheless, the effect of tariffs on prices, in theory, should represent a one-time increase. It is encouraging that most long-run inflation expectations, including from the New York Fed Survey of Consumer Expectations, are low and stable at this juncture. When excluding tariff effects, 12-month core PCE inflation through September appears to be about 1/2 percentage point lower at about 2.3 percent, suggesting that underlying inflation has continued to make progress toward target. My assessment is that inflation is on track to continue on its trend toward our target of 2 percent once the tariff effects are behind us. The big caveat is that tariff effects must prove not to be persistent and that monetary policy remains appropriately focused on achieving that goal.

This is a point worth dwelling on for just a moment. The FOMC’s firm commitment to its inflation mandate is imperative to ensure that inflation does remain in check, as I do expect in my baseline forecast. So let me be clear. I am committed to reaching our 2 percent inflation target. Moreover, I will be prepared to act forcefully, if the tariff effects appear to be larger or last longer than expected, or if other evidence emerges that higher levels of inflation are becoming entrenched in expectations.

Labor market

I will now turn to the labor market. We have less recent official data on the labor market, but the latest available indicators suggest that the labor market remains solid, though gradually cooling. The unemployment rate edged up over this summer from 4.1 percent in June to 4.3 percent in August, a relatively low reading one would expect to see in a healthy economy. To put 4.3 percent into perspective, the average unemployment rate over the 50-year period preceding the pandemic was 6.2 percent. Since August, more recent labor-market indicators, such as UI claims, job postings, and individuals’ assessments of job availability, signal little change to the August reading—at most a small uptick. Taken together, the slightly rising unemployment rate indicates the labor market is softening, but only modestly so.

I would be remiss if I did not mention slowing in payroll gains observed over the summer. In most cases, a sharp slowing in payrolls would suggest increasing slack and would generally be accompanied by an increase in the unemployment rate. However, in this instance, the slowing in payrolls can mostly be explained by a coincident decline in population growth due to immigration policy. Because they are currently driven by fluctuations in population growth, the payroll numbers do not provide a definitive signal about labor-market slack. Therefore, it would be prudent for us to consult the other indicators I already mentioned.

It is important to recognize that there appear to be worsening outcomes for vulnerable and low-to-middle-income (LMI) households. In the labor market, youth and Black unemployment rates, both of which tend to be more cyclical than total unemployment, have steadily risen since this spring through the latest readings in August. The deteriorating labor market experienced by these two vulnerable groups mirrors other emerging strains in some households’ financial health and balance sheets. Among LMI households, we have observed large increases in delinquencies, especially last year, and there is some evidence that their spending has stagnated, in particular compared to the robust spending growth of their higher-income counterparts. This is sometimes called a “two-speed” economy, when the well-off are doing well, while LMI and vulnerable households are not.

Monetary policy works by affecting conditions for the entire economy and is not well suited to produce specific outcomes for specific groups of people. Ultimately, I believe delivering on our dual-mandate goals will produce the best outcomes for all Americans. Nonetheless, it is important for policymakers to monitor the two-speed economy. Understanding the challenges faced by so many Americans underscores the reasons why we need to get monetary policy right. Vulnerable and LMI households are the ones who will be the first and most hurt, if the labor market were to suddenly deteriorate or if inflation were to remain too high.

Economic activity

To turn to economic activity, recent readings are consistent with solid overall growth. Output has been supported by household consumption that has held up better than expected earlier this year. Yet, what has been more striking is the strength of business investment. Business investment has been driven by investment in high-tech equipment and software, seemingly mostly related to AI. As I have mentioned in previous speeches, that suggests to me there is a reason to be sanguine about future productivity growth.³ I see AI as a general-purpose technology, on par with the steam engine and the personal computer, that has the potential to transform the economy and boost productivity. I expect this sector to continue to provide support to output growth over the next few years, at least.

In the very near term, I see the federal government shutdown as weighing on activity this quarter. Furloughing federal workers and forgoing government purchases of goods and services, including those provided by contractors, directly lowers output in the public sector. And spillover effects to the private sector are worth considering. Potential delays in government payments, permits, inspections, insurance provision and other functions could slow certain spending and investment activities, and some small business contractors with very little cushion may never be paid and may ultimately close their businesses. I see both sets of effects as being largely temporary. It is anticipated that they would unwind in the following quarter after the shutdown ends.

In summary, after a temporary slowdown due to the government shutdown, I expect the economy to grow moderately over the medium term, supported by an AI productivity boom. I see the labor market as still solid, but I am highly attentive to downside risks. I see inflation as remaining somewhat elevated due to tariff effects and subject to upside risks.

