One-Armed Economist

   Economists are fond of saying, "On the other hand," Fed Chair Janet Yellen reminded her Philadelphia audience this week. And unlike President Harry Truman, who asked for a one-armed economist, Yellen pointed out that the real world doesn't work that way.
   Yes, the economic expansion since the Great Recession has been under way for seven years, she said. But there are also danger signs, both in America and in the world.
   "I expect the economic expansion to continue," Yellen said, but "economic developments abroad have significantly restrained growth in the United States." However, she added that she is "cautiously optimistic that these headwinds are fading."
   Even so, there are "four areas of uncertainty" that could stall further growth. These four are domestic demand, financial stresses from abroad, the outlook for productivity growth, and how quickly inflation will move back to the 2 percent rate that the Fed considers acceptable.
   As it is, the Fed has been holding a key interest rate low in its efforts to stimulate the American economy, and recent predictions that the central bank will boost this federal funds rate soon have met with new definitions of the term "soon."
   Yellen stressed that the economic outlook is "uncertain, so monetary policy cannot proceed on any preset path."
   So despite the many predictions since last fall that the Fed will adjust its monetary policy "next month," all those months have passed, and given the data points that have come out in recent days, especially the poor job increase rate and rattlings from other major countries, no action is likely to come from the meeting next week of the Fed's Open Market Committee.