Guiding Inflation Back to 2%(Without Breaking the Job Market)

A data-driven path to 2% that cools prices—without freezing opportunity.

Fed Insight: Launch Edition — October 7, 2025

Executive Summary

The Federal Reserve faces a historic data blackout as government shutdowns suspend the release of key labor and inflation indicators. This briefing outlines how the Fed can maintain policy credibility and transparency by leveraging AI-driven nowcasting and adopting a plain-English Inflation Scorecard. Together, these tools can help sustain the path toward the 2% inflation target, support informed decision-making, and reinforce public trust during an era of uncertainty.

Context

With the Bureau of Labor Statistics offline due to the government shutdown, the Federal Reserve is navigating without its usual data compass. Private-sector estimates (Moody’s, ADP, Glassdoor) suggest a weakening job market, particularly among smaller firms, while inflation expectations remain cautiously stable. As policymakers approach the late-October FOMC, the central challenge is visibility: how to steer toward 2% inflation without official, timely reads on employment and prices.

Policy Briefing (≈2 minutes)

This is a visibility problem more than a credibility problem. When traditional indicators go dark, the Fed can mitigate uncertainty by integrating high-frequency private data—payrolls, card spending, online prices, and rent panels—into an AI-driven nowcasting framework. A transparent ensemble (e.g., regularized regressions and state-space filters) can produce weekly estimates of headline/core inflation, supercore services, shelter, and wage momentum—with uncertainty bandsand revision tracking. Clarity must accompany measurement. A plain-English Inflation Scorecard—one page, updated regularly—can display shelter, supercore services, and goods alongside a 2% target line, with short notes on “what moved.” This helps anchor expectations, reduces misinterpretation of Fed communication, and supports stable market functioning during data disruptions. In combination with steady QT implementation and well-telegraphed guardrails, these steps maintain progress toward 2% without amplifying labor-market stress.

Match Score: Conceptual Alignment vs Implementation

“In periods of data blackout, the Fed’s most powerful tool is not speed, but clarity.”

Illustrative Inflation Scorecard (example)

Illustrative Example — Not Based on Official Data. This sample Inflation Scorecard shows how the Federal Reserve could present core inflation components in plain English, helping the public see how shelter, services, goods, energy, and food track against the 2% target.

About Fed Insight

Fed Insight is a WEEKLY analytical brief by the Voice for Change Foundation, leveraging artificial intelligence to monitor and evaluate the Federal Reserve’s progress toward achieving 2% inflation and ensuring transparency and accountability in monetary policy.For full context and detailed policy framework, visit:

www.voiceforchangefoundation.org/guiding-inflation-back-to-2-percent

Download the brief here.

Fed Insight: Weekly Brief — October 9, 2025

Executive Summary

The Federal Reserve enters its second week of limited data visibility amid a continuing government shutdown and a growing internal debate over the pace of rate cuts. This week’s brief highlights incremental alignment with the Foundation’s roadmap—mainly through new Fed research on artificial intelligence’s macroeconomic implications and continued caution among policymakers concerned about labor market resilience.

New Signals and Events

• Inflation Data Workaround: The Bureau of Labor Statistics is recalling limited staff to release the next CPI report, partially restoring data visibility. (Reuters, Oct 9)

• Governor Waller on AI and Payments: Waller emphasized AI’s role in compliance and risk management, signaling the Fed’s growing research interest in AI within financial systems. (Fed.gov, Sept 29 Speech)

• Williams Signals Further Cuts: New York Fed President John Williams supports rate reductions to offset labor-market weakness while maintaining policy credibility. (Reuters, Oct 9)

• Barr and Schmid Urge Caution: Governor Barr and Kansas City Fed President Schmid caution that inflation remains 'too high,' supporting a pause in further easing. (Reuters, Oct 6–9)

• FEDS Note on AI Competition: New research benchmarks AI infrastructure and macro competitiveness, reflecting growing awareness of AI’s global economic impact. (Fed.gov, Oct 6)

• Vice Chair Jefferson on Market Speed: Jefferson warned that AI-driven trading accelerates market reactions to Fed communication, increasing interpretive risk. (Bloomberg, Oct 8)

Policy Brief (≈2 minutes)

The Federal Reserve’s primary challenge remains visibility rather than credibility. With official data still inconsistent, policymakers must rely on private-sector indicators to gauge inflation and labor trends. The Foundation’s roadmap—anchored in AI-driven nowcasting, a plain-English Inflation Scorecard, and communication clarity through NLP testing—offers a framework for accountability during data disruptions. Recent developments show conceptual progress toward these goals, but operational adoption remains minimal.

