by Patrick O’Hare
Fed Chair Janet Yellen recently said that the Federal Reserve is “generally pleased” with the US economy. She did so at the same time she was noting for listeners that the Fed’s median projection for the change in real GDP for both 2016 and the longer run had been lowered to 1.8% from 2.0%.
It was lip service at its finest; meanwhile, the updated projections were starkly modest when taking into account some large gains in median household income and household net worth recently reported by the US Census Bureau and the Federal Reserve.
If one took those gains at face value, one might think the US economy is booming. It isn’t, though, because consumers have been more reserved with their spending and because the Fed’s monetary policy, which rests on the wealth effect, isn’t a one-for-all policy.