The Hot Factory, Cool Consumer Economy
\n\nAn analysis from Blackrock this week offered a scary-sounding description of the economy emerging from the Federal Reserve’s latest Beige Book.
\n\nThe Beige Book suggests that growth is becoming concentrated in manufacturing, defense, data centers, energy, and nonresidential construction, Apollo observed, while consumers, small businesses, housing, and other rate-sensitive sectors show signs of strain. The capital-spending economy is separating from the consumer economy. Monetary restraint is working unevenly. They call it the “Gator Jaw” economy because the divergence looks like an open maw.
\n\nAs far as the facts go, most of that is broadly accurate. Yet the conclusion suggested by this divergence—that this is a negative development—may be backward. What if the two-speed economy is not evidence that the soft landing is failing? What if the divergence is the soft landing?
\n\nThe Fed is trying to bring down consumer inflation, which it officially measures by the personal consumption expenditures price index. It is not trying to stop factories from producing machinery, prevent utilities from building power plants, or persuade technology companies to abandon investments in artificial intelligence. The ideal outcome is one in which consumer demand becomes less inflationary while investment, production, and employment…
Original source: https://www.breitbart.com/economy/
