Analysis of Danielle DiMartino Booth’s Aggressive 2026 Fed Rate Cut Forecast

This analysis is based on the December 30, 2025, Fox Business interview [1] and supporting economic data. QI Research CEO Danielle DiMartino Booth’s forecast of four Fed rate cuts in the first half of 2026 contrasts sharply with both central bank projections and market consensus. Fed minutes from its December 9–10, 2025, meeting reveal a median forecast of just one rate cut for all of 2026 [6][7], with some officials even discussing a pause in rate cuts [8]. Bond markets, meanwhile, priced in two cuts in 2026, with the first expected in late April [8].

The drivers cited by Booth—rising unemployment and corporate layoffs—have mixed empirical support. The Chicago Fed estimated December 2025 unemployment held steady at 4.6% [2], following a prior rise from lower levels. Layoff trends show 55,000 AI-related job cuts across industries and 17,000+ media industry layoffs in 2025 (an 18% year-over-year increase) [5]. However, these trends occur amid conflicting economic signals: U.S. GDP grew 4.3% in Q3 2025 [3], and inflation progress has stalled [3], creating complexity for Fed policy-making.

Booth’s assertion that the Fed would be “surprised” aligns with the minutes’ indication of divided opinions among officials [6][7]. The central bank’s decision-making remains constrained by the need to balance labor market weakness against persistent inflation and solid economic growth.

1. Divergent Forecast Interpretations
   : The gap between Booth’s aggressive forecast (four cuts in H1 2026) and consensus (1–2 cuts in 2026) highlights differing views on the speed of labor market deterioration and overall economic resilience.
2. Mixed Economic Signals
   : The coexistence of steady unemployment, sector-specific layoff growth, and strong Q3 GDP growth [3][2][5] creates uncertainty about the Fed’s optimal policy path.
3. Fed Credibility Considerations
   : If the Fed is forced to implement rate cuts more aggressively than projected, it could raise questions about its economic forecasting accuracy [6].

• Opportunities
  : If Booth’s forecast materializes, short-term bond yields could decline as investors price in looser monetary policy [0]. Equity valuations, particularly for growth stocks sensitive to borrowing costs, might receive a boost, though this could be offset by earnings concerns from increased layoffs.
• Risks
  : The labor market’s current stability [2] raises the risk that Booth’s forecast of rapidly rising unemployment may not materialize. If the Fed sticks to its cautious projection, markets that have priced in aggressive cuts could experience volatility [0]. Additionally, Booth’s methodology for arriving at four cuts remains undisclosed [1], creating uncertainty around the forecast’s foundation.

• Event
  : Booth’s forecast on Fox Business Network’s “Making Money” (December 30, 2025) [1].
• Forecast
  : Four Fed rate cuts in H1 2026, driven by rising unemployment and corporate layoffs.
• Fed Projections
  : Median forecast of 1 rate cut in 2026; some officials discussed a pause in cuts [6][7][8].
• Market Expectations
  : 2 rate cuts in 2026, with the first expected in late April [8].
• Labor Market Data
  : December 2025 unemployment steady at 4.6% [2]; 55,000 AI-related and 17,000+ media industry layoffs in 2025 [5].
• Economic Context
  : Q3 2025 GDP growth of 4.3% [3]; inflation progress stalled [3].