Trump wants a lower price, but the economic optimism is increasing rapidly.
President Donald Trump's signature Bravad was completely exhibited this week in the Davos's World Economic Forum. I vowed to “demand” lower interest rates from the federal preparation system。 Ironically, the enthusiasm of his elections and policies may be the reason for the federal preparation system to be a pause button with further cuts. It's a unique twist, but it's not completely surprising, but confidence is a powerful economic force and is now increasing rapidly.
NFIB Small Business Optimism Index In December, it rose to 105.1. This is a level that has not been seen since October 2018, and has been strengthened to tax cuts, deregulation, and tariffs to rebuild economic conditions. Meanwhile, S & P Global's Flash US PMI provided good news of double shot in January. The production has returned to the growth area for the first time in six months. The confidence of business, an unpredictable elixir of economic dynamism, has reached the highest since mid -2022.
The reason why Fed pauses
According to conventional wisdom, the federal preparation system reduces the price to alleviate the speed. When the Fed began in September, he said to stop the fear that the headwind of the labor market was rising. but Trump election dramatically changed economic expectations。
The enthusiasm between companies is in conflict with urgent urgency. The NFIB report was revealed 52 % pure music among the owners of small and medium -sized enterprises to improve economic improvementThe strongest reading since 1983. This is not a scream for help. It is a march of victory. And the “demand” for Trump's lower rates has grasped headlines, but the recovery of the manufacturing industry and the increase in the employment plan of small and medium -sized enterprises may continue to hold the Fed.
Fed officials have new variables that weigh. Tax cuts, deregulation, and tariffs (Trump's economic agendas Cornon) are ready to rebuild expenditures and trade patterns, but the impact remains the question mark for the officials of the Fed. Do tariffs increase the price of imported goods, or simply shift the supply chain? Does tax reduction spurse or overheat to invest? The answer is still there -I think the most likely result is the longest season Non -expanded growth due to the expansion of the supply side-Ath, the Fed will want to see how they develop before further reducing interest rates.
Emotions are rising, but the inflation pressure is the same.
Of course, it's not all smooth sailing. The US economy is suffering from welcomed people Bidenflation Polter Geist Despite the death of the Biden administration from this world. NFIB emphasized that 20 % of the owners of small and medium -sized enterprises mentioned the rise in the rise in the rise. S & P Global, on the other hand, pointed out that if the cost and selling price increase at the fastest pace in four months, the price pressure would accelerate. A survey on consumer emotions at Michigan University showed a sharp increase in inflation expectations. These inflatinals provide more reasons for the Fed to take a break.
CHRIS WILLIAMSON, the chief business economist of S & P Global, Optimism in manufacturing is obviousExpectations for the Pro Business Policy. However, the prolonged illusion of inflation emphasizes the tightrope that the Fed must walk. A message that may be the possibility of Fed Chair of Jerome Powell? The Fed is going to be further reduced, but I am satisfied that the data will pause so far that the data will guide the next movement.
Trump may want more interest rate reductions, but he should take a suspension of the Fed. Signing that the central bank's trust in the economy is improving。 When Powell and the company pause, they will essentially support Donald J. Trump's policy.
