Economists often say that the Federal Reserve can’t push on a string. This creates a visual image of a string on a table with someone trying to push the string and seeing no result for their efforts. However, data suggests that some of the money the Fed created moved into the stock market and could cause a decline as the Fed tightens policy.
“Buy the dip” is among the most brilliant stock market strategies ever developed. But there’s a big problem with that strategy. There’s no way to know when a dip is a dip, and currently, “Smart Money” is taking profits.
The long-term trend in durable goods orders is bullish. That could drive an increase in economic growth and usher in the Roaring ’20s. The peak in new orders is most likely years in the future. That could benefit equipment and appliance manufacturers, driving an increase in productivity that would increase economic growth and deliver on the promise of the Roaring 20s.
At some point, Congress needs to allow the economy to get back to normal. Now could be a good time for Congress to declare victory and wrap up the emergency programs. That could help get people back to work, and an increase in late payments will show that process is underway.
Economist Paul Krugman recently argued that the Fed doesn’t need to worry about inflation because they’ve beaten it before, but economists need to understand economic context in order to address different situations and problems. The dynamics of investment and savings depend on inflation.
Enter your username and password below
