Wall Street is digesting signs of economic resilience as retail sales posted a gain in September and weekly jobless claims came in below expectations. Moody's Analytics chief economist Mark Zandi joins Catalysts to discuss the state of the economy and what it means for the Federal Reserve's rate easing cycle.

"Real GDP growth is about 3%. That's what it grew in the past year through the second quarter. And that's what it is tracking in the third. And that's a really good economy. That feels really, really good, particularly in the context of the fact that the supply side of the economy is growing even more quickly. We're seeing a lot of labor force growth, a lot of productivity growth, so we can grow this quickly without generating inflationary pressures," Zandi tells Yahoo Finance.

He believes the economy will remain on this course if the Federal Reserve continues to ease interest rates. While some argue that the Fed should hold rates steady given the positive economic data, Zandi lays out two reasons why the central bank should continue on its rate-cut path.

First, he explains, "They've achieved their objectives. Their mandate is to achieve full employment — check. 4.1% unemployment rate is full employment. And the other objective, of course, is low and stable inflation — check. They've achieved that as well... So no reason to keep rates high well above what's equilibrium."

Zandi's second point is that the economy has a potential for growth:

"The economy's potential rate of growth is a lot higher. We're growing 3%, the economy's potential is closer to 4%. And that's why unemployment has been ticking higher... If unemployment is rising because there were layoffs, that would be a real problem. But even if unemployment is rising because we've got more labor supply, that's an issue as well. Unemployment is rising and we don't need to do that. So they should normalize interest rates."

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

This post was written by Melanie Riehl