Opinion: NASA offers soft-landing lessons for the Fed
The Federal Reserve still has a chance to meet both of its main goals — strong economic growth and stable prices — but time is running out to achieve a soft landing.
NASA’s scientists know something the Fed has forgotten: It takes a long time to send and receive messages from space, so they need to account for those delays when sending instructions to their spacecraft so they can land safely on Mars, or orbit Saturn or the moons of Jupiter. The error is compounded because shelter prices are by far the largest component of the CPI, at more than 30%.
Just like a radio signal from Jupiter, it takes time for that message to be received by the CPI. It will be received and incorporated into the CPI eventually, but by then it may be too late for the Fed to react. The Fed might crash the spacecraft because it mistakenly believes the messages it gets are in real time.
Real disposable incomes are growing at less than 1% annualized. Household wealth has fallen off a cliff, with the stock market SPX, -0.41% DJIA, -0.38% in a bear market and home equity beginning to fall. Wage growth is beginning to slow. Supply chains are improving.
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