The Fed’s Chris Waller says he had a “great interview” to succeed Jerome Powell and that the labor market is “weak” and “not in good shape.”

In an interview with Steve Leisman to CNBC Squawk boxWaller described his job interview for board chairman as a formal process This was confirmed by Treasurer Scott Besent in Julyas “just a serious economic discussion.” Waller, who was Governor of the Federal Reserve Since 2020“There was nothing political about it,” he said, an indirect response to accusations that the Fed’s independence was undermined during the second Trump administration. He said they talked about different aspects of the Fed, different speeches Waller has given, and his views on different topics. Waller then spoke about the economy and the struggling job market.

Waller, a key voice on the Federal Reserve’s policy setting committee, explained that his current outlook is dominated by concerns about a faltering labor market. He said the situation was “not good” and that it was “weak”, and appeared to surprise Lessman by saying he would not be surprised if job growth turned negative.

Negative career growth?

With official government statistics now delayed as a result of the government shutdown, Waller said he and other members of the Fed are relying more on private sector data and anecdotal reports from companies to gauge employment dynamics. He said the picture was disturbing.

He added that the data is not as representative or as broad-ranging as official government data, but “they all tell you the same story” about labor market weakness.

“Job growth has probably been negative the last few months,” he noted, prompting Lessman to respond: “Great.” Waller argued that the Fed is not achieving maximum employment with its dual half term: “If you have negative job growth, that’s not maximum employment, you’re cutting back on your hiring.”

Anecdotally, Waller said he hasn’t heard of anyone with big hiring plans. “All I hear is we’re not filling in, we’re not laying off, we’re delaying any career stuff.” He brushed off concerns about inflation or labor shortages, saying: “The labor market is not tight in any way.”

According to Waller’s reading, the situation falls far short of the Fed’s dual mandate of maximum employment and price stability.

Waller has been consistent in his call for further interest rate cuts, which he reiterated in his interview with Lessman, putting him in a dovish position in favor of managing the economy on the right foot, as President Donald Trump has often called for.

For his part, current Federal Reserve Chairman Jerome Powell agreed with this characterization Weak labor marketrecently commented on the “low employment, low employment” environment in September to reporters, memorably adding that “kids who graduate from college…have a hard time finding jobs.”

A different story for high- and low-income consumers

On inflation, Waller dismissed concerns that tariffs would lead to the kind of wage and price spiral seen in the 1970s.

“Any effects of tariffs are one-time effects… This does not cause persistent inflation,” he added, noting that central banks have understood such dynamics for a long time.

Waller argues that in the absence of a tight labor market, there will be no second-order inflationary effects, as workers demand higher wages to keep up with rising prices.

“We see no evidence of that at all, so forget any implications of a second round of tariffs,” he added.

However, he noted that tariffs have a clear but uneven impact on consumer prices. In conversations with CEOs, Waller said they say higher-income shoppers are “price insensitive” and tend to absorb tariff-related price hikes, while lower-income consumers push companies to keep prices constant to avoid losing customers. “It’s about a 40% pass-through,” Waller estimated, noting what he called a “two-tier” effect in the market. He added that there is no consumer price inflation for the bottom half of the income distribution, because those customers will just “walk out the door.”

Waller’s comments came the next day Delta Explosion Profits He emphasized the developing bifurcation of the economy. The most profitable U.S. airline said its premium tickets are close to generating more revenue than its main cabin offerings and it expects that to happen in 2026, a year ahead of schedule. Delta saw a rebound in premium and corporate travel even as prime cabin contracted, good enough to reaffirm guidance at the higher end of its range for the full year. The results show an “inflection” in key demand for the cabin, CEO Ed Bastian told analysts on the earnings call.

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