Trump will not be happy with this. 
Please consider the Polymarket December 10 Fed Decision Probabilities.
- No Change: 67 Percent (matching CME Fedwatch)
- Quarter-Point Cut: 32 Percent
- Half-Point Cut: 2 Percent
- Quarter-Point Hike: 0.5 Percent
No Change went from 6.0 percent on October 27 to 45 percent yesterday, to 67 percent today.
We have gone from a 94 percent chance of a cut less than a month ago to 33 percent today.
FOMC Minutes (Emphasis Mine)
The Minutes of the October 28–29 FOMC Meeting are responsible for today’s no-change jump from 45 percent to 67 percent.
Staff Review of the Economic Situation
The information available at the time of the meeting indicated that growth of real gross domestic product (GDP) had moderated over the first half of the year. Information on the labor market was limited by the federal government shutdown; however, available indicators were consistent with a continued gradual cooling in the labor market without any evidence of a sharp deterioration. Consumer price inflation had moved up since earlier in the year and remained somewhat elevated.
Total consumer price inflation—as measured by the 12-month change in the price index for personal consumption expenditures (PCE)—was estimated to have been 2.8 percent in September based on data from the consumer price index. Core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was also estimated to have been 2.8 percent in September. These estimates implied that total PCE price inflation had risen 0.5 percentage point relative to a year ago and that core PCE inflation was unchanged from its year-earlier rate.
Staff Economic Outlook
Relative to the forecast prepared for the September meeting, real GDP growth was projected to be modestly stronger, on balance, through 2028, reflecting stronger expected potential output growth and greater projected support from financial conditions. GDP growth after 2025 was expected to remain above potential until 2028 as the drag from higher tariffs waned, with financial conditions becoming a tailwind for spending. As a result, the unemployment rate was expected to decline gradually after this year before flattening out at a level slightly below the staff’s estimate of the natural rate of unemployment.
The staff’s inflation forecast was broadly similar to the one prepared for the September meeting, with tariff increases expected to put upward pressure on inflation in 2025 and 2026. Thereafter, inflation was projected to return to its previous disinflationary trend.
The staff continued to view the uncertainty around the forecast as elevated, citing a cooling labor market, still-elevated inflation, heightened uncertainty about government policy changes and their effects on the economy, and the limited availability of data caused by the government shutdown. Risks around the employment and GDP forecasts continued to be seen as skewed to the downside, as elevated economic uncertainty and a cooling labor market raised the risk of a sharper-than-expected weakening in labor market conditions and output growth. Risks around the inflation forecast continued to be seen as skewed to the upside, as the elevated levels of some measures of expected inflation and more than four consecutive years of actual inflation above 2 percent raised the possibility that this year’s projected rise in inflation would prove to be more persistent than the staff anticipated.
Participants’ Views on Current Conditions and the Economic Outlook
In their discussion of inflation, participants observed that overall inflation had moved up since earlier in the year and remained somewhat above the Committee’s 2 percent longer-run goal. Participants generally noted that core inflation had remained elevated, as disinflation in housing services had been more than offset by higher goods inflation, reflecting in part the effects of tariff increases implemented earlier in the year. Several participants observed that, setting aside their estimates of tariff effects, inflation was close to the Committee’s target. Many participants, however, remarked that overall inflation had been above target for some time and had shown little sign of returning sustainably to the 2 percent objective in a timely manner.
Participants generally expected inflation to remain somewhat elevated in the near term before moving gradually to 2 percent. Several participants pointed to the persistence in core nonhousing services inflation as a factor that may keep overall inflation above 2 percent in the near term. Many participants expected some additional pickup in core goods inflation over the next few quarters, driven in part by further pass-through of tariffs to firms’ pricing. Several participants expressed uncertainty about the timing and magnitude of tariff-related price effects, noting that some businesses were reportedly waiting to adjust prices until tariff policies seemed more settled.
With regard to the labor market, participants observed that the data available before the government shutdown indicated that job gains had slowed this year and that the unemployment rate had edged up but remained low through August. Participants commented on the lack of the Employment Situation report for September during this intermeeting period and reported relying on private-sector and limited government data, as well as information provided by businesses and community contacts, to assess labor market conditions.
