{"id":39224,"date":"2018-10-16T07:44:59","date_gmt":"2018-10-16T12:44:59","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39224"},"modified":"2018-10-16T07:44:59","modified_gmt":"2018-10-16T12:44:59","slug":"opinion-powell-has-lost-his-north-star-and-the-fed-is-flying-blind","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39224","title":{"rendered":"Opinion: Powell has lost his North Star, and the Fed is flying blind"},"content":{"rendered":"
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Opinion:<\/span> Powell has lost his North Star, and the Fed is flying blind<\/a><\/h3>\n<\/div>\n<\/div>\n
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The Fed risks raising interest rates too much as the compass spins wildly<\/p>\n<\/div>\n

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STAN HONDA\/AFP\/Getty Images<\/cite><\/div>
Stars appear to rotate around Polaris, the North Star, in this time exposure of the Kitt Peak National Observatory near Tucson, Ariz.<\/figcaption><\/figure>\n
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Federal Reserve Chairman Jerome Powell is in an unenviable position. Folks expect him to fine-tune interest rates to keep the economy going and inflation tame but he can\u2019t make things much better \u2014 only worse.<\/p>\n

Growth is nearly 3% and unemployment is at its lowest level since 1969<\/a>. What inflation we have above the Fed target of 2% is driven largely by oil prices and those by forces beyond the influence of U.S. economic conditions \u2014 OPEC politics, U.S. sanctions on Iran, and dystopian political forces in Venezuela and a few other garden spots.<\/p>\n

When the current turbulence in oil markets recedes, we are likely in for a period of headline inflation below 2%, just as those forces are now driving prices higher now.<\/p>\n

Overall, long-term inflation has settled in at the Fed target of about 2%. The Fed should not obsess <\/a>about it but keep a watchful eye.<\/p>\n

Amid all this, Powell\u2019s inflation compass has gone missing. The Phillips curve<\/a>, as he puts it, may not be dead but just resting.<\/a> To my thinking, it\u2019s in a coma if it was ever alive at all.<\/p>\n

That contraption is a shorthand equation sitting atop a pyramid of more fundamental behavioral relationships. Those include the supply and demand for domestic workers and in turn, an historically large contingent labor force of healthy prime-age adults sitting on the sidelines, the shifting skill requirements of a workplace transformed by artificial intelligence and robotics, import prices influenced by weak growth in Europe and China, and immigration.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Opinion: Powell has lost his North Star, and the Fed is flying blind The Fed risks raising interest rates too much as the compass spins wildly STAN HONDA\/AFP\/Getty ImagesStars appear to rotate around Polaris, the North Star, in this time exposure of the Kitt Peak National Observatory near Tucson, Ariz. Federal Reserve Chairman Jerome Powell […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1997,303,431,441,16888,5220,534,592,600,22343,3650],"class_list":["post-39224","post","type-post","status-publish","format-standard","hentry","category-economics","tag-economic-sanctions","tag-fed","tag-interest-rates","tag-iran","tag-jerome-powell","tag-marketwatch","tag-monetary-policy","tag-oil-price","tag-opec","tag-peter-morici","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39224"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39224\/revisions"}],"predecessor-version":[{"id":39225,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39224\/revisions\/39225"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}