The Federal Reserve may be dragging its feet, but economist Sean Snaith says the numbers tell a different story: it’s time to cut rates.
“Inflation nudged up in August, but wholesale prices are cooling and the downward labor market revisions have opened the door to rate cuts,” says Snaith, director of the UCF’s Institute for Economic Forecasting. “The Fed was too slow to tackle inflation after the pandemic and then cut too soon a year ago. Let’s see if they can finally get it right.”
Snaith has long criticized the Federal Reserve’s pandemic-era playbook. But he says today’s backdrop, including softer wholesale prices and evidence that payroll growth was overstated, strengthens the case to begin a new phase of interest rate cuts.
“The Fed is independent, not infallible,” Snaith says. “This week’s decision is a chance to prove it’s paying attention.”
Alongside his critique, Snaith released his latest U.S. forecast, a four-year outlook for the national economy. Highlights include:
- Growth slows: GDP slips from 2.8% in 2024 to 1.8% in 2025, before rebounding to 2.6% in 2026 and easing again to 1.6% by 2028.
- Jobs steady: Unemployment holds near 4.3% through 2028 — consistent with full employment.
- Spending cools: Consumption growth eases from 2.8% in 2024 to about 2% over the next several years.
- Budgets mending: Wages are finally outpacing inflation, helping households repair strained budgets, even as they wrestle with more than $1.1 trillion in credit-card debt.
