Moody’s Analytics chief economist Mark Zandi joins us now that the recent concern, Mark, has been, is the economy too good, which is going to make it hard for the Fed to adjust rates back to normal and keep inflation from coming back down to 2%. You, you mean, Sarah, that growth is too strong. That’s what you’re worried about, that it’s too strong, that wages are too strong, that it’s fueling these this demand and services prices and that it creates a predicament. No, I don’t, no, I don’t think so. I mean, we’re going to read on that this week, right? We’re going to get GDP. That’s the value of all the things that we produce kind of the the top line for the economy on I think Thursday for the first quarter. We’ll see. My sense is looking at all the monthly data is going to come in around 2% ish, you know, give or take 2% right down the fairway. That’s, you know, consistent with the economy’s potential rate of growth, stable unemployment and continuing moderation and inflation. So yeah, you know, the economy zigs and it zags. You got to look through that and look at the underlying trend and it feels pretty good to me. So so you say, you said importantly there that inflation continues to moderate. So that that’s your expectation. Even though we’ve seen some firmer readings, concerns about rent not coming down, concerns about services prices and places like insurance not coming down, restaurant spending, you expect that to to all come back, what, to 2% this year? Yeah, more or less. Yeah. I, I’m really not that concerned about it. I mean, I think a lot of what we have observed in the first few months of the year is just persnickety measurement issues, you know, seasonal adjustment and other measurement issues. I mean, I don’t want to go down into the weeds, but you know, things like motor vehicle insurance and repair. I mean, that’s, that’s just the vestige of, you know, what happened during the pandemic and the vehicle industry and the collapse of vehicle industry and the surge in prices. And you know, each thing has its stories, but and you know, you can debate each one of them, but it when you look at it together, just feels like a lot of measurement. And here’s a more fundamental thing. I mean, if you look, try to get to underlying inflation, you know, abstracting from the vagaries of the data, you really got to look at the core underlying inflation, excluding the owners equivalent rent. That’s the implicit cost of owning a home, which, you know, even in the best of times, very difficult to measure in this time, given the what’s going on in the housing market, impossible to measure. And that that’s at Target and that’s been at Target for nine months, nine months. So I, you know, my sense of it is we’re already there and that’ll shine through in, in the in the next few months as these measurement issues iron themselves out. So then why not cut sooner? I mean, if that’s the case, Well, that would be my view, right? I mean, I, I think the Fed has achieved its mandate. It has to conduct policy to reach full employment check, you know, the unemployment rate sub 4%. We’ve been there for over 2 years. And I think inflation is, you know, you know, the top line number isn’t quite back to where it needs to be. But as I just articulated, I think we’re clearly headed in that direction. And then you ask yourself, well, OK, if you’ve achieved your mandate, why do I need a 5.5% federal funds rate target? You know, there’s a lot of reasonable debate as to what the, you know, equilibrium rate is. That rate that monetary policy is neither restraining or supporting growth. So maybe it’s not 2 1/2%, maybe it’s not three, maybe it’s not 3 1/2, maybe it’s four. But that’s still higher. That’s still lower than 5 1/2%. So why take the risk, you know, of breaking something in the financial system or economy? So if I were king for the day, David, I would say yeah, we should be cutting rates.
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