Rate Of Change

We’ve got to change our ornithological nomenclature. Hawks become doves because they are chickens underneath. Doves became hawks for reasons they don’t really understand. A fingers-crossed policy isn’t a robust one, so there really was no reason to expect the economy to be that way.

In January 2019, especially the past few days, there are so many examples of flighty birds. Here’s an especially obvious, egregious one from Atlanta Fed President Raphael Bostic. He was so damn positive at the end of October just three months ago he admitted it was giving him problems wordsmithing. Two and a half months, really.

The economy is in a good place. So good, in fact, that as I was sitting down to write this speech, I struggled to come up with sufficient variations on the word “strong.” Strong has many definitions that can describe physical prowess, the intensity of an odor or flavor, and, in physics, a type of force between particles. But one definition stands out to me as particularly apt to describe the economy at this moment: strong—able to withstand great force or pressure.

And now this week:

So grassroots intelligence from Main Street and messages from Wall Street indicate heightened uncertainty and concern about the economy. But the aggregate economic data continue to paint a robust picture. What is a policymaker to conclude from these mixed signals?

To me, the appropriate response is to be patient in adjusting the stance of policy and to wait for greater clarity about the direction of the economy and the risks to the outlook.

So, maybe unable to withstand great force or pressure? You don’t go from strong to heightened uncertainty in a matter of weeks unless it wasn’t ever strong to begin with. Using the same dictionary as President Bostic, it tells me the antonym for “strong” is “weak.”

Memo to Economists: stop using the unemployment rate, this “aggregate economic data” point will let you down every time. Every time. It’s easy to try and ignore the participation problem, but there is no escaping the global “L.”

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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