{"id":53546,"date":"2023-08-27T07:52:46","date_gmt":"2023-08-27T11:52:46","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/opinion-happy-economists-are-ignoring-negative-indicators\/"},"modified":"2023-08-27T07:52:49","modified_gmt":"2023-08-27T11:52:49","slug":"opinion-happy-economists-are-ignoring-negative-indicators","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=53546","title":{"rendered":"Opinion: Happy economists are ignoring negative indicators"},"content":{"rendered":"

Never have so many economists changed their minds so quickly.<\/p>\n

Buried in the latest Economic Policy Survey released this week by the National Association for Business Economics was a virtual U-turn in the outlook for the people generally regarded as the smartest and best at evaluating the economy.<\/p>\n

\n

If the broad change in thinking is right, better days \u2014 and fewer bad days \u2014 lie ahead, but any sudden change in thinking gets observers wondering if the lemmings are heading for a cliff.<\/p>\n

Nearly three-quarters of the economists polled for NABE\u2019s August survey agree that current monetary policy is \u201cabout right,\u201d and nearly 70% had some level of confidence that the Federal Reserve will be able to achieve a soft landing.<\/p>\n

Read: <\/strong>Recession at least a year away, economists now say<\/p>\n

In the March 2023 Economic Policy Survey, that same percentage of surveyed economists reported being \u201cnot very confident\u201d or \u201cnot at all confident\u201d that a soft landing could be achieved.<\/p>\n

\u201cWhenever economists are no longer predicting gloom and doom, you should always take it as a good sign,\u201d said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas\u2019 Sam M. Walton College of Business in an interview on my podcast, \u201cMoney Life with Chuck Jaffe.\u201d<\/p>\n

\u201cThe big difference between March and now is that, maybe in March, \u2026 there was some disbelief that the economy hadn\u2019t slowed yet and now, at this point, we now believe that this is actually possible.\u201d<\/p>\n

When investors get giddy in unison, market observers get nervous. It\u2019s not just the old saw about being greedy when others are fearful and fearful when they get greedy, it\u2019s that the timing of the investment herd is notoriously suspect.<\/p>\n

Most investors wait until the market proves something to them before getting in, meaning they miss much of the uptick and catch most of the downturn that occurs after peak euphoria. It\u2019s never surprising when individual investors get whipsawed by their emotions and sentiment turns around on a dime.<\/p>\n

But economists are supposed to be cool and unemotional. They are, to borrow from the Fed, data-dependent and are not easily moved.<\/p>\n

While I mostly disagree with the old quip about how all the world\u2019s economists laid end-to-end still couldn\u2019t reach a conclusion \u2014 it\u2019s a good line but economist opinions tend to run in packs and sometimes jump to conclusions \u2014 a quick 180-degree turn in forecasts is highly unusual, especially at a time when there are so many classic indicators still saying that there\u2019s trouble ahead.<\/p>\n

The yield curve remains inverted \u2014 meaning short-term interest rates are higher than longer-duration rates \u2014 and that has never failed to be a precursor to a recession, albeit always requiring a good long lead time.<\/p>\n

Likewise, the Leading Economic Index from The Conference Board fell for the 16th<\/sup>\u00a0straight month in July; there\u2019s no denying that tighter monetary policy, elevated prices, harder-to-get credit, and reduced government spending historically put a damper on the economy, although it often requires at least 18 months or more of those behaviors to trigger a recession.<\/p>\n

To reach the conclusion that the economy can minimize or avoid recession and that the Fed can pull off a soft landing, economists appear to believe that those long-term indicators of economic health don\u2019t matter so much anymore.<\/p>\n

Two things are fueling that thinking: 1) consumer spending boosted by a strong job market, and 2) the indicators are still tainted from the COVID-19 pandemic.<\/p>\n

\u201cThe yield curve doesn\u2019t predict recessions, it predicts a process that leads to recession,\u201d said Edward Yardeni, president and chief investment strategist at Yardeni Research, in another recent interview on my show. \u201cMaybe it\u2019s just due to be wrong; just because something has been spot-on right consistently doesn\u2019t mean it\u2019s guaranteed.\u201d<\/p>\n

