Historically, U. S. equities trend upward. I expect it to continue. The speed bumps along the way make it interesting.
by Josh Zumbrun
Dec. 14, 2014 3:04 p.m. ET
Much has changed in the U.S. economy since Federal Reserve officials last issued their economic projections, in September. Oil prices have fallen by more than one-third, the dollar has climbed 5.3% against a broad basket of currencies, and about 800,000 more Americans have found jobs.
These developments present overlapping challenges as Fed Chairwoman Janet Yellen and her central-bank colleagues wrestle with shifting fundamentals at home and mounting jitters overseas. She will hold a news conference Wednesday, after the Fed’s two-day policy meeting, to discuss the central bank’s outlook and plans going into 2015.
Falling oil prices are a boost to the U.S. consumer. But lower prices also are putting downward pressure on already low inflation, potentially moving the nation further away from the Fed’s objective of 2% annual increases in consumer prices.
If Ms. Yellen and her colleagues put more weight on the looming inflation drop, they will hold off on interest-rate increases, which are expected by mid-2015. If they put more weight on underlying economic strength, they will proceed as planned, or even accelerate their move.
The signs so far are that the Fed will proceed as planned.
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Thanks for the headsup on Wednesday —hope we don’t get any surprises. That piece is very well written; I may have to google “Josh Zumbrun” on a regular basis...