The Fed continues to flounder!
Let’s be honest, the Federal Reserve Board has some serious credibility issues. They either spend all their time looking at old and dated data or refuse to accept any information that doesn’t match their own agenda. How else could we have ended up with “Inflation is transitory” situation? How else do we have key elements and components of reports that the Fed says it uses as it’s economic guide that are data points that seriously lag the markets, but view them as if it were real time information? One such data point really drove home this to me. A key inflation component is used car prices. The report the Fed views a model that tracks used car sales that are seriously 90 days or more lagging the markets. So, while that component shows used car prices continuing to rise, in real time markets, those prices have been falling. In fact, massive numbers of repossessions, vehicle surrenders, and cars being traded in for now returning new car inventories are swelling lots and wholesale auctions across the country. If the real time data was used in the current CPI report instead of using dated data, the reported inflation rate could have been one full percentage point LOWER than that report just released! Just imagine how differently the markets would have reacted. Think about how different their own “Dot Chart Projections” would have looked for the end of the year? Yesterday the dot chart the Fed produced projected that the fed funds rate would be 5.6% by the end of 2023! Not that it has ever been a good judge of the future rates, but just imagine how much lower that number would have been using real time data? Unless of course they don’t want that data? The Fed has missed the boat again. They will be embarrassed again. They will make no move to fix the issues and the information they are using to make policy decisions that impact our lives daily, and they don’t seem to care. The only good thing about this is eventually the old news will catch up to the Fed and once again they will start changing policy from behind the curve and the process will begin once again!
Sorry for the rant! I just keep thinking that someday someone will care enough to provide reports in real time to the people that impact the WORLD! Good news, mortgage applications were up more than 7% last week, so there is that!
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