Alignment Scorecard vs Voice for Change Roadmap

Weighted Average Alignment Score: ≈ 21 % (▲ +3 pts vs Launch Edition)

“Incremental alignment progress observed: the Fed is opening research windows into AI and macro policy,

yet still lacks real-time transparency tools.”

Illustrative Inflation Scorecard (Example)

Illustrative Example — Not Based on Official Data

Interpretation

The Fed’s activity around AI remains exploratory, with initiatives largely confined to research on market effects, compliance, and payments. There are early signs of awareness regarding communication risk in AI-driven markets, but no tangible application toward policy analytics or public-facing transparency tools. Labor-market protection remains a dominant concern, showing modest alignment with the roadmap’s employment-stability principle.

Next Outlook (What to Watch Through Oct 14)

• FOMC Member Speeches: Monitor tone shifts in response to private data reliance.

• Partial CPI Release (Oct 10–11): The first official inflation data since the shutdown; likely to set near-term expectations.

• Payments Innovation Conference (Oct 21): Potential forum for new commentary on AI or transparency tools.

• Private Data Expansion: Watch continued adoption of private-sector nowcasting sources (Moody’s, ADP, Glassdoor) as interim indicators.

Summary Statement

“Incremental progress continues. The Fed shows growing awareness of AI’s policy relevance but remains without the real-time visibility and accountability mechanisms essential to sustain credibility in its pathtoward 2 % inflation.”

About Fed Insight

Fed Insight is a weekly analytical brief by the Voice for Change Foundation, leveraging artificial intelligence to monitor and evaluate the Federal Reserve’s progress toward achieving 2 % inflation and ensuring transparency and accountability in monetary policy.

Download the brief here.

Fed Insight: Weekly Brief — October 27, 2025

Special Edition · Inflation vs. Fragility

Prepared by Kevin Bihan-Poudec | Voice for Change Foundation

Executive Summary

The U.S. economy has entered a “low-hiring, low-firing equilibrium,” as described by Goldman Sachs analysts. Immigration limits, federal workforce cuts, tariff uncertainty, and early AI adoption have slowed labor demand without fully relieving price pressures. For the Federal Reserve, the path to 2% inflation is no longer about cooling an overheated economy but managing fragility and information blind spots. AI-based nowcasting and plain-English scorecards could help distinguish between cyclical and structural forces as official data remain delayed by the shutdown.

Economic Context — Why Employers Aren’t Hiring

Source: investopedia.com (10/23/2025)
CNN Podcast: Why Job Hunting Feels Impossible Right Now (10/26/2025)

Policy Brief (~2 minutes read)

• Rate Path: Maintain the 4.00–4.25% band or cut 25 bps if job losses broaden.

• AI-Driven Nowcasting: Leverage credit-card, rental, and payroll data for weekly tracking.

• Public Inflation & Labor Scorecard: Publish simplified real-time charts for transparency.

• QT Guardrails: Suspend runoff if reserves tighten beyond “ample.”

• Labor Backstops: Work with Labor Dept. on reskilling and restore targeted immigration flows.

Alignment Scorecard vs Voice for Change Roadmap

Interpretation

• Headline inflation is easing faster than core services.

• Labor-market slack and supply constraints coexist.

• AI and immigration policies create mixed deflationary/inflationary pressures.

• Without transparent data tools, policy lags could widen and public trust erode.

Next Outlook (Through Nov 3)

• Monitor Oct 28–29 FOMC language on “data uncertainty” and “alternative sources.”

• Watch regional Fed remarks on big-data initiatives (Richmond, Dallas).

• Upcoming releases: ADP (Oct 30) · ISM Services (Oct 31).

• If BLS delays persist, AI-based nowcasting adoption probability > 50%.

Media Quote

“Inflation is no longer a fire to extinguish—it’s a mirror reflecting structural strain in America’s labor market.”