Monetary Policy

Having articulated my outlook, I will turn to my current view of monetary policy. At the FOMC meeting last week, I supported the Committee’s decision to lower the target range for the fed funds rate by a quarter-point to 3-3/4 to 4 percent. I viewed that decision as appropriate, because I believe that the downside risks to employment are greater than the upside risks to inflation. I view the latest reduction in the fed funds rate as another gradual step toward normalization. I see the current policy rate as remaining modestly restrictive, which is appropriate given that inflation remains somewhat above our 2 percent target.

At last week’s meeting, I also supported the decision to conclude the reduction of the aggregate securities holdings on the balance sheet on December 1. The long-stated plan had been to stop balance sheet runoff when reserves were somewhat above the level the Committee deemed consistent with ample reserve conditions. In the several weeks ahead of our latest meeting, signs, such as an increase in repo rates relative to administered rates, did emerge suggesting this standard had been reached. These developments were anticipated as the size of the balance sheet declined and supported the decision to cease runoff.

Looking ahead, policy is not on a predetermined path. We are at a moment when risks to both sides of the dual mandate are elevated. Keeping rates too high increases the likelihood that the labor market will deteriorate sharply. Lowering rates too much would increase the likelihood that inflation expectations will become unanchored. As always, I determine my monetary policy stance each meeting based on the incoming data from a wide variety of sources, the evolution of my outlook, and the balance of risks. Every meeting, including December’s, is a live meeting.

Thank you again for the opportunity to return to Brookings. I look forward to our conversation.

---

1. The views expressed here are my own and not necessarily those of my colleagues on the Federal Open Market Committee. Return to text

2. Lisa D. Cook (2022), “Economic Outlook,” speech delivered at the Peterson Institute for International Economics, Washington, D.C., October 6. Return to text

3. See Lisa D. Cook (2024), “What Will Artificial Intelligence Mean for America’s Workers?” speech delivered at the Ohio State University, Columbus, Ohio, September 26. Return to text

Vaccination is one of the most effective tools for preventing infectious diseases in both humans and animals. Safe and effective vaccines reduce mortality, improve productivity and protect communities from zoonotic diseases that can cross species barriers. However, the success of vaccination programs depends not only on the quality of vaccines produced but also on how they are stored, transported and handled. When vaccines are exposed to temperatures outside their recommended range, their potency can decline, leading to a failure to generate adequate immune protection. Such failures can erode public trust when vaccinated individuals, both human or animal, still fall ill with the targeted disease.

Maintaining vaccines within the correct temperature range from the point of manufacture to administration is therefore critical. The temperature-controlled system that preserves vaccine potency along the travel route is known as the cold chain. A robust cold chain ensures that vaccines remain active and efficacious until their expiry date, forming the backbone of successful immunisation and vaccination programs.

Public health systems worldwide devote substantial resources to building and maintaining cold chain infrastructure. An effective cold chain requires three key elements. First, personnel: trained staff to manage vaccine storage and distribution at every point in the system, ensuring that handling protocols are consistently applied. Second, equipment: reliable refrigeration and transport equipment capable of maintaining required temperatures, together with temperature-monitoring devices that allow real-time oversight. Third, procedures: standardised protocols that guide proper equipment use, temperature monitoring, and the safe transport and storage of vaccines.

When any of these components fail, whether due to lack of training, power outages or equipment breakdowns, the integrity of vaccines can be compromised. For this reason, continuous investment in cold chain systems is not optional but essential for sustaining vaccine confidence and effectiveness.

While public health vaccination programs often receive strong institutional and financial support, animal health services in many low- and middle-income countries remain under-resourced. The consequences are significant: inadequate cold chain capacity can lead to unreliable vaccine supplies, loss of potency and high mortality from diseases that are otherwise preventable.

These weaknesses in animal health systems have several important wider implications. Livestock owners who experience disease outbreaks following vaccination may lose confidence both in vaccines and in veterinary health care services. High animal mortality can make it difficult to detect outbreaks early, diminishing the sensitivity of surveillance systems. Poor disease surveillance allows zoonotic pathogens — that is, those that can infect both animals and humans — to circulate unnoticed in animal populations, potentially spilling over into human communities. Finally, these outbreaks may have serious negative impacts on household livelihoods and national economics.

As a consequence, inadequate investment in animal health cold chains not only affects livestock productivity but also undermines public health security and food systems.

