Mark Zandi is chief economist at Moody’s Analytics. Over the weekend he published a glowing review of the US economy.
I think this contains a big warning…but first is what he said (briefly):
- With the big revisions to GDP last week, there’s no denying it: This is among the best-performing economies in my more than 35 years as an economist.
- Economic growth is accelerating
- Full employment
- Inflation is rapidly approaching the Fed’s 2% target.
- Household financial obligations are light
- Corporate earnings are strong
- The stock market is hitting record highs on a seemingly daily basis
So, what’s my warning? Well, twofold:
1. The Fed is cutting interest rates, 50 basis points so far, with more to come, we’re told
2. China is offering big incentives, and more over the weekend
I’m not arguing with Zandy, I think he’s right. But… perhaps the FOMC should take it off the accelerator, or at least tone it down.
Maybe China will export the deflation and that’s all good?
Comments are welcome.
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