Officials are trying to understand why consumer spending, the job market and overall growth have not responded to the most aggressive interest rates in decades.
Officials are trying to understand why consumer spending, the job market and overall growth have not responded to the most aggressive interest rates in decades.
Since the article is quoting some of the top economists in the world, I would t let not being one really limit your options for commenting.
Here’smy hot take: economists have discussed sticky prices and sticky wages - which is a (imho) crappy way of describing effectively friction in economics. I wonder if what we are seeing here is sticky consumer spending. Normally we’d expect spending to react most quickly to interest rates and inflation, but people have gotten used to a certain level of spending and escalating debt, and so they might simply feel (or need to feel) unaffected by the fed changes.
Honestly, until we update the idea of an economic rational actor, I don’t think we’re going to get very far. In fact I think we risk getting further afield the longer we persist, and the more difficult it will finally be to realign everything.
I agree. The idea of humans being rational is so divorced from reality it makes me wonder if economists know real people.
To be fair, they don’t get invited to a lot of parties.