Encouraging progress has been made in Bangladesh, where a community-based One Health initiative funded by the USAID Feed the Future Bangladesh Livestock and Nutrition Activity and UK Research and Innovation-funded One Health Poultry Hub has highlighted the benefits of shared responsibility across sectors. A farmer survey conducted under the Bangladesh Livestock and Nutrition Activity revealed very low levels of vaccination coverage. This finding was presented at a national meeting that brought together public health, animal health and environmental health officials, along with local government representatives, reflecting the essence of the One Health approach, which seeks to balance and optimise the health of people, animals and ecosystems through cross-sectoral collaboration.

Public health officials were surprised to learn about the low coverage of livestock vaccination for two key reasons. Firstly, in rural districts facing high child undernutrition, improving access to nutrient-rich animal-source foods is seen as vital. Second, frequent high mortality in animals reduces surveillance sensitivity and timely disease outbreak reporting. Rather than attributing blame to veterinary services, they expressed readiness to support joint action. Proposed areas of collaboration included cold chain training, shared maintenance responsibilities and coordinated monitoring of livestock vaccination coverage. They further recommended that animal vaccination data, particularly for zoonotic and high-priority diseases, be routinely shared with District Public Health Nutrition Committees. This integration would help raise awareness of challenges in veterinary health systems and strengthen links between animal health and human nutrition initiatives.

Importantly, discussions also explored the potential for shared cold chain infrastructure. Public health facilities in Bangladesh now possess well maintained refrigeration units, backup power generators and trained personnel. Public health officers felt that, with proper coordination, these existing structures could benefit veterinary vaccination programs — and were keen to take this idea forward. (While the World Health Organization prohibits human and animal vaccines from being stored in the same refrigerator, this barrier can be overcome by installing separate storage units powered by a unified electricity source and shared backup systems.)

This example from Bangladesh illustrates the value of the One Health approach in addressing common logistical challenges. In many contexts, animal health and public health services operate in parallel, each maintaining their own infrastructure, staff and supply systems. However, greater efficiency and resilience can be achieved through integrated planning and resource sharing. Beyond Bangladesh, this idea is also being considered in the four countries participating in the West African One Health project — Sierra Leone, Guinea, Liberia and Nigeria — which aims to strengthen the mitigation and prevention of outbreaks and address sectoral inequities through increased multisectoral collaboration.

In fact, the Guinean National Health Security Agency is currently coordinating with the National Directorate of Veterinary Services regarding the storage and distribution of dog rabies vaccine. In Guinea, rabies vaccines are distributed through a tiered system to maintain cold chain integrity. Vaccines are first stored at four regional veterinary laboratories, then transferred to refrigerators within the Prefectural Directorates of Livestock, and subsequently to human health centres at the sub-prefectural level. Transport is conducted using coolers with regularly-replaced ice packs. Most health centres are equipped with solar-powered refrigerators. Coordination between the Expanded Vaccination and Primary Health Care Program and the National Directorate of Veterinary Services ensures effective management and safety of animal vaccinations.

Access to potent vaccines, safe food and effective disease control underpins both human and animal health. Yet sustaining these systems requires collaboration across sectors that have traditionally worked in isolation. The One Health approach offers a pragmatic and equitable framework for doing so. By sharing cold chain resources — equipment, expertise and maintenance systems — countries can strengthen both public and veterinary health services while maximising the impact of limited resources. In short, investing together means saving together: protecting livestock, safeguarding people and securing the health of the ecosystems we all depend on.

A recent analysis of national higher-education data by a researcher at the University of California, Santa Cruz, found that the United States exceeded the goal of producing one million more graduates in the fields of science, technology, engineering, and mathematics (STEM) over the course of a decade. That goal, set in a 2012 report by then-President Barack Obama’s Council of Advisors on Science and Technology (PCAST), was one of several national objectives created to maintain America’s scientific leadership position in an increasingly competitive global landscape.

The analysis, by National Science Foundation postdoctoral fellow Haider Ali Bhatti was, on the one hand, good news: It indicates that the expansion of programs intended to support STEM education outcomes in the years following the report’s publication yielded a successful return on investment.

But at the same time, Bhatti’s study serves as a warning about the danger of tearing down federal institutions and the information infrastructure they provide. His findings underscored the vital importance of keeping and improving national-level data collection for sustaining STEM education progress and establishing policies and priorities that aim to maintain U.S. leadership in an increasingly competitive scientific and economic landscape.

Let the data speak

The study is framed in the present-day context of the growing challenges faced by U.S. universities: public skepticism of their value, claims of ideological indoctrination, and the ongoing dismantling of diversity, equity, and inclusion initiatives. 

