HAS ANYONE SEEN OUR WAITER?
In hockey, the big three is called the hat trick. In basketball, a triple double. In the world of finance they just say Federal Reserve, IMF and the World Bank. When you have those on your resume’ you are certain to receive attention when you speak.
Thus, Stanley Fischer, Vice Chairman of the US Federal Reserve, the former First Deputy Managing Director of the International Monetary Fund and Chief Economist at the World Bank garnered headlines as he poured cold water on an imminent interest rate increase. Of course, for all the really important reasons.
“The tightening of US policy will begin only when the US expansion has advanced far enough-when we have seen further improvement in the labor market and when we are reasonably confident that the inflation rate will rise to our 2% goal.”
The interesting centerpiece of Fischer’s most recent remarks is that the culprit in holding the US back is not the US itself but “foreign growth”, which is “weaker than anticipated” and has significant “consequences for the US economy”.
I am, however, a bit perplexed that strictly on the face of the falling unemployment rate, 10% to 5%, since President Obama took office, why a case couldn’t be made that the labor market has “advanced quite nicely”. Those are the words of Wall Street Economists, Administration mouthpieces and Federal Reserve officials. Unfortunately, according to Mr. Fischer, not “far enough”.
Rumor has it that while dining out recently Mr. & Mrs. Fischer had to wait an unusually long time for their Crème Brulee’ dessert which connoted an under staffing of employees. In addition, a French dessert made by anyone other than a Frenchman is just not the same. This obviously demonstrates a lack of “foreign growth” impeding a much longed for US growth. China, Viet Nam, Cambodia, even Mexico, can all have their manufacturing and after the TPP Trade Agreement they’ll have even more. But for us, according to the Keynesians and the Fed Vice Chairman will be most satisfied when the wait-staff is at full strength, the Crème Brulee’ served on time and the bartender actually knows how to make a good Manhattan.
When that occurs, meaning “further improvement in the labor market”, the Federal Reserve can once again start contemplating a tightening of interest rates, at least according to Stanley Fischer.