The last non-farms payroll report pretty much sealed the deal in the minds of Fed watchers everywhere. We had, at last, achieved the desired degree of inflation. Rates would be going up. Probably in December.
Interesting political debates typically have what could be called primary effects. In Wednesday night's case, those would include the Bush-Rubio exchange, which did a lot of good for Rubio and a lot of damage to Bush, and the Cruz assault on the moderators, which was dazzling.
The Obama administration’s line on the economy appears to be that it has finally turned the corner and things are truly humming. And maybe so. But there are signs of trouble amid all the good cheer.
At last, some good news about the U.S. economy. Sort of. The government’s Bureau of Economic Analysis (BEA) reckons the economy grew at an annual rate of 4 percent in the second quarter of the year (data subject to revision). If that rate continues, five years of a lackadaisical recovery would be…
All good things must come to an end. And bad things, too, if you believe that the Federal Reserve Board’s bond buying program was a mistake. The minutes of its June 17-18 monetary policy committee meeting, published a few days ago, reveal that these purchases, largely credited with keeping…
Reporting on the Fed’s latest revision of its forecast on the economy (downward, of course) Pedro Nicolaci da Costa of the Wall Street Journal writes:
A few weeks ago I suggested that we now know when Federal Reserve Board chair Janet Yellen will raise interest rates: never. Her first formal monetary policy speech can be read to support that view, or at least that “normal” interest rates are what the Economist describes as “a distant prospect.”…
We now know the approximate date when Federal Reserve Board chair Janet Yellen will feel comfortable ending the Fed’s near-zero interest rate policy: never. Those who were led to believe by her first press conference that she has shed her dove’s feathers for those of an inflation hawk, circling…
Janet Yellen made her first appearance before Congress since assuming the chair of the Federal Reserve Board and produced the yawns she was seeking, even thanking several of her interlocutors for calling her “unexciting.” Knowing that some Fed critics are seeking to rein in the bank’s independence…
Years ago, when Americans began visiting Europe in significant numbers, they invariably returned with trophies ranging from cashmere sweaters (Britain), silk scarves (France), several inches on their waistlines (Italy), and assorted knick knacks. And with stories of the sullen London shop staffs…
“Everything’s coming up roses,” a mother reassures her daughter in Gypsy, the 1959 musical chronicling the rise of burlesque dancer Gypsy Rose Lee. Were lyricist Stephen Sondheim surveying the American economy, he might want to extend the reassurance to the rest of us. For it does seem as if, at…
Our economy is increasingly policy-driven, at least in the near- and medium-terms. What Congress and the president do or don’t do, what incoming Federal Reserve Board chairman Janet Yellen does or doesn’t do, will be important determinants of our growth, inflation, and job creation rates. So here…
The nomination of Janet Yellen to chair the Federal Reserve has come down to this: a referendum on quantitative easing and zero interest rates. The money-printing program that Ben Bernanke started five years ago this month remains Yellen’s answer for how the economy will get back on solid ground.…
“The thrill is gone,” famously warbled B.B. King among others. And so it is for watchers of the U.S. economic scene. The eighteenth partial government shutdown is over, World War II veterans can legally visit the monument to their bravery, hikers can trek through national parks, and the National…
Janet Yellen, dubbed “Ms. QE Infinity” by some wags because of her support for printing money to create jobs, and her willingness to pierce the Fed’s long-held 2 percent annual inflation ceiling, will have more to worry about than monetary policy when she steps into Ben Bernanke’s ample shoes on…
If not Janet Yellen, who? Larry Summers wanted the job, but couldn’t win the support of leftish Democrats and feminists. Former Treasury Secretary Tim Geithner, who can have Ben Bernanke’s job as chairman of the Federal Reserve board for the asking, is said to have told the White House that he…
It’s not that anyone here in Washington begrudges Britain, and to some extent Spain, their fledgling recoveries. But President Obama and other proponents of more government spending aren’t delighted that those nations’ austerity programs seem to be paying off in renewed growth rather than in the…
Spare a bit of sympathy for the Federal Reserve Board’s monetary policy gurus. They have said they will begin to “taper” their purchases of bonds and mortgages when the unemployment rate falls to 6.5 percent. So July’s dip from 7.5 to 7.4 percent, the lowest rate since December 2008, should edge…
Have you heard the news? Janet Yellen is positively clairvoyant!
