Boy, This Economy Is Hard to Read. Mea Culpa.
I’m now sorry that I described recent signs of recovery as akin to a “dead cat bounce” that would eventually be swamped by high interest rates.
Picking up speed.
Photographer: Sergei Gapon/AFP via Getty Images
Slower inflation was supposed to be a sign that the economy was cooling, all part of the Federal Reserve’s plan for higher interest rates to restore balance to the economy. For a while, things looked on track. But since the middle of January there’s an argument that economic activity is picking up again, despite monetary policy being tighter than at any point in years.
The catalyst is the growing confidence among consumers and businesses alike, ironically driven by the slowdown in inflation the Fed has been working to engineer. Monetary policy remains tight — look no further than the struggles in the automobile and commercial property sectors or affordability challenges for homebuyers — but, for now, there are too many industries showing signs of resilience or acceleration to believe that the central bank’s stance will cause the labor market or economy to unravel.