Rex Nutting: What NASA knows about soft landings that the Federal Reserve doesn’t

by | Nov 1, 2022 | Stock Market

The Federal Reserve still has a chance to meet both of its main goals — strong economic growth and stable prices — but time is running out to achieve a soft landing. The problem is that Fed officials are fixated on raising interest rates
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several more times, including another supersize increase at their meeting Tuesday and Wednesday. They don’t seem to notice that inflation is already retreating significantly, while growth is dangerously close to stalling out.

They have a blind spot because they are looking at the past. Greg Robb: Another jumbo Fed rate hike is expected this week — and then life gets difficult for Chairman Powell Fed officials ought to reach out to another government agency that has had remarkable success in achieving soft landings: The National Aeronautics and Space Administration. NASA’s scientists know something the Fed has forgotten: It takes a long time to send and receive messages from space, so they need to account for those delays when sending instructions to their spacecraft so they can land safely on Mars, or orbit Saturn or the moons of Jupiter.Compounding errors It’s the same way with the economy. The signals that the Fed receives from the economy are often delayed, sometimes by months. Unfortunately, one of the main signals the Fed is relying upon right now to decide how much to raise interest rates is delayed by a year or more.

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