When the Fed doesn´t pay attention to its own-generated data!

Bill Dudley was quite upbeat in a recent interview with Benyamin Appelbaum:

…So I think the U.S. economy is still on a decent trajectory, above-trend growth, growth that will cause the labor market to continue to tighten, which is what we would like, and I think we’ll see gradual upward pressure on wages, which is desirable, and then hopefully inflation will start to track back toward our 2 percent objective.

“Standards” have really dropped!


And the Fed keeps on undershooting (even if you consider only its inflation target).


As to the “labor market continues to tighten”, policymakers like Dudley should at least look at what their own estimate of changes in labor market conditions is telling.

Since the Fed´s tightening bias took over in mid-2014, the index has shown the opposite, even turning negative since the start of the year!



One thought on “When the Fed doesn´t pay attention to its own-generated data!

  1. In August 2014 Yellen was happy to draw attention to the index when it was positive: http://www.federalreserve.gov/newsevents/speech/yellen20140822a.htm :

    “One convenient way to summarize the information contained in a large number of indicators is through the use of so-called factor models. Following this methodology, Federal Reserve Board staff developed a labor market conditions index from 19 labor market indicators, including four I just discussed. This broadly based metric supports the conclusion that the labor market has improved significantly over the past year … ”

    Almost Trump-like in her ignoring of reality.

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