Janet Yellen in Public Denial about the Anemic State of US Economy
US Fed Chairwoman Janet Yellen, dubbed “the Schoolmarm” is ignoring the Key warning signs that the US is about to plunge into a recession.
The economic data released over the past weeks are painting a bleaker picture of the US economy than seen a short time ago.
But Ms. Yellen went out of her way Monday to stress that the US economy appears fundamentally solid.
She assured her audience and anyone else who would listen that the job market has rebounded, consumer spending and confidence is picking up, that higher home prices have lifted household wealth, and that ow energy prices have strengthened consumer purchasing power.
Nevertheless there are Key areas of major concern, they are, as follows:
- Job creation is plunging: The most disturbing part of last Friday’s jobs report is not that the headline number was as low as it was, but that revisions to previous month’s estimates were revised Southward to the point that there is now a clear trend of slowing job growth in the American economy.
- Businesses are not investing in capital equipment: The decline in companies’ willingness to invest in people is matched by its lack of interest in investing in new capital equipment.
- ISM data confirms payroll weakness: Data from the Institute for Supply Management (ISM) released last Friday showed the growth in the services sector slowing in May, with the employment component falling into contraction (negative) territory.
Janet Yellen sent a message in a speech in Philadelphia the is 180 degrees out of phase with the facts. There are many uncertainties in the economy that it is impossible to sketch any timetable for when the Fed might raise interest rates again. Yet, she spun it just the opposite, and in a Hawkish manner.
In her speech, she used some variation of the word “uncertainty” 13X’s starting with a question raised by a grim NFPs (jobs situation) report the government issued Friday.
Ms. Yellen was asked, “Is the markedly reduced pace of hiring in April and May a harbinger of a persistent slowdown in the broader economy?”
She did not know the answer.Jobs, NFPs
The US Fed, she said, “will be wrestling” with that question in the months ahead, just as it will be studying other uncertainties she pointed to.
In contrast to what she indicated late last month, when she said a rate hike would likely be appropriate in “coming months,” she offered no timetable Monday for the US Fed to resume raising rates, but intimated that rate hikes are coming.
I, and others I have spoken to see Ms. Yellen as misleading and perhaps even dishonest and a tool of the Obama Administration’ the good times are rolling argument about the anemic economy.
For his part, Donald Trump has said he would sack Ms. Yellen as the Fed Chair. He also has the Fed had kept rates low to help US President Barack Hussein Obama’s Administration. I am in agreement with Mr. Trumps outlook
“I have nothing against Janet Yellen whatsoever,” the presumptive GOP Presidential nominee recently said in a TV interview. “I don’t know her. She is a very capable person. People I know have a high regard for her. But she’s not a Republican.”
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