Episode Overview

Podcast: The Journal.
Episode: Is the Economy Getting Better or Worse? The Fed Says It's Hard to Tell
Date: October 30, 2025
Hosts: Ryan Knudson, Jessica Mendoza
Guest: Nick Timiraos, Chief Economics Correspondent, The Wall Street Journal

Main Theme:
This episode explores the Federal Reserve's most recent interest rate decision in the midst of extraordinary uncertainty. The government shutdown resulted in a "data blackout," making it difficult for Fed officials to read the economy and decide whether to prioritize taming inflation or supporting a weakening job market. The show delves into how the Fed is navigating this "fog," the risks and debates inside the institution, and what could be next for monetary policy.

Key Discussion Points & Insights

1. The Fed’s Uncertain Path Forward

• The Fed cut interest rates by another quarter point, but markets had already expected this move.
• What truly matters now: what the Fed signals about future actions.

Quote [00:30]:
"It's about what they say is the most likely path forward. Markets price that in, the bond market reacts to that."
— Nick Timiraos

• The theme is set with a metaphor: The Federal Reserve is "driving in the fog" due to data loss from a government shutdown.

Quote [00:53]:
"They are driving in the fog right now because of this data blackout that resulted from the government shutdown."
— Nick Timiraos

2. Navigating Without Data: The Fed’s Predicament

• Core economic data—like jobs reports and inflation measures—have been delayed or suspended.
• The Fed is now forced to rely on alternative, less-reliable, or anecdotal information.

Quote [01:25]:
"For the last month, they have not had access to the high-quality economic statistics they use to calibrate their policy decisions."
— Nick Timiraos

Discussion [06:43 - 07:41]:

• Alternative sources: payroll processor ADP, surveys, and company earnings (e.g., Visa and Chipotle).
• The risk with anecdotes is the ability to “find the news to fit your view” instead of getting comprehensive economic clarity.

Quote [07:43]:
"If you have some government data, something that's a little bit more 30,000 foot view, it can help put in context if this is idiosyncratic or if this is because actually under the hood of the economy things are not looking so good."
— Nick Timiraos

3. The Two “Boogeymen”—Inflation vs. Jobs

• Inflation remains stuck at around 3%, above the Fed’s target, while the job market shows signs of softening.
• The Fed faces pressure: lower rates to help jobs, or hold steady to fight inflation.

Quote [04:13]:
"There are two boogeymen lurking in the economy right now. There's inflation, which at around 3%, is higher than what the Fed wants, and there's a weakening job market."
— Ryan Knudson

• There’s internal debate at the Fed about which threat is more urgent to address.

4. The Debate Within the Fed

• Recent economic data pushed the Fed to cut rates in September and October.
• But future moves are uncertain; internal divisions are growing.

Quote [10:06]:
"It sounded like a contentious meeting. The Fed chair doesn't always come out and say there were strongly differing views."
— Nick Timiraos

Quote [12:26]:
"In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it."
— Jerome Powell

Memorable Moment [13:11]:
Powell unusually repeated that December rate cut is “far from a foregone conclusion,” emphasizing the depth of division and uncertainty.

5. Rising Political Tensions and the Influence of President Trump

• President Trump has made public calls for rate cuts and is expected to appoint a new Fed chair in May 2026.
• Market expectations reflect probable policy changes after Powell's term ends.

Quote [15:05]:
"Where you're seeing a greater effect from President Trump's more belligerent stance towards the Fed is it's reflected in market expectations..."
— Nick Timiraos

• Nick notes the rare scenario of potential, significant dissent within the Fed over future rate decisions, should a new chair try to push cuts against committee consensus.

Quote [16:29]:
"If you were to get into a situation where you're having many dissents, you know, which it seems possible now that you have these divisions, that's sort of a wake up call here, that monetary policy isn't set just by one person."
— Nick Timiraos

Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote / Moment | |-----------|-----------------|--------------------------------------------------------------------------------------------------------------------| | 00:53 | Nick Timiraos | "They are driving in the fog right now because of this data blackout that resulted from the government shutdown." | | 01:34 | Ryan Knudson | "It's like driving in the fog with a GPS that has no signal." | | 04:13 | Ryan Knudson | "There are two boogeymen lurking in the economy right now. There’s inflation... and there’s a weakening job market."| | 07:43 | Nick Timiraos | "[Anecdotal data]...can help put in context if this is idiosyncratic or...under the hood...things are not looking so good."| | 10:06 | Nick Timiraos | "It sounded like a contentious meeting. The Fed chair doesn't always come out and say there were strongly differing views."| | 12:26 | Jerome Powell | "A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it." | | 13:42 | Ryan Knudson | "What did Powell say about why his tune has changed...?" | | 16:29 | Nick Timiraos | "...if you were to get into a situation where you're having many dissents...that's sort of a wake up call here..." |

Timestamps for Important Segments

• 00:05-00:53: Introduction to the Fed’s latest interest rate cut, set-up of the "driving in fog" metaphor.
• 01:25-02:39: The effect of the government shutdown and loss of official data.
• 04:13-05:54: Discussion of inflation vs. jobs and shifting policy priorities.
• 06:43-08:15: Alternative data sources and the limits of anecdotal evidence.
• 08:51-10:06: The balance between consumer spending and a weakening labor market.
• 10:06-12:26: Inside the Fed's tense meeting and Powell’s unusually explicit statements.
• 12:26-14:32: Powell’s signaling on December and internal disagreement on the committee.
• 14:32-16:29: Discussion of political dynamics, market expectations, and the implications of possible future dissents at the Fed.

Overall Tone and Conclusions

The episode maintains a sober, slightly anxious tone, matching the uncertainty faced by the Federal Reserve. The conversation is sprinkled with metaphors and some lighthearted banter, but the focus remains on conveying the seriousness of the Fed’s predicament. The complexity of the current economic situation—a data-starved Fed, dueling threats of inflation and employment woes, and political uncertainty—creates a sense of precariousness about the path ahead.

Final Note:
This episode offers a clear, accessible window into high-stakes economic policy-making under intense uncertainty—with vivid metaphors, revealing quotes, and plain-English explanations of why the Fed’s current moment matters for everyone.