Quit calling for the Fed to raise interest rates already!
It seems like only yesterday that we were all assured that as soon as QE3 (third round of quantitative easing) ended then we would immediately crash into a double-dip Great Recession… the second iteration being worse than the first.
But nonetheless the Fed announced in Dec 2013 that they would taper QE3 by $10 billion/month, and from January 2014 to October 2014 the program tapered and was eliminated… and the U.S. saw a GDP growth of 2.4%, we added 2.8 million private sector jobs, and we gained 3.06 million private sector jobs…
So it might come off a little hollow when I say that rushing the Fed to raise interest rates could seriously harm the economy.
But seriously… Rushing the Fed to raise interest rates right now could crush our recovery!
In the 2nd quarter of 2013, my voice was one small voice in the clarion call for the Fed to begin tapering QE3. (I am not – on the whole – a fan of Fed-based stimulus. I prefer honest stimulus like infrastructure, renewable energy and energy efficiency upgrades, and serious R&D appropriations.)
But I became quite concerned late in the 2nd quarter of 2014, and in August 2014 I started saying we might need to slow down the taper. By November – after the taper had run its course – I started to speculate that we might need to implement a small QE4. Now, I’m nothing short of horrified by the calls for raising rates as soon as possible, as I’m certain that doing so now would risk sending our economy into a recession.
So, am I Chicken Little or Cassandra?
Perhaps the better question is: between late 2013 and the summer of 2014; what changed? [Read more…]