Claudia Sahm thinks investors should rethink what they’re salivating for.
The Federal Reserve is likely to deliver its third interest rate cut of the year on Wednesday, a move widely understood to be insurance against the bottom completely falling out of the labor market. But to Sahm—a former Fed economist, recession-indicator architect, and one of the central bank’s most closely watched outside interpreters—the more consequential question isn’t what the Fed does on Wednesday. It’s what additional cuts would mean.
“If the [Jerome] Powell Fed ends up doing a lot more cuts,” she told Fortune ahead of the decision, “then we probably don’t have a good economy. Be careful what you wish for.”
That framing cuts against the dominant mood on Wall Street, where rate cuts have recently been reflexively welcomed and futures markets are already pricing in a second round of easing in 2026. But Sahm thinks investors should only want more cuts if they’re prepared to cheer for a recession.
Powell’s last stretch, and the hardest one
