Moody's Talks - Inside Economics Claudia Sahm on the Muddling Economy
Oct 24, 2025
Claudia Sahm, Chief Economist at New Century Advisors and former Federal Reserve economist, joins Matt Colyar, Assistant Director at Moody's Analytics, for an insightful discussion on the current economic landscape. They analyze the recent Consumer Price Index data and its impact on inflation, labor markets, and stock valuations. Claudia highlights risks such as the effects of immigration policy on productivity and financial strains on lower-income households. The duo also considers the implications of AI on the economy and potential systemic risks in private credit.
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Tariffs Raise Levels; Services Are The Sticky Risk
- Sahm sees tariff effects as largely one-time level shifts, not persistent spirals, while services inflation remains sticky.
- She argued current data support gradual Fed cuts (25 bps), not aggressive 50 bps moves.
Claims Show Low-Hire, Low-Fire Labor Market
- Initial unemployment claims remain low (~230k), consistent with a low-hire, low-fire labor market.
- Claudia called the labor market fragile and a key reason the Fed may opt for gradual easing.
Shutdown Harms Data Flow, Risks Policy Lag
- The shutdown's macro hit looks limited and localized, but it disrupts data collection and risks blinding policymakers.
- Missing October statistics could delay detection of labor-market deterioration and slow policy response.