Making Policy Mistakes IS the Fed Policy
Making policy mistakes IS the Fed policy.
Two weeks ago they hiked to stop “second and third order effects.” This morning: wages 3.0%, lowest since May 2021. Payrolls 29K. July revised to a loss. Three-month average 51K. 🤯
The second-order effect they hiked to prevent is wages. Wages were already rolling over. They hiked into a stalling labor market and a falling wage trend to fight an inflation that came from oil and admin policy.
A rate hike doesn’t lower cost of barrel of oil. It made the worker’s cost of money HIGHER at the same time he lost business because his customers have higher cost of money (trickle UP effect).
Unemployment rose partly because LFPR UP .2%, and U6 is the lowest since Jan 2025. This labor market isn’t collapsing. It’s just not one you hike into!
The tool can’t reach the cause. ✅
Commentary on James E. Thorne (@DrJStrategy) on X. Original post: @RosannaInvests.
