Why the Fed Should Heed the Market
Stock trends are the best predictor of growth. Recent volatility should give the central bank pause.
Federal Reserve Chairman Jerome Powell, perhaps hoping to instill confidence, said in his press conference last month, “Of course we’re always data dependent.” But which data? There are countless indicators economists can seek out to track growth, employment and inflation. Picking the right ones is half the battle in making sound predictions.
More than any other indicator, the Fed should be paying close attention to the stock market—not to manipulate it, but because market indexes are among the best predictors of growth and...