I had to laugh at Fed chief Janet Yellen’s dismissive statement on Q1 GDP’s 0.7% “growth”.
“The [Federal Open Market Committee] views the slowing in growth during the first quarter as likely to be transitory,” Yellen’s statement said.
By Thursday morning Wall Street jumped on her bandwagon, with futures suggesting a 90% chance for a June rate rise, which is the next meeting. Remember, The Street needs to take Yellen’s words as gospel since they are in cahoots to keep markets liquid.
Both debt and equities markets need future growth projections to keep the charade moving forward.
Friday we get April’s job number, which the Fed probably had a good indication of on Wednesday. March’s 98K new jobs marked a 3-year low and projections for April’s number are not that upbeat with Street looking for 175K jobs.
ADP reported Wednesday that 177K private-sector jobs were created during the cruelest month. I will guessimate that Friday’s number comes in closer to 125K, even if the seasonally adjusted fudge factor is higher in April than March.
As readers of this blog know, I believe 2017 will be another one & done for rate hikes. Just as 2015 and 2016 were one & done with December hikes, Yellen decide to go early this year to stoke the “animal spirits” in the markets.
The fact that the consumer has left the building will move the economy toward a recession later this year. All the signs are there.
Retailers closing, car sales plummeting and foreclosures rising all show that Main Street has retrenched and battened down the hatches.
The same people who voted for Trump, who were attempting to get a leg up from 10 years of malaise, now see the future is no more brighter than the past.
Vast swaths of middle America are dark and bleak when you look at them from a job opportunity perspective. And Washington still really doesn’t care to change that too much.
The local mall is half shuttered. The percentage of the adult population on some sort of government assistance is near 50%, whether it’s unemployment, disability or Social Security.
There will be no infrastructure spending this year foe these counties in 2017. There will be not tax cut for the few who pay taxes in these counties in 2017. And most important there will be no rise in benefits paid to these people in 2017.
And yet, Yellen jawbones about this weakness being a blip on the economic scene. Just how disconnected is the Fed as a whole. No one on the FOMC — the governors from around the country — has stepped up to say that this economy only benefits people who live less than 100 miles from the coasts.
The same people who predominantly voted for Hillary Clinton.
Very curious to say the least.