Is the Fed About to Make a Historic Mistake?

As U.S. policymakers digest a wave of delayed economic reports, data quality, not direction, is emerging as a central challenge for the Federal Reserve, according to Jay Hatfield, CEO of Infrastructure Capital Advisors. Hatfield warns that Bureau of Labor Statistics releases are arriving “both delayed and dirty, probably dirtier than normal or inaccurate is probably a better word,” following the government shutdown that slowed agency operations.

Hatfield told AInvest that labor-market figures are particularly unreliable in their initial form. The BLS “uses the mail, which is a great technology from the 1970s,” he said sarcastically, resulting in surveys that often lack sufficient responses and are subject to “heavy ” revisions even under normal conditions. Shutdown disruptions, he added, compounded the reporting problems.

Inflation statistics pose a separate challenge. While not subject to the same survey delays, the shelter component, one of the most significant contributors to consumer price readings, lags real market conditions by roughly 2 years. The BLS “delays it on purpose for six months,” Hatfield said, and its reliance on renewing rents introduces “another 1.5 years” of delay. “It is a huge issue,” he said, though he believes Federal Reserve officials will “see through that flawed data” as they weigh an interest-rate cut in December.

A Split Economy: Old-Sector Weakness vs. Tech-Driven Expansion

Hatfield described a “tale of two cities” unfolding in the U.S. economy. Traditional sectors such as housing and construction are in recession, he said, while technology-related industries, data centers, chip manufacturing, and utility-scale power remain historically strong. “The old economy is very weak… [but] tech and the inputs to tech like power and data centers are very strong,” he said.

Despite widespread public concern about affordability and lagging wages, Hatfield argues that consumer weakness rarely drives recessions. Low-income households “have to consume,” while high-income households continue spending because they “have the income… and the assets,” he said. Across 13 post-World War II downturns, the decline in consumer spending was “0%, but the net decline in investment was 10,” he noted, emphasizing that investment, not consumption, determines cyclical turning points.

Housing Shortage Helps Limit Cyclicality

Long-term underbuilding has reduced volatility in the housing sector, Hatfield said. Unlike the boom-and-bust cycle of the 1970s, the recent construction peak of 1.7 million homes never approached historical highs—and activity has since dropped to around 1.3 million. “Normally, below 1.1, that's a recession,” he said. The relative absence of overbuilding has helped keep rents “pretty under control” in most of the country outside New York, he added. However, continued elevated mortgage rates could still trigger construction-related layoffs if the Fed fails to cut rates.

Copper Still Signals Strength—But for New Reasons

Asked whether copper prices still function as a barometer for economic health, known as “Dr. Copper,” Hatfield said the indicator remains relevant, even if its drivers have changed. While housing-related demand for copper is “very weak,” he said, tech-sector construction and manufacturing are more than making up for it. “It’s still working as [an] indicator… just working in a different way,” he said, noting that Infrastructure Capital Advisors owns shares of copper producer Freeport-McMoRan, which he said is benefiting from tariffs and “strong demand”.

A Bullish View Through 2026

Looking ahead, Hatfield projected roughly 3% U.S. economic growth next year, supported by recovering housing activity and ongoing tech expansion. He dismissed broad claims of a tech bubble, pointing instead to a “reasonable growth to PE” profile for the major technology companies that dominate the S&P 500. Using a GARP approach, growth at a reasonable price, Hatfield said the group’s PEG ratios sit “right in line with the market… about two times.” His firm maintains a year-ahead S&P 500 target of 7,900, implying “well over 10%” upside from current levels, he said.

Hatfield cautioned that certain corners of the market, crypto-related firms, some private startups, and companies with significant losses have already deflated from bubble levels. But he argued that long-term investors should remain exposed to the largest technology names even if they eventually become overvalued. “Do I want to be invested now, benefit from the bubble… or sit on the sidelines and keep yelling that there's a bubble for three or four years and miss out on the returns?”