Participants generally attributed the slowdown in job creation to both reduced labor supply—stemming from lower immigration and labor force participation—and less labor demand amid moderate economic growth and elevated uncertainty. Many participants remarked that structural factors such as investment related to AI and other productivity-enhancing technologies may be contributing to softer labor demand.
Participants generally judged that uncertainty about the economic outlook remained elevated. Participants saw risks to both sides of the Committee’s dual mandate, with many indicating that downside risks to employment had increased since earlier in the year, as the unemployment rate ticked up and the pace of job gains slowed, leaving the labor market more susceptible to any negative shock. Many participants continued to see upside risks to their inflation outlook, pointing to the possibility that elevated inflation could prove more persistent than currently expected even after the effects of this year’s tariff increases fade. A few participants remarked on the risk that trade tensions could disrupt global supply chains and weigh on overall economic activity. Many participants observed that the divergence between solid economic growth and weak job creation created a particularly challenging environment for policy decisions, requiring careful monitoring of incoming data to distinguish between cyclical weakness and structural changes in the relationship between output and employment.
In their consideration of monetary policy at this meeting, participants noted that inflation had moved up since earlier in the year and remained somewhat elevated. Participants further noted that available indicators suggested that economic activity had been expanding at a moderate pace. They observed that job gains had slowed this year and that the unemployment rate had edged up but remained low through August.
Those who preferred to keep the target range for the federal funds rate unchanged at this meeting expressed concern that progress toward the Committee’s inflation objective had stalled this year, as inflation readings increased, or that more confidence was needed that inflation was on a course toward the Committee’s 2 percent objective, while also noting that longer-term inflation expectations could rise should inflation not return to 2 percent in a timely manner. One participant [Trump’s new appointment] agreed with the need to move toward a more neutral monetary policy stance but preferred a 1/2 percentage point reduction at this meeting.
In discussing risk-management considerations that could bear on the outlook for monetary policy, participants generally judged that upside risks to inflation remained elevated and that downside risks to employment were elevated and had increased since the first half of the year.
Most participants noted that, against a backdrop of elevated inflation readings and a very gradual cooling of labor market conditions, further policy rate reductions could add to the risk of higher inflation becoming entrenched or could be misinterpreted as implying a lack of policymaker commitment to the 2 percent inflation objective. Participants judged that a careful balancing of risks was required and agreed on the importance of well-anchored longer-term inflation expectations in achieving the Committee’s dual-mandate objectives.
Mish Comments on Participants’ Views
I certainly agree on downside risk to the labor market. I agree so much so that I would no longer call it a “risk” but rather something that has already started.
I expected this to be obvious by the December 10 meeting, pending BLS jobs reports that reasonably make sense, in alignment with recent ADP and Revelio reports.
However, moments ago the BLS made these announcements.
- BLS will not publish an October 2025 Employment Situation news release.
- Establishment survey data from the Current Employment Statistics survey for October 2025 will be published with the November 2025 data.
- Household survey data from the Current Population Survey could not be collected for the October 2025 reference period due to a lapse in appropriations. The household survey data is not able to be retroactively collected. The collection period for November 2025 data will be extended for both surveys, and extra processing time will be added.
I expected only the Household Survey would be cancelled. This means the Fed will be without both employment and CPI data for the meeting.
Regarding inflation, it is reasonable for the Fed to be concerned. Trump’s policies could easily cause stagflation. But if so, I expect it would be short-lived.
Expect a Big Political Debate
The Fed is going to be accused of partisan politics. And the lack of data will let the Fed do what it wants.
Yet, a significant percentage of people believe the Fed should only pay attention to inflation.
And I am of the position there should not be a Fed at all. But I also have the caveat that an independent Fed is better than a partisan Fed run for political purposes, regardless of which party is in power.
I don’t want to debate “independent”. I simply want to stress that a partisan Fed is the worst outcome. The best outcome would be rates set by a free market, not politicians, and also not alleged wizards with a proven track record of not knowing what the hell they are doing.
