9 out of 10 economists were wrong. But none were suspended or demoted. Here are their new predictions
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[i][b]Photo above [/b]- "I'm sorry ma'am. But your dog is limping, and he's 11 years old . . ."[/i]
A long time ago, America's smartest economist were asked to predict what the Federal Reserve would do next. Well, it wasn't THAT long ago. January of this year. And 9 out 10 predicted the Fed would cut rates at their May 1st meeting. The prediction today? 9 out of 10 think Jerry the Fed Chairman (Jerome Powell) will hold rates steady. (see link below)
Why this change of heart? Well, actual economic data is coming in. The US economy is growing slower – at HALF the rate of inflation now. See second link (GDP) at bottom. And this is based on the “core” inflation data nobody relies on. Because it excludes food, fuel, and housing prices. The stuff that actually makes up more than half our spending. We might be off course when the most carefully handpicked inflation data still shows our ship is sinking, no?
The economy is growing at 1.6%. But since inflation is more than double that (3.7%) we're slowly getting screwed. You, personally, may be getting MORE screwed if you don't already own a home. Of if you have a day job that requires gasoline, electricity, etc. Think truck drivers, Uber, restaurant owners, factories, AI and Bitcoin mining. (Actually, I don't give damn about the last two. They waste more electricity - globally - than the entire state of California).
So . . . the "smart" money is betting that rates will stay the same. As Powell hinted in a press conference last week (like hearing “your dog is limping, and he's 11 years old” after a vet checkup). Should we prepare ourselves to find out that things are worse than we knew? (“Here are those pills again. Please give him two per day, not one like you did before.")
The medicine we are taking – high government mandated interest rates – seems to be making us limp MORE, not less. Will Doc Powell keep the current prescription in place, or raise the dosage? Do you think either of these will actually help? 9 out 10 economists, have faith that the medicine is working.
I'm just sayin' . . . [b][u] The Fed rate decision meeting is today. Here are the odds of a cut. (msn.com)
GDP: US economy grows at 1.6% annual pace in first quarter, falling short of estimates while inflation increases (yahoo.com) [/u][/b] [b]Personal note[/b]. the dog is "Buckwheat". Named after Buckwheat Zydeco, the musician. Lab/German Shepard mix. He's 11 years old and has a tumor on his foot. More tumors in his lungs. His tour of duty is ending prematurely. His allegiance to the pack is absolute and unquestioning. Distinguished service medals: Cats chased, zero. Dogfights, zero. Lives enriched - many.
You cant make a rational prediction about US economics or how the Fed will react, because Economics is a 100% rational science and as such is 100% predictable. But let people anywhere near it and they tinker with the settings and the whole thing goes to $h*t instantly. The US govt prints money with no actual value to back it and borrows $Trillions every year just to pay the interest on what it owes.. If any household or business did that, you would call them insane and you would be right.. I can tell you what SHOULD happen to the US economy. But what WILL happen will not be decided by the US. It will be decided by those people who the US owes $Trillions to..And what it suits them to make that decision..😷
@SusanInFlorida The Black swan is a well established part of Game theory. A discussed, it is simply not possible to predict them, except that it is certain they will occur somewhere and sometime. And to that end, to keep the comparisons current, you need to build airbags and seatbelts into the economic car. Also good brakes, good steering, good all round visibility and a sensible driver who is paying attention..Now all those things may weight down the performance of the car at times and add to the cost.. But when a Black Swan shows up, like a war, or Covid, you are surely going to need them if you dont to end up in a wreck at the bottom of Dead mans curve..😷
