US Energy Policy Failure It has been four months since Russia’s invasion of Ukraine. The White House’s failure to recognize that the Russian attack signified a need to focus on energy security over climate change has kept the price of energy elevated, raised recession risks, provided the funding for Putin’s military, reduced support for Ukraine, and eroded backing for Congressional Democrats. Now panic is setting in at the White House as the domestic political environment crumbles and Ru… View More
The FOMC raised the fed funds rate +75bp today, taking an aggressive step given the recent inflation & inflation expectations data. The Fed wants a restrictive policy by the end of the year (ie, above a neutral rate that’s believed to be in the mid-2% range) to help restore price stability. The plan is to raise rates (tighten financial conditions) until there’s clear evidence inflation is coming back down. There has been a lack of progress in recent months. The July meeting could see a… View More
All eyes will be on the results of the Federal Reserve meeting today when it announces how much it's going to raise short-term rates, its new projections for the economy and short-term rates for the next few years, as well as Chairman Powell's press conference. After the last meeting in May, Powell made it very clear the Fed anticipated raising rates by half a percentage point (50 basis points, or bps) at each of the next two meetings: this week's event and in July. When asked about a larger ra… View More
As they say, there are two types of economists – those who don’t know and those who don’t know, they don’t know. We’re making educated guesses just like everyone else. But here are some impressions we think are worth considering after Friday’s surprise CPI report and market sell-off: Theoretically, it is difficult to get control of inflation until the Fed Funds rate is above the inflation rate. Using any inflation measure one might choose, the Fed has likely only just begun its tigh… View More
JP Morgan CEO Jamie Dimon caused a stir lately when he talked about a "hurricane" hitting the US economy. We think he may eventually be right, but is way too early. The employment report for May confirmed that the US economy continues to grow. Both major measures of jobs went up in May: nonfarm payrolls rose 390,000, while civilian employment increased 321,000. Total hours worked expanded 0.3%. Has a recession already started? Certainly not. Notably, there is some evidence of a transition in t… View More