At the central bank conference in Jackson Hole on Friday, Federal Reserve Chair Jerome Powell warned that a new set of policy-driven shocks is reshaping the U.S. outlook, underscoring how “significantly higher tariffs” are remaking global trade while tighter immigration policy has produced an “abrupt slowdown in labor force growth.” He added that forthcoming changes in tax, spending, and regulatory policies could carry lasting consequences for productivity and growth, and that there is “significant uncertainty” about where those policies will land and how they will affect the economy.
Powell framed the challenge as partly structural rather than cyclical: changes in trade and immigration, he said, are moving both demand and supply, making it harder to separate temporary swings from trend shifts — an assessment that matters because monetary policy is well-suited to smoothing cycles, but “can do little to alter structural changes.”