Yardeni noted that the traditional process following a yield-curve inversion is that no one wants to buy long-term paper because short-term bonds have a higher payoff; that effect is muted now \u201cif you don\u2019t think the two-year is going to stay at these levels,\u201d and current calls for Fed rate cuts in 2024 suggest that investors may want to lock in rates for longer.<\/p>\n

Yardeni said he thinks the economy is experiencing \u201crolling recessions,\u201d downturns that have gone through economic sectors like housing, goods and commercial real estate that have been localized enough to not ruin the whole enchilada.<\/p>\n

Interestingly, Yardeni said he believes there are simultaneous rolling recoveries happening in retail sales and now a rebounding housing market.<\/p>\n

Robert Frick, corporate economist at Navy Federal Credit Union, said in another interview on the show: \u201cWe\u2019ve never really been in danger, in hindsight, of recession. It\u2019s all about the consumer and now the consumer is getting stronger.\u201d Frick noted that he is focusing on consumer-driven numbers and ignoring the yield curve and leading indicators, which he feels are irrelevant in current conditions.<\/p>\n

Of course, none of this means that the economy will completely avoid recession, rather that economists expect a downturn to be brief and muted, and that anything that feels rougher than the hoped-for soft landing won\u2019t be felt for six months or more.<\/p>\n

Besides, flip a few numbers and get some modest hint at policy change from Jerome Powell and the economists could set off in another direction completely.<\/p>\n

That\u2019s not the behavior they\u2019re known for but given the way they\u2019re responding to current economic conditions, no one should be surprised if they do a do-si-do and spin around the next time the music changes.<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Never have so many economists changed their minds so quickly. Buried in the latest Economic Policy Survey released this week by the National Association for Business Economics was a virtual U-turn in the outlook for the people generally regarded as the smartest and best at evaluating the economy. If the broad change in thinking is […]<\/p>\n","protected":false},"author":1,"featured_media":53547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-53546","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nOpinion: Happy economists are ignoring negative indicators | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=53546\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Opinion: Happy economists are ignoring negative indicators | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=53546\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-08-27T11:52:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-27T11:52:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/1693137167_horizontal.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1320\" \/>\n\t<meta property=\"og:image:height\" content=\"742\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=53546#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=53546\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Opinion: Happy economists are ignoring negative indicators\",\"datePublished\":\"2023-08-27T11:52:46+00:00\",\"dateModified\":\"2023-08-27T11:52:49+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=53546\"},\"wordCount\":941,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Investing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=53546#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=53546\",\"url\":\"https:\/\/ifintechworld.com\/?p=53546\",\"name\":\"Opinion: Happy economists are ignoring negative indicators | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-08-27T11:52:46+00:00\",\"dateModified\":\"2023-08-27T11:52:49+00:00\",\"description\":\"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=53546#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=53546\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=53546#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Opinion: Happy economists are ignoring negative indicators\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Opinion: Happy economists are ignoring negative indicators | iFintechWorld","description":"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=53546","og_locale":"en_US","og_type":"article","og_title":"Opinion: Happy economists are ignoring negative indicators | iFintechWorld","og_description":"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association","og_url":"https:\/\/ifintechworld.com\/?p=53546","og_site_name":"iFintechWorld","article_published_time":"2023-08-27T11:52:46+00:00","article_modified_time":"2023-08-27T11:52:49+00:00","og_image":[{"width":1320,"height":742,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/1693137167_horizontal.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=53546#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=53546"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Opinion: Happy economists are ignoring negative indicators","datePublished":"2023-08-27T11:52:46+00:00","dateModified":"2023-08-27T11:52:49+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=53546"},"wordCount":941,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Investing"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=53546#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=53546","url":"https:\/\/ifintechworld.com\/?p=53546","name":"Opinion: Happy economists are ignoring negative indicators | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-08-27T11:52:46+00:00","dateModified":"2023-08-27T11:52:49+00:00","description":"Never have so many economists changed their minds so quickly.Buried in the latest Economic Policy Survey released this week by the National Association","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=53546#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=53546"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=53546#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Opinion: Happy economists are ignoring negative indicators"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/53546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=53546"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/53546\/revisions"}],"predecessor-version":[{"id":53548,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/53546\/revisions\/53548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/53547"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=53546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=53546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=53546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}