The Fed’s Latest Strategy for the Recession: Deny, Deny, Deny

Andy Snyder|July 27, 2022

We said it would happen, and here it is.

Tomorrow, the nation’s bean counters will release their latest tally of the nation’s economic growth. Their job is easier this quarter. There are far fewer beans to tally.

Way back in December, we called a recession in the second half of this year.

We also said the folks in charge would do everything they could to deny it – aside from actually fixing what ails us.

Well, here you go…

Despite the definition applying to every contraction in the past, the folks in charge are once again looking to pull the wool right over the sheep’s eyes.

Janet Yellen, too, has turned blind to the truth.

“This is not an economy that is in recession,” she said over the weekend while looking into the digital eyes of the nation of people who trust her with their money.

We suppose if we were changing the definition of the word, we wouldn’t see any of the trouble on the horizon either.

If that’s the case… then we don’t see our tax bill coming due anytime soon.

Sorry, Janet.

“You don’t see any of the signs,” the former Fed chief and current Secretary of the Treasury continued. “Now, a recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that.”

Farmers… factories… real estate. What’s left that still looks rosy, Janet?

Idiots

This denial is going to create an interesting dialogue tomorrow morning.

That’s when the latest figures from the Bureau of Economic Analysis are due out. All signs – especially the real-time activity tracker from the Atlanta Fed – point to a negative print.

Add it to the first quarter’s figure showing a contraction of 1.6%… and we’ve got a recession.

This wouldn’t be the first time the folks in charge were late to the game… way late.

In November of 2007, the economy was slowing incredibly quickly. The situation was much the same as it is today. Then, too, the jobs market was at its peak. Unemployment was just 5%.

But it took a full year of crying into the rearview mirror before a recession was actually deemed official.

On December 1, 2008, the National Bureau of Economic Research wrote, “The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession.”

The group was a full year late to the game.

By the time things were deemed official… the banks were on the ground, stocks had collapsed and unemployment was rocketing higher.

Stocks reached their bottom less than four months later.

Trust Be Damned

Perhaps we’re just too hung up on definitions. So what if we call it a recession and the folks in charge call it a speed bump on the way to reelection?

What’s it matter?

No babies are harmed, as they say.

Ahh… but that’s the rub.

Millions of people (wrongly!) trust these dopes. They trust their words… their actions… and their outlook.

They’re telling us things are fine. Things are healthy. Just vote for us in November, and we’ll make all your wildest dreams come true… You won’t even have to go to work.

Meanwhile, wealth is vanishing.

The folks in charge are so aloof about it, it’s criminal.

Think for yourself. Look at the data.

It’s bad.

And we’ll find out just how bad tomorrow morning.