In his post-FOMC press conference on September 17, Fed Chair Jerome Powell stated that Fed policy remains tight notwithstanding the latest rate cut: “What we can say is this, that over the course of this year we've kept our policy at a restrictive level—and people have different views—but a clearly restrictive level, I would say.” In other words, monetary policy remains tight.
How does he know this? Real GDP rose 3.8% (saar) during Q2 to a record high, and it is on course to increase 3.9% during Q3, according to the latest estimate of the Atlanta Fed’s GDPNow tracking model (chart). The major stock market indexes are at record highs. S&P 500 earnings is at a record high. Gold is at a record high. True, the labor market is sending mixed signals, but that’s mostly related to structural labor supply issues, as we’ve previously discussed.
