As expected, the Federal Reserve nudged interest rates up another 25 basis points Wednesday. The federal funds rate now stands at 2.25%.
The Fed offered up a rosy outlook for the US economy, projecting growth will continue for the next three years. The central bank also dropped the phrase, “the stance of monetary policy remains accommodative” from its statement. As an analyst told Reuters, “It does seem to potentially indicate they believe monetary policy is becoming less accommodative and getting more toward that neutral rate.”
Apparently, the American consumer has bought into the notion that everything is great in the economy. Consumer confidence surged to an 18-year high this month and is close to the all-time record.
The Conference Board Consumer Confidence Index jumped to 138.4, up from 134.7. Analysts expected a dip.
If you look at past financial and economic crises, what is the common denominator?
That’s why we talk so much about debt on these pages.
When the August jobs report came out earlier this month, much was made over the “solid” wage growth. Average hourly wages increased by 2.9% on an annualized basis.
Peter Schiff raised an important question when the report hit the news cycle. Is this wage growth indicative of a growing economy? Or is it simply a sign of inflation?
“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time and still retain the ability to function.” – F. Scott Fitzgerald
On the one hand, things in the economy look pretty good. The mainstream pundits sure seem to think so. They fill the financial news shows with daily doses of good cheer. But is everything really sunshine and roses? Or should we be holding some opposing ideas in our minds as well?
Saturday, Sept. 15, was the 10th anniversary of the Lehman Brothers bankruptcy. Many people consider it the seminal event of the 2008 financial crisis.
In his latest podcast, Peter Schiff said as we look back at the anniversary, we should realize that the next crisis is going to be worse. In fact, the next economic hurricane is going to be a category five.