Summary Statement

The Federal Reserve’s credibility will hinge on its capacity to see clearly through foggy data. AI-assisted nowcasting and plain-language scorecards are no longer luxuries—they are visibility tools for modern monetary policy. Guiding inflation back to 2% now demands precision, clarity, and coordination.

Download the brief HERE.

Understanding the Fed’s Latest Move | AI Analysis of Chair Powell’s Remarks

What the Fed did & said (Oct 29, 2025)

• Cut the policy rate by 25 bps to 3.75%–4.00%. Rationale: softer labor market, inflation still somewhat elevated, and a shift in the balance of risks (upside to inflation, downside to employment). 

• Will end balance-sheet runoff (QT) on Dec 1 and hold the balance sheet “steady for a time,” while continuing to let agency MBS run off and reinvest MBS paydowns into T-bills (tilting the portfolio toward Treasuries, shortening duration). 

• Data backdrop: Acknowledged shutdown-related delays in official data; relied on public/private indicators suggesting the outlook hasn’t changed much since September. 

• Tariffs: Noted higher tariffs are pushing up some goods prices; base case is a one-time level effect, but persistence is a risk the Fed must manage. 

• Path ahead: December is not pre-set; further cuts are “far from” a foregone conclusion. 

Does this help the 2% path?

Mixed. The cut cushions rising employment risk (consistent with the dual mandate) but eases financial conditions at a time when goods inflation faces tariff pass-through risk. Ending QT runoff also loosens the stance at the margin (less balance-sheet tightening), though shifting reinvestments to T-bills is compositionally prudent. Net-net, it supports labor but adds a modest inflation-risk tail, making communication and near-term data surveillance critical. 

Alignment with Voice For Change roadmap

Overall alignment: 30% (conceptual, not implemented).

• AI nowcasting / alternative data: Fed acknowledges private data use during the blackout, but no explicit AI/nowcast framework or transparency. (Partial concept only.) 

• Plain-English Inflation Scorecard: No.

• QT guardrails: Ending runoff recognizes market-plumbing stress and keeps reserves “ample” (a form of guardrail), but it’s a pivot away from further QT, not a rules-based guardrail regime. 

• NLP/communications testing: Not referenced.

• Labor backstops: Monetary support via rate cut, but no policy toolkit like hiring credits/skills-first pathways.

Near-term advice

1. Pause in December unless disinflation re-accelerates. Only cut again if 3-mo annualized core PCE ≤ ~2.5% and near-term inflation expectations cool; otherwise hold to avoid re-heating goods prices amid tariffs. 

2. Stand up a public “Inflation Scorecard.” One page, weekly during the data blackout: goods (with a tariff tracker), supercore services, shelter, wages, and expectations vs 2% with short plain-English notes. (Anchors expectations without committing to a path.)

3. Formalize an “AI-assisted nowcasting” note. Publish methodology at a high level (inputs: payroll processors, card spend, rents, online prices) + confidence bands. The Fed already references private data—make it systematic and visible. 

4. Balance-sheet clarity as a guardrail. With runoff ending, state explicit money-market triggers (e.g., SRF usage or spreads vs IORB) that would prompt temporary bill reinvestments or tweaks—so the stance shift doesn’t get read as stealth easing. 

5. Labor-market resilience signal. Encourage skills-first rehiring in Fed communications (while remaining in remit): note that clearer, skills-based screening reduces mismatch and helps the transmission of policy without adding inflation pressure.

Bottom line

Today’s actions tilt toward employment risk management while keeping inflation vigilance on the table. To stay credibly on the 2% path, the Fed should hold fire in December unless disinflation is clearly resuming, and immediately upgrade transparency—with a simple Inflation Scorecard and a published alternative-data nowcast to reduce misreads while official data are constrained. 

Download Transcript of Chair Powell’s Press Conference Opening Statement Here.

Fed Insight | Special Brief — November, 1 2025

Source: Fortune.com

Policy Context: A Major Shift in Tone

• Chair Powell publicly acknowledged that net job creation is near zero even as headline unemployment looks moderate.

• He tied the hiring slowdown partly to AI-enabled efficiency—firms doing more with fewer people—while capex tied to AI/datacenters keeps output and investment resilient.

• The framing: upside risks to inflation (from AI investment + resilient demand at the top end) vs downside risks to employment (AI substitution + hiring freezes).

