The Federal Reserve is facing renewed calls to cut interest rates as new economic data suggests a shift in the national outlook. Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting, argues that recent trends point toward the need for rate reductions.
“Inflation nudged up in August, but wholesale prices are cooling and the downward labor market revisions have opened the door to rate cuts,” Snaith said. “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 previously criticized how the Federal Reserve responded during and after the pandemic. He now says that current indicators—including softer wholesale prices and signs that payroll growth was previously overestimated—support starting a new cycle of interest rate cuts.
“The Fed is independent, not infallible,” Snaith added. “This week’s decision is a chance to prove it’s paying attention.”
Snaith released his latest four-year forecast for the U.S. economy alongside his remarks. The report projects gross domestic product (GDP) growth slowing 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. Unemployment is expected to remain steady near 4.3% through 2028, which Snaith describes as consistent with full employment.
Consumer spending growth is projected to ease from 2.8% in 2024 to about 2% over the next several years, while wages are expected to outpace inflation, allowing households some relief even as they contend with over $1 trillion in credit card debt.