The Labor Market Recap
- ADP: On November 6 I noted Private Employers Added 42,000 Jobs in October, First Increase Since July
- Revelio: On November 7, I noted Revelio’s Realistic Assessment of the US Labor Market and Jobs – Sinking Fast
- Challenger & Gray Layoffs: On November 6, I noted Cost Cutting Hits Jobs. October Layoffs Surge to Highest Level in 20 Years
- Richmond Fed: On November 6 I noted Richmond Fed Survey Shows Small Businesses Impacted More by Tariffs
ADP Pulse
Onn November 14, I noted ADP Pulse of Net Private Job Creation Drops to Negative 11,250 Per Week
How fast is the economy shedding jobs?
My assessment is fast. Especially small businesses that I believe are under-sampled.
Importantly, consider the pulse of -11,250 (-45,000) as a revised estimate of ADP’s +42,000 for October.
The Fed could have taken this into consideration. But it’s clear that they didn’t.
And this will have Trump howling in conflicting directions about the “best ever” economy and “no inflation” while slashing tariffs to combat the inflation he caused, while denying he caused inflation.
Finally, on the small-business picture, please read How Trump’s Liberation Day Tariffs Work in Practice.
I discuss one example, an anecdote of how tariffs put a sawmill out of production.
Here’s a comment by the sawmill owner. ”I don’t have a problem that there’s a different technology that is better than what we have. Or that makes us obsolete. I don’t have a problem with that. I have a problem with the government policy making us obsolete.”
Bloomberg made comments supporting what I have been saying all year.
Bloomberg’s Comments
- But the story of tariffs through history has always been that they lead to retaliation and unintended consequences.
- Since April, Trump’s tariffs have shocked supply chains, and raised prices of both imported and domestic goods. While President Trump has promised a “manufacturing renaissance”, between April and August the US actually lost 42,000 manufacturing jobs.
- Not all of that economic damage – if you talk to economists, people in business, small business people – is gonna be fixed immediately. There is no easy solution to repair that.
- The last board at Mackeys Ferry Sawmill came off the production line on September 29. Wilson and Stephen laid off 50 people, some of whom had worked for the mill for decades.
- This is not just a story about a sawmill in North Carolina and a little crossroads of a place. This is a story about what’s going on in a lot of rural America right now.
- I write about economics. Economics is data. It’s aggregate data. And we often lose sight of the fact that, that economics is people.
Well, I write about the economy, and people. And I make assessments and predictions. Not all of them are right. But this one has been.
Please read please read How Trump’s Liberation Day Tariffs Work in Practice and multiply that across rural America.
Thank you for your attention.
For Mish, on a different topic that he sometimes writes about, fiscal fragility, bank failure risk, which he has blamed (in part) on reserve banking. What exactly is “saving”?
11-19-2025
Banks conceal the real crisis and few are noticing
https://www.msn.com/en-us/money/personalfinance/banks-conceal-the-real-crisis-and-few-are-noticing/ar-AA1QLuGq?ocid=msedgntp&pc=U531&cvid=691f2d715a464ecdab743917d88d1b19&ei=63
“Global finance is flashing warning signs that do not show up in the glossy earnings decks and upbeat conference calls. Banks are quietly absorbing losses, stretching accounting rules, and leaning on central banks in ways that keep markets calm while masking how fragile parts of the system have become. I see a widening gap between the official story of “contained risks” and the hard numbers on unrealized losses, deposit flight, and shadow lending that point to a deeper, slow‑burn crisis.”
— Silicon Valley Bank is a template for one sort of financial risk in the system.
“When interest rates jumped at the fastest pace in decades, the market value of long‑dated government and mortgage bonds plunged, saddling banks with large unrealized losses that do not fully hit regulatory capital as long as those assets are not sold. That accounting treatment lets institutions present a picture of stability even when the economic value of their capital has eroded sharply, a dynamic that became obvious when regional lenders with big bond portfolios suddenly looked insolvent once depositors started to run.
[Wrong verb = ‘run’. At first Silicon Valley Bank’s problem was depositors withdrawing money to meet their own liquidity needs, not because of any realization that SVB was at risk.]
