The Line: The Fed Leaves Rates Alone

This week, we have the latest from the Fed and tell you why Americans shouldn’t be so pessimistic about the economy.

The Fed Leaves Rates Alone

The Federal Reserve made no change to the federal funds rate at their meeting this week, a move that surprised nobody, even Gomer Pyle. The Fed summed up their thinking this way:

“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”

Translation: The economy is OK even though hiring is weak, and since inflation is above our target we’re going to leave rates alone for a while.

I don’t know about you, but my question is if they know they’re not touching rates why don’t they just release a one-sentence statement and call it a day?

Markets expect the next rate cut to come in June, but the Fed will always be guided by the most recent data. We will get a better look at their expectations after their next meeting in March, when they release their economic projections. 

Consumer Confidence Fell to its Lowest Level Since 2014

Now that’s a scary headline. The Conference Board said its consumer confidence index fell 9.7 points in January to 84.5, a level lower than during the pandemic.

I get that there will always be pessimists out there, but it’s hard to believe that people think the current and future economic environments are worse than during Covid. Why do I say that? Here are some facts about the US economy:

The unemployment rate is 4.4%. If you look at data from 1948 to present, theaverage unemployment rate has been 5.7%, or 1.3% higher than it is now.

Initial claims for unemployment were 209,000 in the week ending January 24. Theaverage going back to 1967 is 360,759.

Wages are up 3.8% over the past year, while prices have risen just 2.7%.

The US economy grew at a 4.4% annual rate in 3Q25, compared to a 3.2% annual growth rate going back to 1947.

The latest GDPNow estimate for economic growth in the fourth quarter of 2025 is 4.2%.

My point is that even though hiring has virtually stopped and there are many things to worry about, there isn’t any hard data that says we have a worse economy than at any point in the past 14 years.

Watch the Latest Episode of Greg Heym’s Crossing the Line: Why Are Americans So Down on Economy?