Rex Nutting: The Federal Reserve can’t even get the direction of the economy right

by | Jun 15, 2022 | Stock Market

A year ago, the Federal Reserve turned a blind eye to the gathering storm of inflation. Now the Fed is missing another big problem: A rapidly slowing economy. In an effort to appear strong on inflation, the central bank can’t recognize that the economy is already downshifting to a slower growth rate. If it doesn’t wake up to this new threat, a job-crushing recession is inevitable.

Breaking news: Fed lifts interest rates by most in three decades, anticipates policy rate rising to 3.8% by end of 2023 You have to worry when the Fed can’t even get the direction right when it’s describing the economy. But there it is in the very first sentence of the statement that the Fed released after the two-day policy meeting concluded on Wednesday: “Overall economic activity appears to have picked up after edging down in the first quarter.” The economy has not “picked up.” And the bit about the economy “edging down in the first quarter” is true only because statistics sometimes say the opposite of what they mean. You could believe it’s true only if you were fooled by the head fake in gross domestic product data in the first quarter.

The government said GDP fell at a 1.5% annual rate, but …

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