The Atlanta Fed's macroblog provides commentary on economic topics including monetary policy, macroeconomic developments, financial issues and Southeast regional trends.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
June 12, 2006
Transparency Versus Uncertainty (Continued)
Last week, commenting (favorably) on a column from Bloomberg's Caroline Baum I wrote:
I don't think monetary policymakers are speaking with forked tongues, but right now the data certainly are.
Reinforcing the view that Bernanke is confusing markets was a review of his public comments by TheStreet.com, which asserted that in a fairly short span, he has moved from inflation hawk to dove and back to hawk. Bloomberg News columnist Caroline Baum captured the mood on trading floors best with last week's piece titled, "Traders Pine for Days of Greenspan Spoon Feeding.''...
The problem has nothing to do with confusing utterances. It's not the words, it's the facts. Markets are roiling because the fundamentals themselves are uncertain.
Given the high level of uncertainty, the only thing we can do is wait and see how the data move. Will the economic numbers pick up again, suggesting that monetary tightening has yet to do its work? If so, then the Fed will have to keep pushing on the brakes. But if the data continue to look weak, and inflation appears to be retreating, then the Fed can stop being the bad guy.
Each new data point will potentially have a big effect on optimal policy and Fed action because we are, right now, at a turning point.
Mr. Hassett goes a step further, and lays some blame off on that guy that had the job before Mr. Bernanke:
The sad thing is, it didn't have to be this way.
If you consider that a "neutral'' federal funds rate is probably around 4.5 percent, and that the rate was below that all of last year, one must conclude that the Fed had its foot on the gas right up to Greenspan's departure. We are in this difficult spot because the Fed was far too easy when growth was hot last year, leaving all of the tough work for Bernanke.
Well, maybe, but my recollection is that things weren't really all that much easier then. On November 29, for example, I highlighted the following passage from the Wall Street Journal:
Bond investors, worried about slackening home sales, nudged the threat level on their economic early-warning system a notch higher yesterday.
In an unusual event known as a partial inversion of the yield curve, investors kept buying five-year Treasury notes until their yield, which reflects expectations of how the economy will fare over the next several years, fell below the yield on two-year notes, which tracks expectations of what the Federal Reserve will do with interest rates in the shorter term.
On that date the federal funds rate sat at 4 percent, and the speculation of many was that the FOMC may have already blasted through "neutral," and was flirting with putting the economy in the tank.
You may or may not buy the argument that the current confusion surrounding statements from our central bankers is the inevitable consequence of economic circumstances. But if you do, I'd contend that what is fair to the current goose is also fair to the former gander.
TrackBack URL for this entry:
Listed below are links to blogs that reference Transparency Versus Uncertainty (Continued) :
- Is the Number of Stay-at-Home Dads Going Up or Down?
- Labor Force Participation: Aging Is Only Half of the Story
- Putting the MetLife Decision into an Economic Context
- The Rise of Shadow Banking in China
- Which Wage Growth Measure Best Indicates Slack in the Labor Market?
- Collateral Requirements and Nonbank Online Lenders: Evidence from the 2015 Small Business Credit Survey
- Are Paychecks Picking Up the Pace?
- Introducing the Refined Labor Market Spider Chart
- Shrinking Labor Market Opportunities for the Disabled?
- Are Long-Term Inflation Expectations Declining? Not So Fast, Says Atlanta Fed
- April 2016
- March 2016
- February 2016
- January 2016
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth