The U.S. economy isn't dead yet, or even dying, despite what some presidential candidates are claiming, but the Federal Reserve is pushing to stress the positive in its latest summary of current economic conditions.
In its latest Beige Book summary, released today, increases in various districts were termed moderate, slight or mixed, with one district "flat," and another showing a "modest decline."
Manufacturing activity overall was flat, the report said, "although conditions varied considerably." Agricultural conditions were "flat to down moderately," according to the Fed summary, and although labor market conditions "continued to improve," showing "modest gains," wage growth "varied considerably."
The Fed almost never acknowledges strongly negative conditions, probably for fear of making things worse. In a way, this can be called the Willy Loman School of Economics. According to Willy, the lead character in the Arthur Miller play, "Death of a Salesman," things are always great. But the tragedy of Willy Loman was his inability or refusal to recognize a market downturn. Finally, in a graveside eulogy, Willy Loman was called "a man way out there in the blue, riding on a smile and a shoeshine." But when people stop smiling back, it's a tragedy.
Perhaps the Fed deliberately accentuates the positive, holding its moves in reserve as it works quietly to support the economy when things begin to slow, and pull back the financial reins to prevent a runaway.
Will they admit this? In a vague way, yes, but without being specific. Having a Willy Loman as chairman of the Federal Reserve Board would indeed be a tragedy for the American economy.
Sometimes things are in reality not great.
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