Data-driven, legacy-driven. Keep those two descriptives in mind and you will know a good deal about the prospects for a dialing back of asset purchases—“tapering”—by Federal Reserve Board chairman Ben Bernanke. After some confusing, market-roiling signals in the past two weeks, Bernanke has made it…
The Brookings Institution might have been a little harsh on Senator Elizabeth Warren's plan to reduce student loan interest rates:
Vicki Needham at the Hill writes that:
Until recently it has been fashionable to denigrate the U.S. economic recovery: “America is the best house in a bad neighborhood,” sniffed many analysts. No longer. America is now a very good house in a terrible neighborhood.
The bad news is that there is good news. At least, that’s how many skittish investors in shares and bonds see the increasingly cheery view of the Federal Reserve Board’s monetary policy gurus who concluded last week that downside risk to the economy has diminished since the Fall, and guessed that…
Federal Reserve Board chairman Ben Bernanke hints that he might—perhaps, maybe—be thinking about possibly slowing the Fed’s purchases of bonds and mortgages. That leads bondholders to start selling, driving up interest rates, and causing tremors on stock markets. Not only here in the U.S.: the…
Former Federal Reserve chairman Paul Volcker has launched a group with the mission of restoring trust in government, according to this report by Charles S. Clark in Government Executive. No question something needs to be done and none, either, that Mr. Volcker has a way of getting things done.
At the conclusion of a lunch at the British embassy here in Washington, Britain’s ambassador, Sir Peter Westmacott, asked each of the four scribbler-economists he had invited to give his forecasts for the year. I usually decline to participate in this sport, but after hearing the unoptimistic views…
The Fed earlier this week blamed sequester for the economy faltering. As Forbes reported then:
To understand the American economy, you have to answer four questions. How can it be that unemployment remains high at the same time the number of job vacancies is rising? Will consumers keep buying cars and houses at anything like the current pace despite the recent increase in payroll taxes? How…
In a press conference today, the Federal Reserve announced it will keep interest rates low and leave QE3 unchanged, continuing to buy $85 billion a month in bonds to prop up the economy.
Wall Street has taken to thinking in terms of walls. There is a “wall of money” waiting to tumble down on stock markets and into corporate investments if only investors could climb the “wall of worry” constructed by America’s politicians who can’t seem to put the nation’s finances in order.
The fiscal cliff is a diversion, designed by politicians to conceal their inability to come to grips with the fact that they continue to spend too much, and refuse to reform a tax structure that reduces the competitiveness of American companies in world markets. No matter what deal is cut, whether…
When Federal Reserve chairman Ben Bernanke rushed to the aid of President Obama with an act of raw partisanship called QE3, the media ignored the political implications of this latest plan to print massive amounts of new money to boost the stock market.
A perceptive e-mail from a friend from the world of finance:
So it’s come to this. A former professor of economics turned central banker can keep policymakers and investors on the edge of their seats, waiting for his latest pronouncement. That tells us two things. First, in the near-term, the president and Congress are irrelevant, frozen in mutual antipathy…
Here is an easy way for any non-economist to tell whether an economy is in dire straits: If investors are looking to their central bankers to get them out of the mess created by over-borrowing, ineffective regulation, and political paralysis. Markets unwilling to lend money at reasonable rates? No…
Federal Reserve Board chairman Ben Bernanke now has two reasons to disappoint those who are hoping he will use his speech next week at the conclave of central bankers in Jackson Hole, Wyoming, to launch the good ship QE3. The first is that the economy continues to move ahead, albeit at a slower…
“Don’t just do something, stand there,” President Ronald Reagan once advised his staff. Federal Reserve Board chairman Ben Bernanke has decided that remains pretty good advice: In his Friday speech to the world’s central bankers assembled in Jackson Hole, he said that he will not use “the range of…
A businessman and investor for whose judgment I have the highest regard sends this email about yesterday’s Fed announcement:
Judy Shelton makes the case in the new issue of THE WEEKLY STANDARD for the “Gold Standard or Bust.” Sound finances, she points out, require sound money, and sound money, it turns out, seems to require a dollar as good as gold—i.e., a return to a gold standard. As she puts it, “monetary policy…