Last week, I spent several days in Philadelphia for the Annual Meeting of the National Association for Business Economics (NABE). The event brings together economists from central banks, think tanks, corporations, and universities to assess the state of the global economy. The theme this year was Global Economy in Transition: Finding Opportunity Amid Disruption. Sessions explored the pressures shaping global business and policy: geopolitical instability, shifting trade regimes, monetary divergence, and the disruptive force of technology. There were also discussions of long-term structural issues such as climate risk, labor markets, and the balance of economic power.

As Kent and I highlighted two weeks ago, conventional recession indicators suggest a healthy economy, though recent trends in the labor market for college graduates paint a different picture. We pointed to some appalling anecdotes and statistics, including the case of the Computer Science major who submitted 5,762 job applications, only to hear back from none.

This reality begs the question of whether job creation in the age of AI will ever speed up as individuals, companies, governments, and educational institutions adapt. If so, when?

In 2025, if you asked the average economist about the U.S. labor market, the answer might sound reassuring: the unemployment rate is holding steady around 4%, inflation is relatively under control, and job growth continues month after month. But ask a 23-year-old college graduate with a crisp new diploma and a browser full of unanswered job applications, and you’ll hear a different story.

Picture this: you walk into your favorite department store and notice two things at once. First, the racks are heavier with "40% off" tags than you have seen in years. Second, the checkout line feels strangely light, with fewer people and smaller baskets. What’s sad is that this picture may not be all that difficult to imagine…

For professional economists, these signals are not trivial. But for households, they are even more telling. Recessions leave footprints in daily life long before policymakers announce them.

The federal funds rate is not some simple light switch. You cannot flip it down and flood the economy with prosperity, nor crank it up and instantly stamp out inflation. Yet, time and again, politicians sell it that way.

The latest example comes from the President’s aggressive campaign to slash interest rates by as much as three percentage points, to around 1%. The adminstration insists this will supercharge growth, lower mortgage costs, and save the government trillions in debt payments. But there’s a catch: no serious Fed official supports it.

Ten days running is my tally of hearing some variation of the same uneasy question: “Will we be able to trust the numbers coming out of Washington?”

And these aren't conspiracy theorists or online agitators. They are fellow economists, investors, and business leaders. You know… sensible, data-driven people… who built careers on the assumption that official statistics were, if not perfect, at least honest.

Now that trust is starting to fray.

Among colleagues who follow the U.S. economy closely, shifts in policy direction don’t usually come as a surprise. Yet, in recent weeks, a series of reports has indicated that the administration aims to select the next Federal Reserve Chair chiefly for ideological loyalty, favoring a candidate inclined to reduce interest rates regardless of macro dynamics; the prospect has given both these authors a pause.

As trained monetary and financial economists, we’ve spent years studying the delicate architecture that allows the Federal Reserve to function independently from political pressures. When that independence is threatened, so too is the foundation of macroeconomic stability.

In early 2024, a friend of mine (let’s call her Jane) launched a skincare startup with a mission that was equal parts personal and global. Her serums blended botanical oils from Southeast Asia with rare extracts from Latin America, promising customers something fresh, clean, and effective.

By mid-year, boutique retailers had taken notice. Online orders were ticking upward. She was finally seeing the promise of her idea come to life until a spreadsheet of customs estimates landed in her inbox. A critical ingredient, once affordable, now carried a tariff surcharge in excess of 100%. Essentially, Jane’s next shipment would cost more in tariffs than the goods themselves.

At first, I laughed.

The idea that a grocery store cake could spark a viral meltdown felt like classic internet absurdity. When I read that Whole Foods had quietly altered the recipe of its beloved Berry Chantilly cake, I chuckled at the idea of social media users crying betrayal over a dessert.

Almost immediately, though, I felt something else: inspired. The public outcry worked. Faced with customer backlash, Whole Foods reversed course and reintroduced the original recipe. A multibillion-dollar enterprise had changed direction, not because of lawsuits or legislation, but because regular people noticed a change they weren’t okay with and refused to let it slide. That’s no small thing.

They never expected to feel stuck in their dream home.

When two dear friends of mine (let’s call them Joe and Jane) bought their two-bedroom starter house in late 2020, it felt like the beginning of a promising chapter. Interest rates hovered just below 4 percent, their mortgage felt manageable, and with a baby on the way, they believed they were laying down roots. By the start of 2025, the picture had changed. Two children, hybrid jobs pulling them in opposite directions, and no third bedroom in sight. They’d outgrown the house. What they hadn’t outgrown was their 3.5 percent mortgage.

When I walked into the TechEx AI & Big Data Expo in Santa Clara last week, I didn’t expect clarity. I expected noise: buzzwords ricocheting off LED screens, startups pitching productivity miracles, enterprise executives nodding sagely to sales demos. And all of that was definitely there. But what stayed with me wasn’t the flash. It was a quieter insight: most professionals aren’t worried that AI will replace them. They’re worried they’re already being measured against it.

In the fall of 2008, I was a high school student. By all outward appearances, life should have felt simple: class schedules, teenage distractions, college brochures arriving in the mail. But I remember a different sensation. A slow, quiet panic crept into conversations at the dinner table. Classmates who used to brag about new video games or summer plans began whispering about their parents losing jobs. Distant cousins moved back in with grandparents. And even in my young, largely insulated world, I could feel the walls of certainty shaking.