Jan Hatzius Goldman “Fed Should Think About Easing”, Recent events have largely sealed the case against a rate hike next week, We expect modest downward revisions to GDP growth in 2016 and 2017 in light of tighter financial conditions
“All of the employment gains among women since the recession hit in December 2007 have been taken by foreigners, even at a time when the numbers of U.S.-born women surged more than 600,000, according to new federal statistics.”…Washington Examiner August 7, 2015
“There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.”…Gallup CEO Jim Clifton
“We are being lied to on a scale unimaginable by George Orwell.”…Citizen Wells
Several months ago when I engaged in an email debate with Jan Hatzius of Goldman regarding the employment situation and impact of baby boomers, I came to the conclusion that he and other economists were too entrenched in the theoretical realm of economies to see the reality of the economy and employment in the US.
Are Jan Hatzius and Goldman finally facing a reality check on the real condition of the economy?
From Zero Hedge September 12, 2015.
“Is Yellen About To Shock Everyone: Goldman Says The “Fed Should Think About Easing””
“What a difference a little over a year makes.
Back in January 2014, just after the Fed announced the tapering of QE (because, you know, the “date-dependent” Fed would never be tapering if the economy wasn’t improving, right?) the propaganda machine went into overdrive, with Wall Street’s pet economist, not to mention the NY Fed’s key “outside advisor”, Goldman Jan Hatzius preaching that the long awaited recovery had finally arrived.
This is how the tabloid pseudo-finance website Business Insider characterized his call at the time: “Goldman’s top economist, Jan Hatzius, just said the words we’ve been wanting to hear for five years. He believes the economy is now growing at an above-trend pace.””
“For what it was worth, we disagreed with Hatzius, noting that this would simply be the second time in five years Goldman has jumped the “recovery” shark after its dramatic reversal in December 2010 when as QE 2 was ending, Goldman once again sought to boost wholesale confidence by going fundamentally bullish and saying “This outlook represents a fundamental shift in the thinking that has
governed our forecast for at least the last five years.”
Fast forward a little over a year when we learn that Goldman was once again wrong (for what it’s worth, naturally Business Insider was too).
First it was in April of 2015 – some 16 months after his “bold” prediction – that the same “above trend growth”-forecasting Hatzius said we “do not have much confidence in the inflation outlook and believe that the right policy would be to put hikes on hold for now.”
But… what happened to above trend growth?
Then in the first week of June, Hatzius once again hedged saying “Our forecast remains that the Fed policy committee will hike rates at the September meeting, but …this remains a close call. There is a strong risk management case for delaying liftoff.” In other words, the market determines Fed policy, not the economy, despite the reflexive lies to the opposite.
Then just two weeks later, on June 18, Hatzius having long given up on his “above trend growth” forecast changed his tune again, and now said he expected a December rate hike instead.
“In large part this reflects the fact that seven FOMC participants are now projecting zero or one rate hike this year, a group that we believe includes Fed Chair Janet Yellen…. We had viewed a clear signal for a September hike at the June meeting as close to a necessary condition for the FOMC to actually hike in September, because we did not believe that the FOMC would want to surprise markets on the hawkish side when they raise the funds rate.”
Of course, if the economy had grown at an “above trend pace” since his January 2014 call, the Fed would have to be at 1% or higher by now.
Just to make sure nobody is surprised next week when Yellen does not hike and unleashes a massive relief rally, Hatzius added that a September rate hike announcement this Thursday “shouldn’t be close”, and as we showed previously, unveiled 7 reasons why. Amazing how Goldman’s narrative changes with every month.
And then, the humiliation was complete last night when the same Jan Hatzius, having long-forgotten his January 2014 prediction, in a note previewing the US economy in “September and Beyond” had this to say:
In our view, the recent events have largely sealed the case against a rate hike next week. Fed officials have made clear that “data dependent” policy refers to incoming economic news as well as factors that could impinge on the outlook—including changes in financial conditions…. The news on wage and price inflation, however, has been softer than generally expected a few months ago…. most of the inflation shortfall relative to the Fed’s 2% target is due to more persistent factors, including continued labor market slack.
We expect modest downward revisions to GDP growth in 2016 and 2017 in light of tighter financial conditions.
Hm… maybe Jan meant below-trend growth?
And here we get to the punchline, because Goldman which originally expected a September rate hike, then pushed it to December in June, is now fairly confident that there may not be a 2015 rate hike at all!”
As reported at Citizen Wells September 4, 2015, white employment is down 132,000 since January 2015.