“These criticisms demand higher education research to demonstrate tangible outcomes of progress informed by evidence-based evaluations,” said Bhatti, in UC Santa Cruz’s Department of Ecology & Evolutionary Biology. “In this climate of heightened public scrutiny, undergraduate STEM education offers a particularly valuable disciplinary domain to assess higher-education outcomes given its importance to national workforce development goals and global economic competitiveness.”

Relying largely on data from the National Center for Education Statistics (NCES), Bhatti found that the number of STEM degrees obtained in the decade following the 2012 “Engage to Excel” report exceeded the goal of an additional million graduates by 16%. He also found that the proportion of STEM degrees among all degrees conferred increased over the decade, reversing previous declining trends.

Stemming economic threats

In addition, STEM employment expanded correspondingly, with growth surpassing the PCAST report’s projections, according to Bhatti. In his study, he explained how the 2012 report emerged as a response to specific workforce and educational concerns facing the country in the years prior. While America had historically relied on foreign-born STEM professionals to satisfy unmet workforce demands, the presidential advisory council warned that this strategy was no longer sustainable.

STEM education and employment opportunities were increasing globally, making other countries potentially more attractive to STEM-trained workers and creating potential vulnerabilities for American economic stability, the study states. Furthermore, other research showed that STEM-related jobs represented some of the best opportunities for upward mobility in the American economy, offering high wages and lower unemployment rates than other sectors.

The 2012 report concluded that expanding access to these high-quality careers provided a potential pathway to reduce income inequality if more Americans were trained in STEM fields. Against this backdrop of global competition and domestic opportunity, PCAST established concrete, measurable goals to address what the report characterized as a critical “decision point” for American educational and economic leadership at the time of its publication.

Other encouraging and stubborn trends

In his study, Bhatti cited other research that analyzed national data to assess progress on two other goals in the PCAST report: improving retention rates among students in STEM fields, and increasing demographic representation. At the time of the report, only 40% of students who started as STEM majors graduated with a STEM degree. To assess progress on that front, Bhatti presented results from research that analyzed longitudinal cohort data from the ongoing Beginning Postsecondary Students (BPS) study by NCES.

That research found improved retention rates among bachelor’s degree students in STEM fields, at 52%, along with a phenomenon that Bhatti said is more powerful: retention rates in STEM that were equal to or higher than those in non-STEM fields at the bachelor’s degree level. Given the typical amount of exploration and changing of majors that undergraduates do, Bhatti said it was encouraging to see comparatively less attrition in STEM disciplines than in other fields.

In regards to increasing demographic representation, Bhatti reported mixed progress, with national data showing substantial gains for Hispanic students and women, but also persistent gaps for Black and American Indian/Alaska Native students. According to NCES data, the share of Hispanic STEM degree recipients increased from 9.5% to 14.7%.

Bhatti also found that the percentage of science and engineering degrees earned by women rose from 43% to 49% at the associate’s level, while remaining stable at about 50% for bachelor’s degrees over the past decade. 

But overall, NCES data show an upward trend for women in STEM: Between 2012 and 2022, the share of women who earned STEM degrees increased steadily from just under 32% (124,853) to over 37% (193,625). 

Refuting critics with proof of ROI

Besides NCES, Bhatti examined other national reports, data sets, and longitudinal studies spanning over 10 years since the publication of the PCAST report. And now, more than a decade later, he said if higher education’s critics are correct, we would expect minimal to no progress toward these goals. But his study clearly showed otherwise.

“Overall, these results reveal patterns that challenge public narratives about the diminishing state of higher education—particularly in undergraduate STEM education,” Bhatti concluded. “These findings provide an evidence-based foundation for both evaluating past investments and guiding future strategies to strengthen America’s talent development in the evolving global STEM ecosystem.”

Bhatti emphasized that NCES is a division of the U.S. Department of Education, which has been critically defunded and affected by mass layoffs due to federal restructuring. “This work shows the importance of data infrastructure to check if we, as a nation, are on track in the increasingly competitive world of STEM,” he said. “We need things like NCES to enable evidence-based evaluations of our educational progress.”

While his study is largely positive about recent trends in undergraduate STEM education, Bhatti also noted several caveats. The decade covered by his study included large‐scale reforms as well as variability across institutions and regional systems. Thus, Bhatti said national averages may have masked pockets of underperformance. 

In addition, while degree production and completion have improved, Bhatti’s findings stop short of documenting the quality of the learning experience, the alignment of degrees with workforce needs, or long‐term career outcomes. He points out that “degree counts alone are insufficient; we must also ask whether graduates are succeeding in the jobs of today and tomorrow.”

His analysis, “One million more: assessing a decade of progress in undergraduate STEM education,” originally appeared  in the journal Journal of Microbiology & Biology Education on August 21.