Federal Reserve Policy Failures Are Mounting

“One possible reason why the Fed have consistently erred on the high side in their growth forecasts is that they assume higher stock prices will lead to higher spending via the so-called wealth effect. The Fed’s ad hoc analysis on this subject has been wrong and is in conflict with econometric studies. The studies suggest that when wealth rises or falls, consumer spending does not generally respond, or if it does respond, it does so feebly. During the run-up of stock and home prices over the past three years, the year-over-year growth in consumer spending has actually slowed sharply from over 5% in early 2011 to just 2.9% in the four quarters ending Q2.”

http://www.caseyresearch.com/articles/federal-reserve-policy-failures-are-mounting

Scan to Donate Bitcoin to Freedomwat.ch Staff
Did you like this?
Tip Freedomwat.ch Staff with Bitcoin