• Implicit message: cyclical tools are necessary but insufficient when a structural technology shock hits labor demand.

What It Means for the Fed’s Model of the Economy

• Phillips curve gets noisier: AI raises productivity while weakening hiring, loosening the historical link between activity measures and wage/price pressure.

• Okun-style relationships blur: GDP can hold up even as payroll growth stalls; “growth without jobs” becomes more plausible.

• NAIRU uncertainty widens: If AI reduces labor intensity, the unemployment rate consistent with 2% inflation may be higher than pre-AI norms—or at least more variable.

• Sectoral divergence matters more: High-capex/AI-exposed sectors can boom while routine white-collar roles stagnate; macro aggregates can mask labor stress.

Implications for Monetary Policy

• Pace of easing stays gradual: Faster cuts risk re-igniting price pressure via AI-driven investment and wealth effects; too little easing risks entrenching a “Great Freeze” in hiring.

• Data risk is elevated: With blackout/patchy data, the Fed’s usual reaction function is less reliable; measurement uncertainty becomes a key policy variable.

• Communication must do more work: Markets need clearer framing of the two-sided risk and conditional paths (“what would pause/resume cuts?”).

Strategic Recommendations (Fed Actions)

1. Operational visibility (now):

   • Stand up a real-time “AI/Labor Dashboard” internally: hires, openings, separations, hours, wage postings, listings quality, small-firm payrolls; track sector/firm-size splits.

   • Use a lightweight nowcasting ensemble (card spend, online prices, rents, job ads, shifts data) to bridge data gaps and quantify uncertainty bands.

2. Guidance discipline (near-term):

   • Tie forward guidance to observable triggers: e.g., “We will reassess the pace of cuts if supercore services runs ≥0.3% m/m for 3 months, or if 3-mo average private payrolls <0.”

   • Publish a plain-English Inflation Scorecard (shelter/services/goods vs 2% target, with one-line “what moved” notes). It anchors expectations when official data are thin.

3. Balance sheet steadiness (ongoing):

   • Keep QT guardrails explicit (funding market stress thresholds; MBS runoff glidepath). Avoid adding credit-condition shocks to a fragile hiring backdrop.

4. Labor resilience (contingent):

   • If unemployment drifts ≥4.6–4.8% with weak job-finding rates, signal support for targeted, temporary hiring credits in care, energy transition, cyber, and public safety—inflation-sparing backstops.

What the Fed Should Advocate Publicly (Beyond Monetary Policy)

• AI Transition Standards: Encourage Congress to set minimum transition practices (human-review rights on algorithmic rejections; transparency on reason codes; bias audits).

• Reskilling at scale: Support federal/state matching grants for employer upskilling on AI tools; prioritize displaced mid-career workers and recent grads in AI-exposed roles.

• Responsible automation pacing: Promote phased adoption norms in critical services (finance, healthcare, utilities) to avoid abrupt labor shocks.

• Data access for public-good measurement: Endorse privacy-preserving partnerships that allow aggregate, anonymized high-frequency data to inform public policy during data outages.

Summary Recap (Key Takeaways)

• Powell acknowledges job creation has stalled, yet the Fed is easing gradually.

• The dual mandate is harder: AI lifts output but suppresses hiring, producing upside inflation risk and downside employment risk at the same time.

• Cut too fast: risk reigniting inflation via AI-investment and wealth effects. Hold too tight: risk deepening the labor freeze and long-term scarring.

• Solution set must go beyond rates: real-time measurement (nowcasting), plain-English scorecards, careful QT guardrails, and labor backstops; plus public advocacy for fair AI hiring and mass reskilling.

• Bottom line: Powell isn’t ignoring the problem—he’s signaling a structural shift that requires new frameworks, not just new rates.

Fed at a Crossroads: Stephen Miran’s Warning and the Case for an AI-Assisted Policy Framework — November, 2 2025

Source: NYtimes.com

Summary

• Miran is pushing a much more aggressive easing stance than his colleagues. He argues that current policy is “very restrictive” given structural changes (immigration, tariffs, regulation) that have likely reduced the neutral real interest rate.

• His warning that maintaining high rates “runs the risk that monetary policy itself is inducing a recession” highlights that the employment side of the Fed’s dual mandate is becoming more urgent in his view.

