Is It Just Me Or Does It Really Feel Like The Economy Is Falling Off A Cliff?
Unless you live on Mars, you’ve probably had conversations with friends, relatives, and acquaintances about the tightening economy, as of late. It seems that everyone (or almost) everyone has been feeling the impact of higher prices and higher interest rates; this makes sense. Once prices get high enough, people stop buying; it’s inevitable that people stop buying when monetary policy is not expanding: right now it’s tightening.
Interest rates are up, and the Federal Reserve is decreasing its balance sheet. In fact, if you look at broad measures of money supply, the money supply is decreasing — when adjusted for inflation.
Perhaps people feel like the economy is not doing “good” because it isn’t doing good.
It’s true that we haven’t seen damage in the job market…yet. But I’m not committed to the claim that everything is wrong in the economy right now, so bringing up the job market as a counter-argument is beside the point.
To get a better picture of what I’m talking about, look at the consumer confidence numbers below.
Are consumers just delusionally pessimistic? No. We are seeing record lows in consumer confidence because sentiment is matching reality; the reality is that prices are sky-high over the last couple of years. It’s not that people would rather lose their jobs than see their paychecks not go as far, but that doesn’t mean the latter is painless or…