Regulators have acknowledged that rate shocks inflicted significant paper losses on banks’ securities books, and detailed disclosures show how quickly those losses can become real when funding conditions tighten. In several cases, institutions that had reported solid capital ratios were forced into emergency sales or shotgun mergers after they had to liquidate “held to maturity” assets at steep discounts, crystallizing the gap between book value and market value. Analysts tracking these portfolios have highlighted that the same structure of long‑duration assets funded by flight‑prone deposits still exists across a wide swath of the sector, even if the immediate panic has faded, which means the underlying interest‑rate risk has not disappeared so much as been deferred into the future.”
—————–
Economist Murray Rothbard wrote that if you might need your savings at any instant then conceptually your saving should be kept in a safety deposit box or equivalent, and not lent out.
Others have said that maturities need to be matched up. Banks borrowing from depositors short term and lending to homebuyers very long term is a bad concept.
and yet again the FED is WRONG
The peak in long-term money flows, the volume and velocity of money, is this November. Inflation should fall from this point forward.
Great Report Mish.
Now I can skip all the other crap that is out there about what the Fed could, should or might do.
The unemployment numbers out this morning do not give the fed reason to cut rates.
https://www.cnbc.com/2025/11/20/jobs-report-september-2025.html
Trump could have the IDF bomb the FOMC.
those nit wits still cannot beat hamas. israel is our little weak bitch in our sea of oil. i really feel sorry for israelis. those poor useful idiots for pax dumbfuckistan.
That’s what you got from that article?
You have JDS.
Trump is in your head. Do you wake up everyday and wonder how you can include Trump in some ridiculous thing you can say ?
Let’s check some facts. In late 2007, inflation was accelerating just like it has been recently. The Fed also started to cut rates in September, while the unemployment claims went from 302K to 352K from late September to late November. Also in 2007, the unemployment claims had already started to run much higher than they are nowadays. The last unemployment claim data FRED shows is 9/20 which claims having plummeted from 264K to 218K @ 9/20.
So with all that being said, again I say it possible that the Fed is playing politics. They are using the Dem shutdown to call into question the need for rates reductions due to a lack of data. Is this being done to hurt Trump?
The Fed GDPNow forecast has leapt up to 4.2% for Q3, and the incredible thing is the net exports continue to widen to the positive. When you go back and look at Q2 & 3 2024, you clearly see net exports as being negative as you’d expect as the US continued to run trade deficits.
So have the Trump tariffs made such an impact that we may be on the cusp of seeing continued if not permanent positive net exports, meaning robust GSP.
I think the Feral Reverse is throwing banks a life line. Mish has posted many articles recently showing delinquencies and defaults bottomed 2-3 years ago. Given persistent inflation above targets, the correct action would be to hold rates until inflation came down, or raise rates above inflation as former Fed President Volker did. Even though raising rates lead to a recession, it ushered 40 years of disinflation and technological advances. So Powell knows what has worked and must be fighting a fire he doesn’t want anyone to see.
They dont want inflation to go down,because it kills the debt.
I don’t know about the lifeline part, but if the Fed earnestly believes there’s no looming shift to the downside in employment, then yes I agree holding the line makes sense, especially with 4.2% inflation.
I have my doubts though. The 1st time claims just came in @ 220K which is still quite low, but unemployment crept up to 4.4%. When it reaches 4.5%, I think the fed will cut again. Again, GDP can accelerate as unemployment picks up.
agreed. New or not so new type of QE
“ Is this being done to hurt Trump?”
Trump is doing a great job of hurting Trump all on his own but if the theory here is that the Fed is all powerful and capable of bringing down presidents then we need to change our entire electorate system and eliminate the executive branch and instead have national elections to vote for the Fed chief as the head of government.
when will I get my $2000 check??
Just before midterms.Sorry you have to wait!
My perspective is that as long as the AI bubble continues to get injections of hot air (like NVDA’s earnings) the appreciation of the stock market will keep people spending ~ based on their healthy portfolios. The wealth effect is alive and well heading in to the Christmas buying season.
The Fed needs to keep its powder dry for when the AI bubble bursts IMO.
NVDA projected 1/2 trillion of booked sales over the next few years.
/sarc The good thing is that all the trillions of projected AI spending will increase productivity and conquer inflation.
