CHARLOTTESVILLE, VA (CVILLE RIGHT NOW) – As the Federal Reserve convenes this week, UVA Economics Professor Ed Burton says not to expect any major moves on interest rates. “Expect no action from the Fed today at all,” Burton said bluntly, citing that Treasury bill rates haven’t fallen below the key 4.25% mark. He emphasized that while the Fed garners attention, it’s ultimately the market that sets interest rates. “Think of the Fed as the Wizard of Oz… he thinks he’s controlling everything. But… he really isn’t,” he said. 

Instead, Burton pointed to two more pressing economic variables: rising geopolitical tensions in the Middle East and the fate of a massive Senate spending bill. If Iranian oil exports are disrupted, oil prices could spike, while the proposed legislation could either weaken the economy through tax hikes or exacerbate the national debt through more spending. “We’re on the horns of a dilemma,” Burton said, predicting either scenario would have ripple effects across the economy. 

Looking ahead, Burton expressed cautious optimism about the strength of the economy but warned of persistent challenges like high mortgage rates and sluggish housing starts. He also advised job seekers, especially recent graduates, to focus on developing AI skills. “If you’re training for a job that’s going to be something repetitious, it’s going to be a much tougher job market,” he cautioned. His advice? “Learn more about artificial intelligence,” because knowing how to use it may be the new key to employment. 

Listen to the full conversation here: