This podcast episode discusses the substantial changes to the U.S. economic outlook and rates outlook for the rest of the year, driven by new immigration data. The increased immigration has led to faster population and labor force growth, resulting in more labor market slack and slower wage growth. The Federal Reserve has revised its economic outlook, with a higher break-even level for payrolls, indicating a less tight labor market. Despite recent inflation surprises, the Fed expects inflation to eventually reach its target. The podcast also explores the Fed's rate cut forecast, potential scenarios, and the impact of immigration on interest rates. It highlights the disconnect between the optics of strong economic data and the true impact of the immigration story, which is not well understood by investors.
