Is Janet Yellen trying to screw Donald Trump?
No, I’m not asking for possible titles to a porn movie (“Trump Gets Janet Yellin’” or “Trump Puts Down Ol’ Yellen”). But it really does seem like the Federal Reserve Chair(wo)man is out to get the Donald.
Yellen recently told Congress’s Joint Economic Committee that an interest rate hike could be imminent if “incoming data provide some further evidence of continued progress toward the committee’s objectives.” Markets have already priced in a hike of a quarter to a half of a percentage point. For now, stocks continue to be reach historic highs and the dollar is strong, even as Yellen and her central banking cohorts begin to ease on the gas.
But will Yellen’s gambit plunge us into a recession is the question. Just because Wall Street is gorging on high returns doesn’t mean the economy is sound. For eight years and running, the Fed has kept interest rates near zero percent in an attempt to spark investment and borrowing. Unemployment has gradually shrunk during the Obama years, yet the workforce participation rate remains low by modern standards. Prior to Election Day, two-thirds of Americans were anxious about their economic future.
Stock traders are popping the bubbly while middle America drinks the warm beer of worry. If you’re still in the dark as to why Trump stole the Rust Belt from Hillary, you need not look further than that.
Fear aside, Trump’s election has been an Advil to the ongoing economic headache felt by most Americans. Eight years of Obama’s big spending combined with ultra low interest rates has done precious little to shore up their optimism. Retirees on fixed income can’t get a yield on their savings. Millennials earning a salary for the first time in their life have little incentive to put money away.
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