The Wall Street Journal headline makes a prediction, and the subheadline adds to it:

Market Selloff Upends Fed Rate-Cut Calculus
A further slowdown in the labor market could lead to a larger half-point rate cut next month

It needn’t, though, and if Federal Reserve Chairman Jerome Powell and his Board of Governors make such a move, they’ll be ignoring history.

Inflation is right next door to the Fed’s goal of 2%\yr; the delta between today’s inflation and that target is in the region of noise around the signal.

The stock market is down a bit, even if sharply: for all the steepness of the drop over the last few days, it’s still only down 6-ish percent, not even a correction level.  The market also is irrelevant.

Historically—and history did not begin with the dot com bubble burst—Fed benchmark interest rates that have been consistent with 2% inflation have been in the 5% region. That’s where the Fed is now, and that’s where our economy’s inflation is now.

But wait—unemployment has risen to 4.3%. I say, so what. That level, and the increase over the prior month and especially the past year, plus, certainly bear watching. However, the increase is off historic lows for unemployment, and the present level remains consistent with full employment, which is another of the Fed’s statutory goals.

It’s time for the Fed—for Powell and his BoG members—to say so on both matters, and to say they’re now going to sit down, be quiet, and let market forces—this time, meaning private economy forces—do their trick unfettered by artificially, and arbitrarily, set government-managed interest rates. Who wins then? Our private economy, with both stable pricing and stable business cost of money—interest rates.

Other major winners would include the stereotypical widows and orphans, and old folks, and anyone else who depends in significant part on fixed income, which is to say interest-driven, instruments.

I repeat myself, but this bears repeating.

In his op-ed regarding the wholly unbalanced training of today’s economists (because so many of them are not getting any training in price theory), Steven Landsburg, an economics professor at the University of Rochester, wrote that he puts a question to his students, all of whom get the correct answer, and to  variety of smart lawyers, accountants, entrepreneurs, and scientists, nearly all of whom do not.

The question:

Apples are provided by a competitive industry. Pears are provided by a monopolist. Coincidentally, they sell at the same price. You’re hungry and would be equally happy with an apple or a pear. If you care about conserving societal resources, which should you buy?

Landsburg’s answer:

In a competitive industry, prices are a pretty good indicator of resource costs. Under a monopoly, prices usually reflect a substantial markup. So a $1 apple sold by a competitor probably requires almost a dollar’s worth of resources to produce. A $1 pear sold by a monopolist is more likely to require, say, 80 cents worth of resources. To minimize resource consumption, you should buy the pear.

Maybe. Maybe not. The monopolist is unlikely to be using his resources efficiently; competition will drive that producer to maximize efficiency in resource usage. On a per fruit item basis, it may be that the two are using resources the same. Maybe the competitive producer is using fewer resources per fruit item.

The more accurate answer is that there isn’t enough information in the question to provide an answer.

The editors of The Wall Street Journal closed their Friday editorial on the threat of an “election recession” and who’ll get blamed if one occurs with this:

They [the Federal Reserve Board] don’t deserve to be scapegoats for a recession, if one is coming. What we’d like to hear from one of the candidates isn’t blame but an agenda for faster growth and stable prices.

That first part is correct. That last is evidence that the editors haven’t been paying attention. Former President and current Republican Presidential candidate Donald Trump, and his running mate, current Ohio Senator JD Vance, have been crystalline on this.

They’ve repeatedly touted their mantra of “drill, baby, drill,” their intent to open up drilling for oil and for natural gas along with their parallel push to reduce regulatory impediments to drilling, transporting the goods, refining them, and transporting the refined products, and the sale of those refined products.

They’re openly—explicitly—pushing that because with energy at the heart of our economy, reducing energy costs will reduce inflation and allow wage growth to catch up, which reduces real prices. To which I add: reduced inflation and stable pricing will by themselves produce full and stable employment, another of the Fed’s Directed Operational Capabilities.