Should-Read: Tim Duy: The Fed Is on the Right Side of Its ‘Transitory’ Bet

Should-Read: Tim Duy: The Fed Is on the Right Side of Its ‘Transitory’ Bet: “The Fed is betting that residual seasonal adjustment issues negatively impacted the first-quarter gross domestic product and that the data does not reflect the true pace of economic growth… https://www.bloomberg.com/view/articles/2017-05-08/the-fed-is-on-the-right-side-of-its-transitory-bet

…If they are correct, then the pace will pick up over the next two months and they will likely hike rates in June…. So far it looks like the Fed is on the right side of their bet. The employment report for April reveals solid job growth and low unemployment as the economy charged into the second quarter…. [I see] a fairly large residual seasonal impact in the first quarter that has been growing over time… [with] the offset… currently concentrated in the third quarter…. This won’t be the last word on seasonal adjustment issues in the GDP data. The BEA is working on addressing these issues and may hopefully be able to resolve the situation in the near future….

Early indications… are that the data will be there to justify a June move…

May 10, 2017

AUTHORS:

Brad DeLong
Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch