"Two things became abundantly clear during today's Yellen press conference:
i) the Fed no longer has any idea what it is doing, or where it is steering the economy, exemplified by the Chairwoman's response that she has little "confidence" in the Fed's current set of forecasts (because one can be wrong only for so long about the economy before one indeed loses all confidence in one's abilities), however since everyone is benefiting for now as the asset bubble is still growing and asset prices are still rising, there is nothing the Fed will change about its current line of action and
ii) the Fed has no idea how or why unemployment - as massaged as it may be courtesy of tens of millions of Americans dropping out of the labor force - is as high and as structural as it is.
Of course, all of this should have been quite obvious to everyone else years ago when trillion after trillion in excess liquidity did nothing to stimulate the economy (as can be seen in the -2.0% GDP Q1 GDP is set to print in its final revision), and certainly nothing to boost employment, particularly long-term unemployment - those who are out of work for 12 months or more - to above-consensus levels.
So it appears there is something far more structural with America's long-term unemployment problem, something not even the "smartest academics in the (Marriner Eccles) room" can diagnose. Surprisingly, earlier today Gallup reported one factor that may be contributing to America's unemployment malaise - the same problem that is the reason for the insolvent US welfare state coffers: obesity.
According to Gallup, Americans who have been out of work for a year or more are much more likely to be obese than those unemployed for a shorter time. The obesity rate rises from 22.8% among those unemployed for two weeks or less to 32.7% among those unemployed for 52 weeks or more.
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