The Fed voted to hold the federal funds rate at 5.25% last week, but its Summary of Economic Projections (SEP), for which there's no vote, raised borrowing costs and upped the odds of a recession.
Great post! Both timely and thoughtful. Job growth is down by half. And over the last year 77% of all new jobs were in healthcare and education. The rest of the economy is creating 70k jobs a month. It won’t take long for these real rates to turn that number negative.
Such an opaque tool seems to invite misuse. Illogical though it may be, the state of the economy is probably the single factor with the most influence over voters in their choice for President. Would some figure(s) hidden in the shadow of the SEP be able to tip the 2024 election by causing a recession? Voters would undoubtedly blame Biden for it. With no accountability, perhaps even subconscious bias could deliver Trump another four years in the White House. Is that the Fed's intention?
Great post! Both timely and thoughtful. Job growth is down by half. And over the last year 77% of all new jobs were in healthcare and education. The rest of the economy is creating 70k jobs a month. It won’t take long for these real rates to turn that number negative.
Thank you for highlighting the important difference between real and nominal rates.
Such an opaque tool seems to invite misuse. Illogical though it may be, the state of the economy is probably the single factor with the most influence over voters in their choice for President. Would some figure(s) hidden in the shadow of the SEP be able to tip the 2024 election by causing a recession? Voters would undoubtedly blame Biden for it. With no accountability, perhaps even subconscious bias could deliver Trump another four years in the White House. Is that the Fed's intention?