Going, going…

It´s not quite gone, but the just released NGDP growth data clearly indicates that monetary policy has, if anything, been tightening. The chart shows that NGDP growth at annual rates has been trending down for a year, and this does not consider that the level of nominal spending is way below any reasonable trend level.

Will this fact put some pressure for action during the upcoming FOMC meeting? Will the inflation hawks come to their senses and finally see that instead of going up inflation is coming down? Will the “fence sitters” conclude that the data is already very bad and that there´s no sense in “waiting for additional data”?

I have no idea, but given the history of the last three years, I´m not optimistic.

8 thoughts on “Going, going…

  1. Thank you for the graph. I don’t expect any big things like NGDPLT, but perhaps they will at least take some steps toward a better outcome than this insanity. I don’t know how they sleep at night.

  2. Gloom, doom and ruin.

    Let us hope that inflation hawks are just secretly Obama-haters, and when (and if) Romney wins, they will start pushing for growth. I can detect no sensible reason for the hysteria about inflation now.

  3. From what I gather, NGDP growth has been adjusted upwards for 2009, but downwards in 2010. So the timing of the second NGDP shock was later, which explains delayed labor market adjustment better.

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