This Earnings Season Will Be Awkward for the Fed

Corporate America is about to show the Federal Reserve how far behind the curve it is in terms of monetary policy. U.S. companies begin disclosing their results for the first quarter this week, with the first up being the big banks led by JPMorgan Chase & Co. and Goldman Sachs Group Inc. These reports and the outlooks provided by company managers will likely provide a clearer picture of a fast-moving economy than most data being released at this time.

In a perverse way, the better companies do the more aggressive the central bank will have to be to push back against their success. Sure, the Fed doesn’t want to be in a position of actively trying to torpedo growth and demand, but it may have no choice if companies are providing evidence that they are able to easily push higher prices on consumers, thereby continuing to fuel the highest inflation rate since the early 1980s.