The 4 Mistakes Made by the Federal Reserve sending the United States into a Recession

1. The Federal Reserve’s starting point for monetary policy lift-off was far too late. The economy was already overheating by the time they started reacting.
2. We think they were wrong about the labor market. We think they were surprised by how fast the labor market tightened. The participation rate has not come back to the degree that they were expecting.
3. They were surprised about inflation, places the transitory story hasn’t played out very well. They thought a lot of the inflation pressures were transitory but that’s lasting longer for a lot longer and at a lot higher rate than they anticipated.
4. And then finally, we think they were a little bit too concerned about a taper tantrum. So we think they were a little bit too gentle in terms of their communication to financial markets because they’re worried that that’s going to provoke a sell-off in the bond market. And we think the fact the problem right now is that the markets are taking them seriously enough.

It’s a short one today on the market and inflation. Day 5 of the challenge.

I didn’t get much done today. I posted some videos to TikTok but that’s it.