Nvidia CEO Jensen Huang has predicted that between $3 trillion and $4 trillion will be spent over the next 5 years on AI buildout. 65% Of The World’s GDP’ or ‘$50 Trillion’ Will Be ‘Augmented’ By AI Just Like How ‘Motors Replaced Labor’
Me: Why are we worrying about inflation. LOL Every company is going to be way more productive, and everything will drop in price dramatically….right?
But people wont have jobs to buy the goods to pay the taxes.
No problem,as long a s the markets keep growing!
I suspect my electric bill that has doubled over the last few years will double again if that happens. Food prices will also increase because they are destroying farmland to build data centers. Government debt at 120% of gdp who is going to pay for AI to make a profit.
I wish I had saved the link but I read somewhere that AI chips and data centers will start hitting hard limits on electricity usage in about two years. There isn’t enough electricity for all the planned data centers and if it’s not built (electricity capacity), electric rates will shoot to the moon.
There may be abandoned data centers the same way we’re going to have abandoned office buildings all over the place.
Once again, all of this is metastasizing around the 2028 to 2030 mark.
Yeah i agree i think there are a bunch of boomers with 401 ks spending their children future.
Tis is the only matter.And protect the big banks too,they are the FED’s shareholders.
Have you seen the rest of the market? GDP is boosted Estimated 4% on AI alone tge real gdp is 0.1%
The bond market vigilantes are starting to get noticed. Both the 20 and 50 day moving averages on the 10 and 30 year US bond yield charts are rising. The 30 year US bond yield is about to rise above the 200 day moving average. What probably scares the Feral Reverse is the after 4-5 interest rate actions, yields on the 30 year US bond are still at the top of the range of the past 2 years of consolidation, and looking to head even higher.
Should we also be concerned with the spike higher in japanese rates? I would think so and the stock market seems to be ignoring that,for now.
What do you think?
Let’s not forget financial asset inflation is out of control
Home insurance up from $1200 to $1970. Property taxes up from $4300 to $6000. I am 76 years old. Fortunately, I am still working but health concerns will soon end that. I experienced the inflation of the post Tricky Dick era and just got out of the USMC during the Vietnam War where I saved all of my money. When I got out, I could not afford a new car with the inflation of prices. I drove a 1960 VW for a very long time. My grand children feel that they are absolutely screwed. This time, inflation will result in outright rebellion or the ushering in of either a communistic or socialistic system. Neither is good. I am a free trade capitalist, the young ones are calling for it’s end. God help them. They do not listen to this old man.
This is exactly what I’ve been saying for years. Based on the way the system has been structured the most likely outcome will be socialism. People will trade their civil rights for more government handouts, expecially when they need to support a family. I hear more and more people talking about socialism as positive. Now we see the public electing overt socialistic leaders. This will soon be the norm in the US. The next financial crisis feels close and socialism will again be accellerated as government takes an even greater role in everyone’s life. I work for the government and believe strongly that almost everything the government touches turns to crap.
Well guess if capitalism was working for the masses there would not be an issue
US capitalism is working only for the billionaires’ crooks…
That may happen…unless we integrate Monetary Gfting into the Debt Only present paradigm with a 50% Discount/Rebate at retail sale which will end inflation by transforming it into beneficial deflation. It will also end socialism’s major flawed tool of RE-distributive taxation because the money will be DIRECTLY distributed. By doubling everyone’s purchasing power this policy will re-juvenate profit making economic systems. These are all things conservatives and libertarians want, but will never get until the new monetary paradigm is recognizedas the key problem to be resolved.
If NVDA earnings had been bad today, the market would have cratered and the Fed could have easily cut but now the inflation threat and market bubble can continue.
The Fed’s in a tough spot and with no data so not sure how they proceed but should probably default to no cuts until next FOMC in January, IMHO.
Jensen said GPUs are sold out. So why was he always making a push to remove the China ban on selling them GPUs? He has nothing to sell them.
Or was it just to drive up prices on the available product he could sell?
Nvda results are ALWAYS good!How can you doubt about them?
FED wants inflation to burn the debt.
They will cut rates!To much leveraging in the markets,these borrowers need some help to breathe.
Mish, you have been all over the “Tariff” BS for years! Great job keeping us posted , really appreciate your work!