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Problems the Fed Can’t Fix

Observant1
edited March 14 in Other Investing
Key Points

• Fourth-quarter GDP growth was revised down to 0.7%, half the initial 1.4% estimate,
signaling a significant economic slowdown.

• The core PCE price index rose 3.1% annually in January, its highest since early 2024.

• The Federal Reserve faces a dilemma as inflation reaccelerates and growth slows,
leading Wall Street to scale back rate-cut expectations.

https://www.msn.com/en-us/money/markets/is-the-economy-in-trouble-warning-signs-are-piling-up/ar-AA1YzshE

Comments

  • WABACWABAC
    The Fed can't fix what it didn't break.
  • DrVenture
    I see the issue as putting massive strain on the economy in the face of inflation. Our current energy price surge is likely to add to inflation and economic slowdown. This makes lower FED funds rates unacceptable. GDP has been falling and is approaching zero, another lower GDP print would be very bad.

    Slow growth plus inflation, puts the FED in a very awkward position. Besides the FED funds rate, they could do what, that would help with that situation? Not a rhetorical question, a real one.
  • DrVenture
    Now supposing that the Hormuz issue were settled quickly. And that the WH decided to scale back tariffs significantly. And the FED held steady. I assume markets would rejoice. I think that jobs/hiring might still be a problem though.

    Do the 4.4% "unemployed" have the skills needed in the current marketplace? Will AI take more white collar jobs? My guesses are "no" and "yes".
  • Sven
    There are very few encouraging news out there. Yet the AI theme keeps beating the drum.

    I am retreating and build up my cash until the Iran war ends.
  • Old_JoeOld_Joe
    I've jumped down a nearby rabbit-hole and pulled the rabbit in on top of me.
  • CrashCrash
    Old_Joe said:

    I've jumped down a nearby rabbit-hole and pulled the rabbit in on top of me.

    Giggle.

  • CrashCrash
    WABAC said:

    The Fed can't fix what it didn't break.

    Conclusion: "The Fed can and should do its job. What it should not be asked to do is everyone else’s."

    Quite right. And anything the FED does decide to do in any scenario is always muted and indirect, like pushing the string across the table, eh?
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