Waller Calls March Rate Move a “Coin Flip” as Jobs Data Diverge 

Federal Reserve Governor Christopher Waller told the National Association for Business Economics on February 23rd that the March 17th–18th Federal Open Market Committee decision is “close to a coin flip.” After three straight 25-basis-point cuts since September, the Fed paused in January—over Waller’s dissent—and left its policy rate near 4.75 percent. He argued that “the risk of a substantial downturn in the labor market combined with a limited risk of higher inflation warranted another cut.” Mixed economic signals since that meeting are doing little to settle the debate, while gold, ever the monetary barometer, notched a fresh high of $5,236 per ounce on Monday.

Waller’s caution springs largely from the labor market. January’s headline payroll report showed a chunky 130,000 jobs gain—more than the previous nine months combined—and unemployment edging lower. Yet alternative trackers painted a far weaker picture: ADP recorded just 22,000 private positions, Revelio counted 3,000, and Challenger logged 108,000 layoff announcements, the worst January since 2009. Official revisions already revealed that only 181,000 jobs were created in all of 2025—an anemic 15,000 per month—and Waller expects further downward tweaks that could turn last year negative. He called the latest print “noise more than signal,” noting that three-quarters of the additions came from health care and construction, which together make up roughly one-fifth of employment.

Growth data complicate the narrative. Real GDP expanded at a 1.4 percent annual rate in the fourth quarter, but private domestic final purchases—a better gauge of underlying demand—rose 2.4 percent. Manufacturing output jumped 0.6 percent in January, its best showing in almost a year, and service-sector purchasing-manager indexes have been in expansion territory for 19 consecutive months. Still, consumption is cooling: personal-consumption-expenditure (PCE) growth slid from 3.5 percent in the third quarter to 2.4 percent in the fourth as lower- and middle-income shoppers traded down or simply bought less.…