Economic Commentary

In his post-FOMC press conference on December 19, Fed Chairman Powell said that low inflation would allow the Fed to be more patient in adjusting rates. The stock market fell. He said essential the same thing in his January 30 press conference. The market rallied. Okay, that’s an over-simplification. The Fed’s tone has shifted, but […]

During an economic slowdown, the government often employs fiscal stimulus to “prime the pump.” In such cases a burst in aggregate demand boosts income, which adds to consumer spending, which adds to income, and so on. This process can work in reverse. A shock to aggregate demand hits income, which reduces consumer spending, further reducing […]

For investors, the year began in fear. The global economic slowdown, the yield curve, Fed policy, trade policy, and the partial government shutdown generated risk. Last week, the news was mixed. There is no sign that the budget stalemate in Washington will end soon. There were renewed reports that President Trump is considering imposing tariffs […]

In the last couple of years, Nobel Laureate Robert Shiller has championed the idea of economic narratives. Economic data describe “the fundamentals,” but stories are often the key drivers of activity. Investors are currently faced with two competing narratives. There are no signs that the economy is in a recession or about to enter one. […]