A TIGHTROPE WELL INTO THE FUTURE

fortune.com/2025/08/04/warning-economy-i...orkers-next-5-years/

elly commented on these signs of labor tightness as pivotal context for the wider question of the labor supply in the economy, with long-running trends implying that the Federal Reserve and embattled Chair Jerome Powell will face major challenges fighting inflation going forward—meaning ever-slimmer chances of the all important rate cut the market wants so much.
The worker problem in the economy

The aging population and declining labor participation also speak to a deeper, structural challenge that will persist well into the future.

According to Census projections, he noted the working-age population will actually contract in coming years without immigration returning to previous levels.

Kelly highlights the Census prediction that the population ages 18 to 64 would actually fall by over 300,000 people in the year ending July 2026, and continue to fall at roughly that pace through 2030. He notes that the retirement wave and recent changes to major immigration programs are further sapping labor supply, reducing potential growth.
Fed’s dilemma: inflation, growth, and political pressure

This squeeze comes at a time when the Federal Reserve is under immense political pressure to lower interest rates, with President Trump and his allies calling for easier money to offset the effects of new tariffs and support flagging markets.

Yet Kelly argues the central bank must tread carefully, as cutting rates into a structurally tight labor market risks spurring wage and price inflation rather than accelerating economic growth.

He observed that U.S. economic growth has averaged 2.1% per year since the beginning of the 21st century, largely driven by a 0.8% annual increase in the workforce.

“Starting from a point of roughly full employment, given the continued retirement of the baby boom and considering the possibility that deportations and voluntary departures of immigrants entirely offset new immigration in the next few years, it is quite possible that the next five years will see no growth in workers at all,” he added.

If this happens, the economy will grow more slowly, Kelly predicted, “but will only be capable of growing more slowly without igniting higher inflation.”

For the Fed, the message is clear, he adds: Be extremely cautious about any rate cuts. For investors, it’s a warning to temper expectations for rapid economic gains or a sustained bull market driven by easy money. In other words, American “exceptionalism” isn’t a given, going forward.

Investors, Kelly said, “should no longer bet broadly on a strongly rising U.S. economic tide or lower interest rates.”


REMEMBER WHEN I POSTED THE NEXT FEW YEARS WILL BE DIFFICULT FOR AMERICA? REMEMBER WHEN I POSTED THE BIRTHCHART OF AMERICA IS FACING DIFFICULT TRANSITS.? THE ABOVE IS THE ISSUE AND THE CHART REFLECTS THESE FACTS.....OH BUT, I AM WOO WOO AND CRY WOLF,AND TO BE DISMISSED.....(AT YOUR PERIL).....WAIT AND WATCH

Will we see more automation in the workplace? AI shows promise as a way to replace paralegals, research assistants, and other who do a lot of data processing.

HA, when in the last 10 years have you posted something that didn't blame Trump for our impending doom? I must have missed that thread... maybe you could dig it up?

U HAVE CONTINUED TO RELATE SKEPTICISM AND 'CRY WOLF' AND NOW I AM SHOWING U EVIDENCE,THRU MANY SOURCES....THAT ALL IS NOT AS ONE MIGHT THINK AND THAT TRUMP IS WAY OVER HIS HEAD IN HIS ATTEMPT TO GO FAST AND BREAK THINGS....NO OTHER GOV. ;LEADER HAS PLAYED 52 CARD PICK UP WITH THE WORLD.....IS IT WISE AND WILL WORK...I WOULD SAY IT IS BEYOND BELIEF THAT SOMEONE COULD BE THAT RECKLESS WITH A GLOBAL ECONOMY AND BILLIONS OF LIVES.......EGOMANIAC EFFORTS TO CONTROL EVERYTHING IS A
SIGN OF MENTAL DEFICIENCY.....CRAZY WOULD BE A SIMPLE WAY TO PUT IT.

You are posting predictions and current snapshots. You are the one who is “crying wolf” every single day. I am suggesting you wait for the outcomes instead of falsely predicting them. Learn from your crappy sources who have permanent egg on their faces.

AHEM......I AM NOT THE SINGULAR VOICE CALLING OUT FINANCIAL FACTS......PERHAPS U NEED TO DO MORE READING

paulkrugman.substack.com/p/its-beginning-to-smell-a-lot-like


At this point, however, the data really are looking increasingly stagflationary. And I thought it might be useful to talk about why the lights on the economic dashboard are flashing yellow or red.

The starting point for any discussion is the fact that Trump is pursuing really extreme policies on both trade and immigration. He has completely reversed 90 years of gradual trade liberalization, bringing us right back to Smoot-Hawley tariff rates (and imports as a percentage of GDP are three times what they were in 1930, so these tariffs matter a lot more):



So is inflation happening? So far there have only been hints of tariff-driven inflation in official data. What seems to have happened so far is that U.S. companies rushed to import and stockpile foreign products before the Trump tariffs went into full effect, and are still to a large extent selling out of those stocks. Also, many companies were reluctant to raise prices, alienating customers, as long as there was a chance that Trump would make deals that brought tariffs significantly down again.

That, however, isn’t happening. It’s true that many of Trump’s tariffs are clearly illegal, and the courts could force him to reverse them. But I wouldn’t get my hopes up. And if the tariffs are here to stay, we can expect them to be passed on to buyers.

We can already see this happening in private surveys of purchasing managers, which have historically been good predictors of official inflation. The latest report on services from the Institute of Supply Management was quite grim on both inflation and jobs. Torsten Slok of Apollo has a chart showing the historical relationship between the ISM and inflation rates 3 months later, which suggests a nasty shock — inflation of 4 percent or more — just around the corner:

Was world trade liberalizing? Not really, nations all over the world spend their time creating barriers.

Chinese EV's are not allowed to be sold in the US. Toyota diesel pickups aren't allowed to be sold here either. These restrictions were passed years before Trump.

Legislators are always passing laws to protect their industries and sometime just their bigger campaign donors.

homeagain wrote: AHEM......I AM NOT THE SINGULAR VOICE CALLING OUT FINANCIAL FACTS......PERHAPS U NEED TO DO MORE READING

paulkrugman.substack.com/p/its-beginning-to-smell-a-lot-like

Paul Krugman… seriously, HA? How many times does that little troll have to be wrong before you start questioning his expertise?

Oh, I forgot, if it’s on the internet and you read it, then it must be true. Krugman is wrong more often than a Colorado weather forecaster. Flip a coin… you’ll probably find more truth doing it that way.

IT'S OK......HAVING BLINDERS ON IS COMFORTING AND CONVENIENT, YOU 'R SAFE AND SECURE ABOUT THE FUTURE AND I APPLAUD U FOR YOUR FAITH.

They are predicting five rate cuts in the next 12 months!