• The divergence between Miran’s view and the majority of Fed officials underscores internal policy conflict: some see inflation as requiring caution; others emphasize labor risk and structural headwinds to hiring.

• Because he has publicly argued the neutral rate is “2 points lower” than current policy implies, his position suggests the Fed may be behind the curve in adjusting to structural shifts.

Why This Matters

• Structural vs Cyclical: Miran’s argument is premised on structural change in the economy (lower labor force growth, automation, regulatory/tariff shifts) altering the policy equilibrium, not merely a cyclical downturn. This echoes our discussion about AI-led labor disruption.

• Employment Risks Elevated: If job creation is nearly stalled while productivity/computation growth accelerates (as we’ve also noted), then the risk of a “labor crisis” becomes more acute. Miran is warning that the Fed may be underestimating this side.

• Inflation vs Employment Tension: Miran is effectively saying: the risk of rate cuts generating inflation is lower than the risk of high rates generating unemployment or recession — a tilt toward the employment side of the mandate.

• Policy Signaling Shift: If more Fed officials adopt Miran’s view, it could shift expectation of faster, larger cuts — but that shift would carry inflation risks, especially given the backdrop of AI investment and supply-side pressures.

Implications for the Fed and My Framework

• This development reinforces the idea that the Fed’s visibility gap (data blackout + structural change) complicates policy. Miran’s stance amplifies the employment risk side of that gap.

• In the context of AI-impacted labor markets, his warning adds weight to the proposition that monetary policy alone cannot manage an AI-driven labor shock. The Fed might indeed need to act more aggressively — but that must be paired with deeper tools (which align with my proposed nowcasting/scorecard/reskilling framework).

• The tension between inflation and employment becomes even sharper: if the Fed moves faster to cut rates, it must simultaneously monitor inflation pressure from AI capex, productivity gains, and wealth effects — exactly the kind of dual-risk scenario my framework addresses.

Strategic Suggestions (based on this signal)

Given Miran’s position and the broader context, here are some suggestions the Fed could consider building and communicating:

• Scenario planning: Develop internal scenarios for “AI-driven labor stall + moderate inflation” vs “normal labor growth + inflation overshoot” — tailor the policy path accordingly.

• Enhance labor-market monitoring: Use enhanced data (AI nowcasting, job-ad analytics, hiring freezes) to detect structural hiring shifts more rapidly — since Miran’s concerns rest on a faster deterioration than the traditional data can show.

• Be proactive on communications: If the Fed may move faster on cuts, explain the conditionality clearly: what labor metrics will trigger cuts, what inflation metrics will pause them. This helps maintain credibility amid structural change.

• Coordinate with fiscal/regulatory policy: Since Miran emphasizes risk to employment, the Fed should publicly call for complementary policies (training, hiring incentives, algorithmic transparency) to avoid falling into a labor trap — consistent with the framework I’ve been advocating.

• Reevaluate neutral rate assumptions: If structural changes (automation, immigration, demographics) are lowering the neutral real rate, the Fed should communicate explicitly how this influences their policy path — thereby aligning expectations and reducing confusion.

Final Take

Governor Miran’s warning is a significant signal: even at the Fed, there is growing concern that labor market fragility is more than a cyclical slowdown. His stance underscores that without stronger employment recovery tools, the Fed could risk causing a recession by waiting too long.

this supports the key messages I’ve been making: the labor-market impact of AI matters deeply for monetary policy; the Fed’s traditional toolkit is under strain; and the need for enhanced measurement, transparency, and labour-market safety nets is becoming urgent.

Policy Context — A Divided Board Faces a Structural Shock

Federal Reserve Governor Stephen I. Miran’s blunt warning that the Fed could “induce a recession” if it keeps policy tight for too long marks a rare public break inside the Board of Governors.

His call for a half-point rate cut at the December meeting—twice the size of the most recent move—frames a deeper dispute: how to manage monetary policy when inflation is edging lower but job creation has stalled.

Miran’s stance reflects a growing view that the economy is not overheating but structurally cooling from within.

Automation, tariffs, and immigration limits have slowed labor-force growth, while AI-driven productivity allows companies to expand output without hiring.

In that world, traditional models linking inflation, growth, and unemployment start to fray—and the danger of over-tightening becomes real.

