Political Observer on The Economic Metaphysics, as practiced at The Financial Times.
JUN 10, 2023
Political Observer wonders at the long term viability of such Economic Metaphysics?
Headline: Economists predict at least two more rate rises to quell stubborn inflation
Sub-headline: Experts polled by the FT say Fed will need to take tougher action than markets expect to cool economy
https://www.ft.com/content/d5dcc72e-96eb-403a-a793-c9a8c3a11e30
When I read this ‘essays’, in the Financial Times, I was reminded of two vital chapters in Deidre McCloskey’s ‘The Rhetoric of Economics’ .
Chapter 2:
The Literary Character of Economic Science
Science Uses Literary Methods Page 20
Proofs of of the Law of Demand Are Mostly Literary Page 23
Linguistics Is an Appropriate Model For Economic Science Page 28
Literary Thinking May Improve Applied Economics Page 31
Chapter 3:
Figures of Economic Speech Page 35
Even a Mathematical Economist Uses, and Must Use, Literary Devises : The Case of Paul Samuelson Page 38
Most of the Devises Are Only Dimly Recognized Page 38
Models Are Nonornamental Metaphors: The Case of Gary Becker Page 40
Mathematical and Nonmathematical Reasoning in Economics Rely on Metaphor Page 44
The Master Tropes Rule Economics : The Case of Robert Solow Page 48
…
Colby Smith and Sam Learner rely on evoctaive Graphs at three points in their essay. Not to speak of :
…
The latest survey, conducted in partnership with the Kent A Clark Center for Global Markets at the University of Chicago Booth School of Business, predicts the Fed will lift its benchmark rate to at least 5.5 per cent this year. Fed funds futures markets suggest traders favour just one more quarter-point rate rise in July.
Top Fed officials have signalled a preference for forgoing a rate rise at their next two-day meeting on Tuesday, while keeping the door ajar to further tightening. After 10 consecutive increases since March 2022, the federal funds rate now hovers between 5 per cent and 5.25 per cent, the highest level since mid-2007.
…
A selection of sentences is more than in order :
Of the 42 economists surveyed between June 5 and June 7, 67 per cent forecast the federal funds rate to peak between 5.5 per cent and 6 per cent this year.
More than half of the respondents said the peak rate will be achieved in or before the third quarter, while just over a third expect it to be reached in the final three months of the year.
“They haven’t done enough for long enough yet to get inflation down,” said Dean Croushore, who served as an economist at the Fed’s Philadelphia Reserve Bank for 14 years.
Despite mounting expectations that the Fed is not yet done with its tightening campaign, most of the economists thought the Fed would skip a June move.
“The economy turned out to be much more resilient than we originally thought and the question is: is that resilience temporary and the hikes in the pipeline are sufficient or does the Fed need even further hiking?
An added complication is the pullback by regional lenders following the collapse of Silicon Valley Bank, First Republic and a handful of other institutions.
Among respondents, however, concerns about inflation appeared to outweigh banking sector worries.
By the end of 2024, roughly a third of the respondents said it was “somewhat” or “very” likely that core PCE would exceed 3 per cent. More than 40 per cent said it was “about as likely as not”.
“There has barely been any progress on core inflation, the real economy is performing vastly better than anyone could possibly have expected and policymakers have yet to fully adjust to that reality,” said Jason Furman,
The biggest factors driving down the rate of inflation will be rising joblessness and falling wage gains, 48 per cent of the economists said, followed by global headwinds stemming from a weakening Chinese economy and strong US dollar.
The Final Two Paragraphs:
Recession calls have been pushed back as well. Most economists do not see the National Bureau of Economic Research declaring one until 2024, compared to surveys conducted last year in which roughly 80 per cent expected a recession in 2023.
About 70 per cent said the peak unemployment rate in a forthcoming recession would not be reached until the third quarter of 2024 or later. Gabriel Chodorow-Reich of Harvard University said he is bracing for a mild recession in which unemployment rises to about 6 per cent.
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