The American economy is booming, with high GDP growth, record-low unemployment, and wage gains for median workers. Over the past few quarters, U.S. economic growth indicators have consistently outperformed official projections. But the U.S. Federal Reserve recently conceded that its policies might be too restrictive, hindering the full potential of the U.S. economy, which the Fed and other economists argue is capable of even better performance in the quarters ahead.
Straight Arrow News contributor Larry Lindsey casts doubt on that hypothesis and warns against less restrictive “dovish” actions that the Federal Reserve might take in its pursuit of this kind of thinking. If anything, Lindsey contends, our economy is “too hot” and the Federal Reserve should adopt more restrictive policies.
Turns out the Fed is quite dovish, at least in its rhetoric. And that’s just propping the tape up and to move even higher. Well, this is kind of strange, it all started with the last FOMC meeting, and it starts with what the Fed thinks is going to happen. They’ve put this down in something they call the summary of economic projections. And they said the economy’s gonna run hotter, they said GDP is up seven-tenths of a percent this year from their last estimate, and 2025 is up another two-tenths of a percent. The unemployment rate is going to be down by a tenth of a point. And the consumer price index, the PCE that they use, one of the measures is up one-tenth and the other is up two-tenths from their last projection.
So things are running hot, higher inflation, higher growth, and lower unemployment. Well, one would think this would move them toward a tighter stance. But the median member, there are 19 members, 10 of them said we’re going to stick with what we said, nine of them sort of tightening their projections a little bit, but then out came Chairman Powell. And he gave a very dovish press conference. That was the market reaction, that was the reaction of all the commentators. The main point he makes is he thinks that currently, Federal Reserve policy is quite restrictive, meaning that it’s really doing a lot to slow the economy. Well, if that’s true, why are they projecting a faster rate of growth, if it’s being so restrictive? It’s unclear what the Fed thinks. And that’s not the only strange part of the belief that this is quite restrictive.