It’s not just Powell pandering to markets – rate cuts are necessary

Knowledge Leaders Capital/Bryce Coward/7-16-2019

“We have been surprised over recent weeks to read a slue of commentary proclaiming that the economy is in great shape and Fed Chairman Powell is just pandering to markets by signaling rate cut(s) in July and beyond. Specifically, “strong” readings from the employment report, inflation and now retail sales have received much attention even as much more leading data continues to point to weakness among these very indicators in the second half of 2019. In this post we’ll try to show why Chairman Powell is right to cut rates here and now and why incoming data has done little to alter the intermediate-term outlook of a slower economy ahead.”

USAGOLD note:  We thought this article helpful in showing some of the statistical categories that could influence the Fed’s decision on rates come the end of July.  The article’s most important message is that the Fed is looking at a great deal more than the numbers emphasized in surface analysis of the economy.  We would add that it is not just chairman Powell who makes the decision on rates, but a panel of economic experts that meets as the Federal Open Market Committee. Powell often makes reference to “we” when he talks about monetary policy decisions and he has shown an inclination toward being a “consensus” Fed chairman.

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