Powell’s Fed Let the US Economy Get Too Hot for a Soft Landing

I am old — I turn 60 next year. So I don’t believe in Santa Claus. I don’t believe in the Tooth Fairy. And I am pretty darned skeptical about Jay Powell’s “soft landing,” too. I’ve seen enough Fed chairs over the years to know that managing monetary policy is not in the least like flying a plane. If the world’s pilots had the same success rate touching down as the world’s central bankers at achieving price stability, most of us would opt to drive or sail.

What, you may wonder, am I complaining about? We got the latest US inflation numbers on Thursday and they were fine. The headline consumer price inflation rate in July was 3.2% year-over-year, up only a sliver from 3% in June. From those who prematurely predicted that inflation would be “transitory,” we now hear claims of vindication. As Humpty Dumpty says to Alice: “When I use a word, it means just what I choose it to mean — neither more nor less.” Inflation has been above target for nearly two and a half years. Whenever it returns to 2%, we’ll be told: “That’s what we meant by transitory!”