Market attention today shifts to the jobless rate.
The September number came in at 5.1% and any drop in that figure, even as some are saying, as small as one-tenth percent, could cause the Federal Reserve to crank up interest rates for the first time in what has become a long, melodramatic act in the theater of economic absurdity.
Here's a paragraph that pretty much says it all from today's WSJ. It's what you really need to know.
After keeping rates at near-zero for almost seven years, the Fed has been waiting for the perfect monument to raise rates. That would be one when jobs are plentiful, markets are calm and inflation is just right.
The two key words in that paragraph are waiting and perfect. Waiting here is synonymous with indecisiveness and clueless. Even neophyte investors sooner or later learn there's never a perfect time to invest and waiting for it is usually--spelled missed opportunity.
"This has proved elusive. Meanwhile, the longer the Fed waits, the greater the danger delay downs the seeds of future problems,either with inflation or financial stability," the article continues.
But the significance of the jobless rate remains in question, particularly when one looks at the last 15 years, a period the Journal points out which included two boom-and-bust cycles, and the jobless "rate averaged 6.4%."
There are other indicators connected to jobs like the labor participation rate and such the Fed watches, but the bottom line here is pretty simple: these indicator-paralyzed bureaucrats, whatever they opine and do, perfect moments are as rare as truthful politicians.
And for those who argue the hike would most likely be 25 basis points, no big deal since it's reversible, actually defeat their own point. They first apparently downplay those dreaded unexpected, unintended consequences and, second, if the 25 basis point hike is no big deal, why has it taken these economic Federal soothsayers so long to act?
The answer is perfect.
N.B: The number came in for what it's worth at a seven and a half year low of 5% setting off numerous articles about a December rate hike.
No comments:
Post a Comment