A Perfect Storm of Economic Uncertainty
The Fed has a history of being either very wrong, or intentionally misleading, so we need to be very vigilant.
Last week, the federal government’s Bureau of Labor Statistics reported that the US economy added one hundred and seventy-five thousand new jobs, far less than the consensus forecast of two hundred and forty thousand jobs. At the same time, the unemployment rate ticked up from 3.8% to 3.9%. These numbers, at first glance, hardly seemed that soft, but Fed officials went out of their way to embrace this data as justification to renew their calls for lower rates over the coming months. In fact, after a few prior months of strong jobs growth and slight upticks in inflation, the Fed was happy to not just welcome these numbers as proof that lower rates were back on track, but they also announced that they were going to slow down the pace of reducing their balance sheet. The Fed claimed that their ”restrictive” monetary policy was doing the trick of slowing the economy and breaking the back of inflation.