NGDP Outlook June 15th 2017

Market-implied NGDP expectations fell from 3.9% year-ahead before the recent Federal Reserve policy statement, to just above 3.8% after. A disappointing result and a stark way of quantifying the restrictiveness of current Fed policy. The Fed had announced months ago that four rate hikes would be done in 2017, and yes, they really mean it. We think nominal income growth is the best single way to quantify what monetary policy is doing to the economy, but if you’d prefer the Fed’s Personal Consumption expenditures price index along with job growth, well then the message is the same: the economy is…

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