Mark Zandi
Mark Zandi
Mark Zandi is chief economist of Moody's Analytics, where he directs economic research. He is co-founder of Economy.com, which was acquired by Moody's Analytics in 2005. Prior to founding Economy.com, Zandi was a regional economist at Chase Econometrics...
NationalityAmerican
ProfessionEconomist
CountryUnited States of America
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This is a similar point in the business cycle to when Greenspan took over the reins of the Fed. And of course he was tested right away with the 1987 stock market crash.
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This Administration is trying to change the whole intellectual basis for fiscal policy that Alan Greenspan enforced when deficits were large in the early 1990s. We got fiscal discipline through the idea that deficits matter. That's been flipped on its head.
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Greenspan should weigh against asset markets in the good times -- just as he works to support them in the difficult times. He's been one-sided in his policies,
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He doesn't have the wide range of experience Greenspan did going into the job, which has served Greenspan well.
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The new chairman will want to show his inflation-fighting mettle. Early on, Chairman Greenspan was on the aggressive side to establish his credentials.
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Housing is a fault line in the economy that Greenspan is indeed worried about, but he doesn't think a housing (slowdown) will undermine the expansion.
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If Greenspan had been stronger in his views, then the bubble would not have been as large and the subsequent correction not as severe.
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Too-easy credit and millions of bad loans made during the U.S. housing bubble paved the way for the financial calamity and Great Recession that followed. Today, by contrast, credit is too tight. Mortgage loans are particularly hard to get, creating a problem for the housing market and the broader economy.
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It would undermine the housing market, and could quickly result in credit problems that would affect the entire (American) financial system.
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It would take time for that to occur and during this period of adjustment -- some things might not get done -- maybe some crops won't be picked or some hotel rooms won't get cleaned.
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The work force is growing not because employers are hiring a lot of new workers to staff expanding operations. The economy, in other words, is not being driven by businesses out there scouring for opportunity and revenue growth and pushing up wages as they compete to hire more workers.
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The risks are clearly that inflation will accelerate further because of energy.
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The rhetoric over China is intensifying for a number of reasons.
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There won't be any change in the script the Fed has laid out. Export growth has weakened and there is a lid on wage growth. This data takes some pressure off of the more hawkish Fed members.