Inflation targeting: Good strategy, but poor structure

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The monetary policy experiment of inflation targeting has failed to produce a more stable macroeconomic environment. The failure doesn’t stem from the wrong objective, but from the poor structure of

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Liquidity flows: Economic cycle still on sustainable path

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The US economy has faced persistent fears of setbacks, but the recovery continues to move forward. Our proprietary liquidity indicator suggests that the economic cycle remains on solid ground and

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The economy and Fed policy

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Real GDP growth rose by a 0.7% annualized rate in the fourth quarter, hurt by continuing cutbacks in energy capital spending, inventory liquidation and foreign trade. The bruising impact of

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Disruptive effects of oil-price plunge

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Compared to past cycles, the oil-price plunge from mid-2014 through early 2016 has proven to be longer in duration as well as larger in scale. In turn, the adjustments in

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US business surveys highlight a two-speed economy

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The US economy continues to expand, but the pace of growth varies greatly between the manufacturing and nonmanufacturing (service) sectors. While the manufacturing sector has hit stall-speed, the service sector

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On the economy: New normal or abnormal?

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Over the past five years, the average annual growth of 2.1% in real gross domestic product clearly fits the narrative of the new normal. Yet the economy’s recent performance has

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The FOMC script – Another change and fruther delay in normalisation

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The Fed decided to delay the normalisation of official rates—primarily because of global financial and economic uncertainty, which, in its view, temporarily overshadowed stronger labor markets and a better-than-expected domestic

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Out of service: What’s behind the sector slowdown?

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The scale of the slowdown in the nominal growth rate for the service sector is as baffling as it is surprising. It raises the prospect of either a major mismeasurement

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US economic growth and implications for monetary policy

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Despite the modest second quarter rebound, the economy’s growth rate has been generally sluggish over the past five years. This may suggest lower potential growth going forward—and less resource slack

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US Budget long-term outlook – an unsustainable imbalance

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The Congressional Budget Office estimates that the budget deficit for fiscal year 2015 will narrow further, extending to six consecutive years a trend of shrinking deficits. But the longer term

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