May 22nd, 2024 - Volume 10 (2024), Missive 115 (Wednesday)
One armed economists aren’t any better these days
Like a parade, each passing section is different, but the pace is unchanged
The yield on the UST 10yr will go negative as a result of the procession
The joke used to be that a one armed economist was the best economist because they couldn’t say “on the other hand”. Today, though it doesn’t matter how many arms an economist has because, invariably, all and any hands are being held shoulder high, palms-up, in a sign of exasperated defeat when it comes to forecasting the economy. The latest causality appears to be Paul Krugman, professor of economics at the City University of New York who admitted to Wall Street Week yesterday that he is ‘fanatically confused1’ when it comes to interest rates and thereby the general state of the economy. He’s not alone these days, as one after another economist is raising their hand or hands and giving up on their hard-landing, soft-landing, no-landing scenarios in favor of outright admitting that they are flying blind when it comes to figuring out what comes next. But that’s just the point of an economic procession, there is always something that comes next, it just won’t be enough to dissuade the overall trajectory of the economy’s grand march.
When it comes to a surplus productivity-led widening of the output gap, which engineers the economic procession, the quality of income super-secedes that of the rate of interest.
You don’t have to be all that flabbergasted when it comes to the performance of the economy so long as you know how a procession works. It doesn’t matter if you’re typically a optimist or pessimist, an economic procession is like that of graduation or funeral procession wherein a large body moves slowly forward at a pace purposely below its potential. Like a parade, although each passing section will be wildly different from the next, the actual pace of the procession is unchanged. It is like this for the U.S. economy right now, as each day seems to be different from the next, yet
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