The Punchbowl Is Gone

No One Wants to Say “A Recession Is Fine”

Why Is Unemployment So Low?

Staring Us in the Face

Ponzi-Like Dynamic

Dallas, Energy, and Jared Dillian

The Federal Open Market Committee’s 12 voting members differ on where they think interest rates should go this year. But we know they’re unanimously against cutting rates until at least 2024—or at least they were as of December, according to that meeting’s minutes.

That means one of the three possible directions (up, down, sideways) is currently off the table. Rates will thus move either sideways or up—unless the FOMC members change their minds, which is quite possible. They all profess to be “data dependent.” However, the bond market doesn't believe that. Traders continue to price in rate cuts later this year.

My own forecast, as noted in last week’s Year of the Pause, is they will hike to 5% and possibly 5.5% then wait to see how the economy responds. They want to control inflation without causing too much pain. But of the two, controlling inflation takes priority. I think we have to take Powell at his word.

These policy arguments have a lot of nuances, meaning “subtle distinction or variation,” as Merriam-Webster defines it. We live in a time when subtlety is often lost in the yelling and insults. Fortunately, I have a wide group of well-informed, thoughtful friends with whom I can debate economic questions vigorously but amicably.

Today I’ll share some of their comments and forecasts with you. They don’t necessarily match my own outlook but that’s why they’re valuable.

The beginning of wisdom is to constantly question yourself. That can be harder than it looks. As humans, we tend to seek out those who agree with us. Confirmation bias is a strong human trait. Mea culpa.

No One Wants to Say “A Recession Is Fine”

As I’ve mentioned, a recent email technology fiasco scrambled my usual reading habits. It had some benefits, though, highlighting what I really missed. It also reminded me that the way I consume news isn’t what most people would call “normal.”