Click to enlarge.
I have added a trend line in red. Note that it is an unsustainable parabola. What's new?
We are getting extra growth as the unemployed are being put back to work. This extra boost to growth is definitely not sustainable over the long-term. I'm really starting to wonder if most investors realize it though.
So, without further ado, here are my questions.
1. As seen in the chart, does the Fed expect to see a 0% unemployment rate by 2019?
2. If zero is not the ultimate target, then how much longer can this unsustainable growth party realistically last?
3. What will our country's growth look like once we are done tapping our unemployment reserves?
4. How is the Fed going to engineer a soft landing when our unemployment reserves are literally falling like a meteor?
5. Has the Fed given any thoughts to deploying a parachute to reduce the velocity?
6. How big will the recessionary impact crater be?
March 12, 2014
Q&A: The Fed Will Manage a Soft Landing
John Williams, president of the Federal Reserve Bank of San Francisco, is feeling pretty good about the economy. He is ready to continue the Fed’s retreat from bond-buying and forward guidance. And he says he’s optimistic that this time, the Fed will manage to produce a soft landing.
St. Louis Fed: Unemployed