Last Friday the New York Federal Reserve raised its estimate of U.S. GDP growth for the fourth quarter of 2017 to four percent.
That’s officially the unattainable, impossible magic-wand-level of GDP growth all the ‘experts’ said was impossible. Why did they make that ‘unexpected upward’ re-re-re-revision? Because the underlying economic activity represents facts that cannot be denied. The economy is on-the-move.
…”Hold on to your economic britches peeps – throw dem ju-ju bones out the windows – grab hold of the young-un’s, squeeze em tight and introduce them to ‘capitalism unchained’. We are in uncharted MAGA territory now. Q4 will be well beyond
3.2% 3.8% 3.9% 4.0%… Well Beyond.”…
The actual economic activity noted in virtually every region in the U.S. is so strong the polling measures of economic optimism are reaching new records. Today, as an example, for the first time in their 11 year CNBC All-American Economic Survey more than half of all Americans responding to the questions rate the economy as good or excellent. Additionally, nearly 41 percent of Americans say they expect the economy to be better a year from now. These represent the most optimistic results CNBC has ever recorded.
We would be remiss if we didn’t note a specific choice of words used to describe the economic conditions being measured:
…”We’re not measuring a marginal change in the economy, we’re measuring a different economy.”…
…And it’s and entirely accurate way to describe what is happening. When we reviewed the President Trump 2015 strategic economic plan, that included trade shifts and Main Street policy, we called it a “new dimension in American economics“.
For 30+ years U.S. economic political policy has been driven by Wall Street interests. STOP. Main Street, the middle-class and the American worker have suffered. STOP. The successful election of Donald Trump, and the execution of his “main street” economic policy agenda, has sledgehammered the prior economic machine into a full seizure an halt. FULL STOP.
It was Albert Einstein who aptly stated:
“The significant problems we have cannot be solved at the same level of thinking with which we created them.”
The same basic principle applies to those who are trying to understand and evaluate current economic activity yet failing to disengage themselves from their historic economic frames of reference.
Minds framed around thirty years of financial political policy, intended to influence the U.S. economy and created by vested interests who were building out the legislative priorities based on Wall Streets’ best interests, will struggle to understand the new landscape which is entirely formulated to benefit Main Street.
The two economic engines are entirely divergent and detached. Time, along with focus only on Wall Street interests, has pushed those two economic engines further apart. The same policies which worked in the immediate past will not work in the immediate future.
The two economic engines are now in reverse level of importance. Trump economics focuses on Main Street’s economic engine. The Fed is stuck focusing on the economy through the prism of Wall Street’s economic engine.
We are now in the economic space between both engines. The traditional cause and effect (Fed) is now uncoupled. The administrators of the economy are perplexed; this is unfamiliar terrain.
• Wage rates will be driven up by inflation in ‘non-measured’ high-turn, domestic consumable goods: food, fuel, energy. The Fed does not measure this segment for inflation.
• Inflation, from the perspective of the Fed will appear artificially low because prices on the measured segment will be static: non-domestic durable goods, housing etc. Durable good prices will remain static, and in the short to mid-term fall surreptitiously, seemingly unattached to the larger expanding economy.
Until the two economies gain parity -sometime late in 2018- any fed activity, taken as a consequence to their familiar traditional measurements (interest rates etc.), will have minimal to negligible impact on Main Street. (March 2017 Discussion)
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