For the newly re-appointed Chairman of The Federal Reserve, it must be a satisfying feeling. To, at last, have that second appointment as Chairman. What makes this especially noteworthy, is that he's done it under two different Presidents, with two very different views of the economy.
First appointed by Donald Trump. The Tax Cut and Jobs Act, President was very pro-business. Advocating lower taxes, and protective US Tariffs.
And now under Joe Biden, the Build Back Better President. Who's economic priorities lean to environmental regulations, and social justice.
I can't think of two Presidents in our history who had mode divergent views.
So, today Powell will ascend Capital Hill, to testify before the Senate Committee on Banking, Housing, and Urban Affairs. Already we can see that salesmanship at work. Last night Powell released his opening statement. And we can already see the master salesman setting the stage for the rest of his testimony.
In Powell's view, it's Spring Time in the economy. He leads by telling us that the economy is strengthening. And will continue to do so, as the cases of Covid decline.
Next comes a discussion of a strengthening labor market. With declining unemployment, and opportunities galore. Then noting that issues in the Supply Chain have contributed to our current inflation numbers. But concluding that “most forecasters” expect that inflation will move down significantly over the next year.
I'm not sure which Forecasters, Mr. Powell is referring to. But they must not work on Wall Street. Where increasingly Street Analysts are coming to the view that this round of inflation is here to stay. At least for longer than a year.
What Powell is doing is setting the stage. Like any good salesman, he realizes that later on in the discussion, the Senators are likely to complain about current conditions. But Powell hopes that his Big Picture overview of Economic Spring, will leave a lasting impression.
But, of course, this bucolic overview misses so much of what happens here in the real world. Where far from Spring, we are entering, what President Biden has called a long dark winter.
A winter, where it is uncertain where almost all of those economic indicators Powell sites are headed.
We don't know, for instance, where the Pandemic will go. Within the last few days, a new name was added to our lexicon: Omnicron. What's its potential for good or evil? At this point, no one knows.
Or the labor market: we are currently looking at one of the largest distortions ever, between the 10 million job openings, and the number of workers who remain at home. This is creating a huge imbalance.
Not mentioned, by our Fed Salesman has been the increasing volatility within the financial markets. Wide swings in prices are increasing. In commodities like oil, and lumber, in the Crypto market, in the stock and bond markets. Far from indicating a smooth sail into the future. This is raising at least a yellow flag of growing uncertainty.
So, as a marketing piece, Chairman Powell's opening statement is a work of art. Portraying the current economy in Springtime. We would expect nothing less from our Salesman at the Fed.
Unfortunately for many, including I suspect many on the Senate Committee, this statement falls far short in addressing today's issues of growing inflation, supply chain woes, and labor allocation.
We'll have to see how many of the Senators pick up on all this.