Giacomo Santangelo said that in a complicated economy, the Federal Reserve’s tools are overly simplistic. While lowering interest rates may be necessary when jobs are down, it can increase inflation. “They literally have one lever, and it’s a question of when they pull the lever,” he said. Read the full article.
The jobs numbers have significant repercussions. At 2:30 p.m. Eastern time on Friday, September 5, 2025, the yield on the 10-year Treasury Note, a critical base measurement for many types of loans, including home mortgages, was at 4.09%. It had been 4.26% on September 6.
That might seem like good news for those who want to buy a house. The national 30-year mortgage rate at the time of writing is 6.58%, according to Bankrate.com. But a sudden drop of the 10-year Treasury Note yield is a classically bad sign that investors are expecting an economic downturn, if not a recession.
“There are certain things you can only read one way,” Giacomo Santangelo, a senior lecturer of economics at Fordham University, told me. “There’s no other way to interpret it.”
But in a complicated economy, the Fed’s tools are overly simplistic. “They literally have one lever, and it’s a question of when they pull the lever,” Santangelo said. The lever is short-term interest rates that are heavily influential. They can reduce, increase, or leave the rate where it is. Unfortunately, while reducing rates might be necessary to stimulate the economy when jobs face pressure, that is the opposite of what to do when inflation could increase.
“What we do know is that consumers are responding to the tariffs by going into debt,” Santangelo said. “It would be foolish to be aggressive with this because it will be inflationary and we’re still in the process of getting the beginnings of the tariffs inflation and the deportation inflation.”
