Richard Clarida on US Economy, Inflation, and Potential Fed Chair Picks

US Economy and Inflation Outlook

• 💡 The US economy is currently in a good and resilient place, with growth projected to exceed 2% in 2025.
• 📈 Inflation has been flat and not significantly impacted by tariffs, with strong capital spending in the tech sector and fiscal impulse from the "big beautiful bill" in 2026.
• ⚠️ Despite positive aggregate indicators, anecdotal evidence from companies suggests uncertainty, caution, and low consumer confidence, indicating an uneven economic story.

Federal Reserve Leadership and Candidates

• 🎯 President Trump has reportedly finished interviewing candidates for the next Fed chair, with Kevin Hassett possibly staying as NEC director.
• 🔑 Remaining frontrunners include Chris Waller (strong macroeconomist, forecaster, communicator), Kevin Warsh (institutional reform, balance sheet insights), and Rick Rieder (respected investor, bond market connectivity).
• 📊 The bond market is largely indifferent to these potential picks, with surprises being a potential appointment of Scott Austan or Hassett, though both are reportedly staying in other roles.

Supreme Court Hearing and Fed Independence

• ⚖️ Justices appeared skeptical of the White House's argument to remove Fed Governor Lisa Cook, suggesting a high likelihood she will remain in her role.
• 🏛️ Legal scholars anticipate a narrow ruling that prevents Cook's removal, potentially sending the case back to lower courts.
• ✅ Confidence in Federal Reserve independence remains high, supported by Congress's intent and the financial markets' reliance on the Fed's inflation credibility.

Fed Chair's Response to Subpoenas

• 🎤 J. Powell is expected to provide a crisp and brief answer to questions about DOJ subpoenas during post-decision Q&A, likely sticking to his previous statements and moving on quickly.