Bloomberg Surveillance Dip-Buyers Emerge Following Oracle Woes & Fed Rate Cut
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Dec 11, 2025 Alexis Crow, Partner and Chief Economist at PwC US, discusses the shift in the U.S. economy from a K-shape to a 'Pac-Man' pattern, where top incomes rise while the bottom 50% stagnates. She emphasizes the role of AI in addressing skill shortages and boosting productivity, albeit with delayed effects. Iain Stealey, International CIO for Fixed Income at JPMorgan, highlights opportunities in UK bonds amid inflation and previews a carry-rich environment in fixed income, while also noting the potential in European peripheral debts.
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AI Is Early But Material For Productivity
- Alexis Crow says AI is in early innings and mainly infrastructure build rather than downstream adoption so far.
- She expects about a 0.5 percentage point productivity boost to GDP over five years from AI.
Fed Likely At Neutral Rate
- Robert Kaplan interprets the Fed as at or near neutral policy with the nominal neutral rate ~3–3.75%.
- He says future moves need material changes in unemployment or inflation to shift policy.
Dual Mandate Creates Hard Tradeoffs
- Kaplan argues post-COVID policy must balance inflation and employment because stimulus created excess demand.
- He notes the Fed faces trade-offs and internal division when both mandates matter.