MFA Musings: 6/17/19
Today’s Title: Reflection.
As I sit along the water’s edge, I see the reflection of the sun setting and the moon rising. This serene moment encourages me to reflect on the past week. News anchors’ have been talking, economists have been prognosticating, and the world is speculating: “Will the FOMC lower the Federal Funds rate any time soon?”. I think we all need to take a step back and think clearly about this debate.
As I think about the question, I remember several conversations that I have had over this past weekend about the difficulty in finding employees. Restaurants cannot find servers. Builders cannot find tradespeople. All over the country, people tell me they cannot find enough help. A recruiter I know told me that everyone they hire is leaving a job. Everyone that wants to work has a job.
Now, we have one bad unemployment number this month, and the world states the FOMC needs to lower the Fed Funds Rate. Could it be that everyone has a job? Another thought that comes to my mind is the strange notion that I am supposed to believe that the FOMC, with its dual mandate of price stability and full employment, needs to make a change?
The US unemployment rate is below 4.00%. If one of my coworkers told me two years ago that the FOMC would lower the Federal Funds rate with unemployment below 4.00%, I would have laughed. And, add that inflation is roughly 2.00%, which is the FOMC’s goal.
As I sit back and reflect on the last few weeks, I struggle to see how the FOMC lowers the Federal Funds rate in any significant amount with the overall metrics of the USA.
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Have a great week!