Is the Fed Campaigning for Biden?

May 2, 2024 By E.J. Smith - Your Survival Guy

FOMC Chairman Powell answers a reporter’s question at the press conference.

You know the Fed is a political beast headed by an unelected official in Jerome Powell. Yes, he was appointed by Trump, but is he playing to keep his job if Biden wins? With inflation like this, one would think interest rate hikes would be on the table. Yet Wall Street holds its breath for a rate cut (campaign contribution) in September. Stay tuned. In the meantime, check out food inflation, and you see the Fed is in the business of higher prices. The Wall Street Journal writes:

So why the first-quarter price rebound? His analysis fits the Fed’s view that most of the pandemic-era inflation wasn’t caused by easy monetary policy. It’s the result of supply-chain disruptions that still haven’t entirely been fixed, especially for goods. This helps the Fed explain why the decline in goods prices has all but stopped, after having driven most of last year’s inflation decline. Mr. Powell also cited the statistical lag in calculating shelter prices, as rents are now rising more slowly.

But his view that monetary policy is restrictive seemed at odds with his list of sunny economic statistics. He even discounted the first quarter slowdown in GDP growth to 1.6% as underselling economic strength. And he said the labor market continues to be tight, if less so than a year ago.

Asked about the talk of “stagflation,” which is in the air since the first-quarter report, Mr. Powell said “I don’t see the stag, or the ’flation.” We agree that growth can co-exist with declining inflation. But prices are no longer falling and asset prices are high and in many cases rising. (See copper.)

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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