{"id":57636,"date":"2026-01-05T09:38:32","date_gmt":"2026-01-05T13:38:32","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/kashkari-offers-cautious-optimism-on-economy-amid-cooling-job-market-inflation-concerns-natural-gas-futures-decline\/57636\/"},"modified":"2026-01-05T09:38:32","modified_gmt":"2026-01-05T13:38:32","slug":"kashkari-offers-cautious-optimism-on-economy-amid-cooling-job-market-inflation-concerns-natural-gas-futures-decline","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/kashkari-offers-cautious-optimism-on-economy-amid-cooling-job-market-inflation-concerns-natural-gas-futures-decline\/57636\/","title":{"rendered":"Kashkari Offers Cautious Optimism on Economy Amid Cooling Job Market, Inflation Concerns; Natural Gas Futures Decline"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Minneapolis Fed President Neel Kashkari<\/strong> stated that <em>inflation remains too high<\/em> but is <em>slowly trending down<\/em>, with strong confidence in declining housing services inflation.<\/li>\n<li>The <strong>U.S. job market is &quot;clearly cooling,&quot;<\/strong> marked by expectations of <em>low hiring but low firing<\/em>, though Kashkari cautioned that there is a <em>risk the unemployment rate could &quot;pop&quot;<\/em> from current levels.<\/li>\n<li><strong>US Natural Gas Futures<\/strong> saw a significant decline of as much as <strong>6%<\/strong> today, primarily driven by <em>forecasts for less cold weather<\/em>, near-record production, and ample storage, rather than geopolitical developments.<\/li>\n<li>Kashkari expressed confidence in the <strong>economy&#39;s continued resilience<\/strong> and believes American households are in a <em>better fiscal position<\/em> than two decades ago, while acknowledging the persistence of a <em>K-shaped economic recovery<\/em> in his district.<\/li>\n<li>He highlighted that potential <strong>Supreme Court rulings on tariffs<\/strong> could introduce <em>new uncertainty<\/em> and that tariffs are driving up goods inflation, though he perceives the U.S. as <em>approaching an equilibrium on the tariff front<\/em>.<\/li>\n<\/ul>\n<p>Minneapolis Federal Reserve President Neel Kashkari provided a comprehensive outlook on the U.S. economy, emphasizing a cooling job market and persistent, albeit slowly declining, inflation. Kashkari noted that <em>inflation is still too high<\/em> but is &quot;slowly trending down,&quot; with particular confidence in the reduction of housing services inflation. Goods inflation has returned to pre-pandemic levels, while services inflation, closely tied to wages, is also gently trending downward.<\/p>\n<p>The job market is &quot;clearly cooling,&quot; according to Kashkari, who anticipates a period of &quot;low hiring but low firing.&quot; Wage growth is also &quot;slowly tending down.&quot; Despite these trends, Kashkari flagged a potential risk that the <em>unemployment rate could &quot;pop&quot; from here<\/em>, and he is more concerned about labor market weakness than sticky inflation. He suggested that the breakeven hiring rate for the U.S. economy is approximately <strong>75,000 jobs per month<\/strong>.<\/p>\n<p>On broader economic resilience, Kashkari expects the economy to &quot;remain resilient&quot; and believes American households are in a &quot;better fiscal position than 20 years ago.&quot; However, he acknowledged that a &quot;K-shaped economy still seems to ring true in my district,&quot; indicating uneven recovery across different segments of the population.<\/p>\n<p>Regarding monetary policy, Kashkari stated his &quot;guess is we&#39;re close to neutral now.&quot; He has supported recent interest rate cuts, increasing his projection for the year from two to three <strong>25-basis-point<\/strong> reductions, but stressed that the Federal Reserve &quot;should not be on a preset course&quot; and must remain flexible to incoming economic data.<\/p>\n<p>External factors also weigh on Kashkari&#39;s mind. He indicated that the effects of the situation in Venezuela are &quot;mostly through oil prices,&quot; a risk he is &quot;not seeing it so far.&quot; He warned that a possible Supreme Court ruling against the administration on tariffs &quot;would create new uncertainty&quot; and that tariffs generally push up inflation while dampening economic activity, posing a challenge for the Fed. Despite this, he believes the U.S. is &quot;approaching a kind of equilibrium on tariff front.&quot;<\/p>\n<p>Kashkari also touched upon the role of artificial intelligence, noting that &quot;AI is a big company story from what I hear, not an issue with small companies.&quot; He expressed skepticism that AI is rapidly replacing workers, but suggested that massive investment in AI data centers could drive borrowing costs higher.<\/p>\n<p>In a separate market development, <strong>US Natural Gas Futures<\/strong> experienced a notable decline of up to <strong>6%<\/strong> today. This drop was primarily attributed to <em>forecasts for less cold weather<\/em> over the next two weeks than previously expected, coupled with <em>near-record output<\/em>, <em>ample amounts of gas in storage<\/em>, and <em>lower global prices<\/em>. Some reports clarified that this decline was more a reaction to weather forecasts and supply-demand dynamics rather than geopolitical events in Venezuela.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Minneapolis Fed President Neel Kashkari stated that inflation remains too high but is slowly trending down, with strong 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