11/11 Fed Speech Lauds Productivity, Skips the 25 bp Cut: Inflation “Moved Up,” Payrolls +22k, PCE +0.6%

PRESS RELEASE SUMMARY

On November 11, 2025, Governor Michael S. Barr used the Singapore Fintech Festival stage to talk about technology’s potential to lift productivity and reshape hiring. The problem? The speech never acknowledged the October 29 FOMC rate cut of 25 bp to 3-3/4 to 4 percent, the plan to end balance sheet reductions on December 1, or the Committee’s explicit warning that “inflation has moved up since earlier in the year and remains somewhat elevated.” That’s a glaring omission given the live policy pivot and the Fed’s new emphasis on downside risks to employment.

Here’s what the data reveals:

• The Fed cut rates 25 bp on 10/29 and flagged rising risks to jobs; the 11/11 speech didn’t mention it.

• Barr cited surveys linking slower hiring to technology adoption, but hard data show payrolls +22,000 in August, with unemployment at 4.3%—weak enough to worry, not enough to attribute to technology without proof.

• The speech referenced a projected $3 trillion data center build-out—big if true, but presented without corroboration from federal macro data.

• Inflation narratives are conflicted: FOMC says it’s moved up; producer prices for August edged down 0.1% m/m; consumption still ran hot with PCE +0.6% m/m and income +0.4%.

The Policy Context That Went Missing

If you’re going to tell a long-run productivity story, you can’t skate past the near-term policy turn. On 10/29, the FOMC cut the target range by 25 bp to 3-3/4 to 4 percent, called out that inflation has “moved up,” and signaled a stop to balance sheet reductions on December 1. The Committee also elevated “downside risks to employment.” These are not footnotes; they’re the operating environment.

The 11/11 speech emphasized how technology can support higher output growth “without pressure on inflation over the longer term.” That’s fine as a thesis, but it doesn’t engage with the immediate reality: the Fed is easing into a backdrop of sticky inflation pressure and a cooling labor market. Omitting that context makes the current policy stance look calmer than it is.

The Mixed Inflation Tape

• FOMC, 10/29: “Inflation has moved up since earlier in the year.”

• PPI (August), -0.1% m/m: a soft print that doesn’t reconcile cleanly with the FOMC’s tone.

• Consumers are still spending: PCE +0.6% m/m in August; incomes +0.4%. That supports activity—and keeps near-term price risks alive.

Productivity Promise vs. Inflation Reality

The long-run claim is that capital deepening via technology lifts trend growth without stoking prices. Maybe. But the timing matters. The current policy picture—rate cuts and a slowing balance sheet runoff—arrives while the Fed acknowledges higher inflation relative to earlier in the year. If the central narrative shifts to productivity just as easing resumes, investors should ask whether the message is anchoring expectations more than reflecting near-term data.

Meanwhile, the speech cited “$3 trillion of new data center capacity” as a projection. The caveat (“if they’re right”) is doing heavy lifting. There’s no federal macro corroboration in the materials provided. Without official series (capex, structures, manufacturing new orders) confirming that scale, the number belongs in the “watch-and-verify” bucket, not the policy frame.

Labor Cooling: Survey Stories vs. BLS Hard Prints

Barr referenced surveys indicating firms are retraining and “scaling back hiring,” linking that to “recent low levels of job creation.” The hard data back the “low” part—but not the cause.

• BLS (August): Payrolls +22,000, “little change since April,” unemployment 4.3%.

• That’s consistent with cooling, not a collapse—and it does not establish technology as the driver. Surveys can lead turning points, but they’re not proof of causality.

The broader narrative across the System is coherent: Waller on 10/16 argued for continued easing with inflation “fairly close” to 2% ex tariffs; the FOMC on 10/29 cut rates and highlighted employment risks; Barr on 11/11 emphasizes technology’s labor-market effects. The through-line is softer labor demand. But pinning that softness primarily on technology is a bridge too far based on the data provided.

The AI Pivot: Messaging Move or Macro Substance?

Within four days, you had Jefferson (11/07) urging humility about forecasting technology’s effects, then Barr (11/11) moving from scenario analysis (earlier 2025 speeches) to operational deployment—“governance framework,” “translate legacy code,” “generate unit tests,” “accelerate cloud migration.” That’s a shift from hypotheticals to hands-on implementation.

This coordinated emphasis signals a system-wide messaging pivot: technology as productivity booster, risk factor, and internal toolkit. It’s not inconsistent with easing policy—if anything, the subtext is that productivity gains could cushion growth as the labor market cools, making room for gradual rate normalization. But when the FOMC says inflation has picked up and the next public speech spotlights long-run productivity without addressing near-term prices, investors should read that as narrative drift.

Numbers Behind the Narrative

What This Means for Markets

Rates: Easing Bias Meets Noisy Inflation
- The Fed is easing with inflation risks still live. That combination typically supports intermediate duration while rewarding flexibility.
- Positioning: Favor the 2–5 year part of the curve to capture policy drift, and hedge upside inflation risk with 5–10 year breakevens. Vol remains your friend; maintain convexity via options where feasible.

Credit: Carry With Selective Defense
- Cooling jobs and steady consumption (income +0.4%, PCE +0.6%) argue for continued spread carry in high-quality credit.
- Stay up-in-quality in cyclicals exposed to labor softness; be cautious on lower-quality issuers reliant on cheap funding as the easing path remains uncertain.

Equities: Separate Hype From Cash Flows
- The headline $3 trillion data center projection is not backed by official capex data in the materials provided. Don’t pay for scale you can’t yet verify.
- Prefer “picks and shovels” with observable backlog and pricing power—power equipment, grid upgrades, thermal management, and data-center REITs with contracted revenue—over richly valued pure-plays whose earnings depend on speculative build-out timelines.

FX and Commodities: Watch the Policy Divergence
- An easing-leaning Fed with sticky prices can pressure the USD at the margin, but the path depends on how other central banks react. Keep hedges dynamic into data.
- Energy’s role is ambivalent: producer prices softened in August (-0.1% m/m), but resilient consumption sustains demand; commodities stay a tactical hedge against the inflation narrative gap.

Policy Path and Communication Risk
- The narrative shift toward long-run productivity while omitting the 10/29 policy pivot invites communications risk. Markets will price the data, not the optimism. Expect higher sensitivity to the next prints on CPI, PCE, and payrolls.

The Investor Takeaway

• Anchor to the policy facts: the Fed cut 25 bp on 10/29, will end balance sheet reductions on Dec 1, and says inflation has “moved up.”

• Treat technology-attributed hiring softness as unproven at the macro level; the BLS shows +22k August payrolls and 4.3% unemployment—cooling, not collapsing.

• Don’t underwrite a $3 trillion capex cycle without corroboration. Demand confirmed orders and margin durability before paying peak multiples.

• Position for easing with protection against sticky prices: overweight 2–5y Treasuries, pair with TIPS/breakevens, and stay selective in credit and equity beneficiaries tied to verifiable cash flows.

The speech celebrated long-run productivity just as the Fed quietly eased policy into a bumpy inflation backdrop. That’s a nice story—if the data follow. Until they do, trade the pivot you can measure, not the future you’ve been promised.