LABOR AND MATERIALS SHORTAGE RESTRAINING RECOVERY, FED SAYS

The U.S. economic recovery has been brisk, but “shortages of material inputs and difficulty in hiring have held down activity in a number of industries,” the U.S. Federal Reserve said in its 9 July Monetary Policy Report.
The report indicates that the Fed might be changing its view of its current strategy to right the economy.
The central bank has set 2 percent as its target inflation rate and despite the hard facts, continues to insist that rates much higher than that are temporary.
Inflation reached a 3.9-percent pace in May, year over year, and as we reported today, the CPI rose 5.4 percent from a year ago, the largest spike since August 2008.
Also, the Fed has steadily maintained that the economy must return to “maximum employment” – usually seen to mean pre-crisis levels – before it will raise interest rates.
TREND FORECAST: We disagree with the Fed’s expectations of employment returning to February 2020’s job market. And they will do all they can to keep interest rates low to juice equity and the housing market… despite rising inflation. Again, Gregory Mannarino’s article in this Trends Journal provides clear insights of what to expect next. (See, “The Fed is Already Moving Goalposts, Stocks Hit New Record Highs”).