This morning, the Chairwoman of the Federal Reserve Bank of the United States, Janet Yellen, is giving a speech in Jackson Hole, Wyoming, where she will make a pronouncement on whether the Fed will raise interest rates. Ms. Yellen has a quiet demeanor and looks like a moderately stylish grandmother. But the financial media are covering this event as if Yellen is a rock star.
It’s not her fault. The showboating began with longtime chairman Alan Greenspan, former saxophone player, Ayn Rand devotee, and husband to NBC’s Andrea Mitchell. I’ve attended House hearings where the members of both parties hung on to every word uttered from Mr. Greenspan’ lips.
He had so much chutzpah, he could get away with talking back to members. A Democrat, I recall, asked him a question with a choice of three answers (a, b, or c). Mr. Greenspan responded: your father was much nicer to me when he was in Congress. Bam!
However, let’s not forget how Greenspan did NOT foresee the last decade’s economic crisis caused by banks over-investing in the mortgage market. Greenspan’s razzle-dazzle vanished.
Yellen, as I’ve stated above, completely lacks razzle-dazzle. Nevertheless, she has to deal with Greenspan’s legacy of media hype.
As I see it, the Fed’s responsibility is to keep the money flow at a rate that helps, not hurts, the economy. Greenspan took this a step forward and became a prognosticator on all things economic. Yellen has taken a more traditional approach – she looks at facts and makes decisions.
But are they the right decisions? Has today’s Fed helped or hurt the economy?
As Donald Trump has pointed out, our nation’s GDP is sluggish. According to government statistics released today, our second quarter 2016 GDP is at 1.1 percent; in the first quarter it was 0.8 percent. Further, the Fed typically lowers the GDP number from the previous-plus-one quarter based on additional data. Therefore, don’t be surprised if that 1.1 percentage drops to 0.9 or thereabouts in the next announcement three months from now.
The financial media – which may or may not influence Yellen’s thinking – seems to believe we are at full employment. The reality is different: black youth unemployment is at 25.7 percent (the highest among all ethnic groups), black unemployment as a whole is at rate of 8.4 percent, with 12.4 million working-age blacks not participating in the labor force as of July 2016.
While white unemployment stands at 4.3 percent for the same period, 73.4 million working-age whites are not participating in the labor force. Do the math: this means the number of working age Americans not participating in the labor force is over 85 million people.
Also, as of last month, 26.7 million Americans were on Social Security disability payments (most of them would be included in that 85 million ‘not participating’ number).
Am I missing something? Because I don’t see good news in these numbers.
To Mr. Trump: my bits of advice. Promise voters you will put people in charge of the nation’s finances who will be focused on economic growth. (Note: ordinary folks have never heard of the Federal Reserve, so don’t mention it by name.
Keep in the back of your head that Janet Yellen’s low-key style is good, even if you disagree with her policies. We don’t need any more razzle-dazzle, especially if it’s coming from someone who’s well-connected to the mainstream media (e.g., Greenspan).
Further, promise voters there will be no more government-paid financial news events at expensive resorts such as Jackson Hole. Ms. Yellen and/or her successor can make the same announcement at a much lower cost at the Fed’s headquarters in D.C.
While you’re at it, promise that under your administration, there will be NO government-financed confabs at resorts, period. Why should taxpayers pay for conferences at places they could never afford to visit themselves? Plus, in this age of Skype, why do federal employees have to fly to attend expensive ‘summits’ and such?
Mr. Trump, you’ve already shown how you’re able to connect with average Joes and Janes. Now it’s time for you to prove that you’re planning to run the government with them in mind. No more Fed conferences at Jackson Hole is a good place to start.