Why Miran’s Warning Matters

1. The labor market is no longer cyclical.
   The Fed’s standard playbook assumes hiring rebounds as rates fall. But if AI is enabling firms to “do more with fewer people,” the feedback loop between policy easing and job growth weakens.

2. Neutral-rate uncertainty is rising.
   Miran argues the neutral real interest rate—the level consistent with stable growth and inflation—has drifted lower.
   If true, today’s policy stance is tighter than the data suggest, raising recession risk even with inflation near 3 percent.

3. Internal dissent signals policy fatigue.
   The 10-2 vote at the last FOMC meeting and public disagreements between Miran and Chair Powell show a central bank grappling with forces outside its historical domain: technological disruption and structural labor change.

What It Means for the Fed’s Model of the Economy

The Fed’s core relationships—Phillips curve, Okun’s law, and NAIRU—are being tested.

AI adoption breaks the assumption that rising output automatically lifts employment.

Productivity shocks now reduce labor demand even as they boost GDP, leaving the Fed with mixed signals: solid growth, soft hiring, and still-elevated prices.

As a result, policy calibration has become guesswork.

The Fed is steering through fog—its traditional indicators lag reality, and its models may understate how automation shifts the supply–demand balance for labor.

Implications for Monetary Policy

• Gradualism vs decisiveness:
  Powell’s quarter-point steps aim to preserve credibility. Miran sees that pace as dangerously slow. The divide captures a core dilemma—move too fast and reignite inflation, too slow and entrench unemployment.

• Data fragility:
  With partial shutdowns disrupting federal statistics, the Fed’s dependence on lagging indicators is risky. Missing or delayed labor data leave policymakers “flying blind” just as AI accelerates real-time changes in hiring.

• Communication pressure:
  When the models break, the message matters more. Clear, plain-English framing of the dual-mandate trade-offs can prevent markets from misreading policy hesitation as confusion.

Strategic Recommendations — Beyond Rate Cuts

1. Build real-time analytical visibility.
   The Fed should launch an internal AI-assisted nowcasting hub that integrates high-frequency signals—payroll processor data, job-posting flows, online-price trackers, small-firm credit usage—to estimate employment and inflation weekly.
   Visibility, not velocity, is the missing policy instrument.

2. Introduce public transparency tools.
   A Plain-English Inflation Scorecard—tracking shelter, services, and goods components against the 2 percent target—would restore trust during periods of data blackout.
   Simple visual dashboards can bridge the gap between Wall Street analytics and Main Street understanding.

3. Clarify quantitative-tightening guardrails.
   Explicit thresholds for halting balance-sheet runoff would keep funding markets stable and avoid compounding labor weakness with liquidity stress.

4. Partner on labor resilience.
   Monetary policy cannot reverse automation.
   The Fed should advocate congressional support for reskilling credits, AI-transition audits, and algorithmic-transparency standards to ensure displaced workers can re-enter the labor market.

A Call for Inter-Institutional Coordination

Miran’s comments reveal a broader truth: the Fed alone cannot counter an AI-induced labor shock.

It must push publicly for collaboration with fiscal and regulatory bodies—encouraging policies that mitigate displacement without stoking inflation.

Examples include:

• Federal and state AI-workforce transition funds;

• Incentives for firms that retain and retrain rather than replace staff;

• National standards for ethical AI deployment in hiring and HR analytics.

Such coordination would let monetary policy focus on stabilization while other agencies manage structural change.

Strategic Outlook

The near-term path likely stays divided: Powell and moderates favor gradual easing, Miran and supply-side voices call for urgency.

Yet both camps are reacting to the same phenomenon—the erosion of traditional signals by technology.

The next phase of monetary strategy will depend less on rate increments and more on data integrity, transparency, and adaptive modeling.

If inflation continues gliding toward 2 percent but hiring stagnates, the Fed will face pressure to institutionalize AI-era policy tools.

Doing so could redefine central banking for the digital century.

Summary Recap

• Job creation has effectively flatlined, even as output expands.

• The Fed’s dual mandate is being tested by AI-driven productivity without employment growth.

• Governor Miran warns that waiting too long risks a policy-induced recession.

• Rate cuts alone can’t resolve structural dislocation; the Fed needs real-time measurement, transparency, and coordination.

• The Voice for Change Framework—combining AI nowcasting, public scorecards, and labor backstops—offers a practical roadmap for that transition.