President Trump tweeted on Christmas Eve that he was “all alone (poor me).” It was a sentiment with which Fed Chairman Jerome Powell could sympathize. As 2018 came to a close, the president blasted Powell for raising interest rates and causing the stock market to plunge. Wall Street pundits warned that swooning share prices suggest […]
Category: CFE Analysis
Zero Bound
The outlook for growth in employment and corporate earnings over the next few years is headed down. The problem is not what the Federal Reserve will do, or what a Democratic (or Republican) Congress is likely to do, or the possibility of a mushrooming trade war. It is the unsustainable nature of what has caused […]
What did We Learn from Recent Monetary Policy Performance?
A growing chorus of commentators are now issuing warnings about additional Fed tightening in light of the flattening Treasury yield curve. Despite clear evidence that job growth in the U.S. is running well ahead of a sustainable pace, low wage and price inflation, for many suggest no need to firm overnight interest rates. Exhibits A […]
The slope of the yield curve and lessons from recent history
A downward sloping yield curve is widely seen as a harbinger of recessions, and indeed has an impressive track record. The yield curve inverted before the last two recessions and is likely to invert again within less than a year, which naturally raises fear of another recession. Much commentary of late has noted that yield […]