So,
what are you to do. Take it slow and easy on the new news. Wait for a theory or
idea to stand some test of time. As an example, I quote from a CNN Politics
article of June 1st ,Treasury secretary concedes she was wrong on
‘path that inflation would take’ and which were also referred to in a
Reuters article of June 7th, Yellen says inflation to stay high,
Biden likely to up forecast,
“US Treasury Secretary Janet Yellen
admitted Tuesday that she had failed to anticipate how long high inflation
would continue to plague American consumers as the Biden
administration works to contain a mounting political liability.
"I think I was wrong then
about the path that inflation would take," Yellen told CNN's Wolf Blitzer
on "The Situation Room" when asked about her comments from 2021 that
inflation posed only a "small risk."
The admission was the latest
indication that the administration's expectations of a normalizing economy were
thrown into disarray by the continuing pandemic and the war in Europe.
"As I mentioned, there have
been unanticipated and large shocks to the economy that have boosted energy and
food prices and supply bottlenecks that have affected our economy badly that I
didn't -- at the time -- didn't fully understand, but we recognize that
now," she said.
Yellen and other White House
officials once framed inflation as a temporary side effect of the economy
returning to normal following the pandemic, pointing to snags in supply chains and
demand outstripping supply.”
Yellen has taken more
responsibility than is usually done for her comments. The market did call her
out on it however. Notice the time frame is 6-8 months, much too long to wait in the news hungry
environment that requires snap statements and quick facts and figures.
What then are some of the new, new problems that the news folks are jumping on.
Stagflation is now starting to show up in articles, recession is much more common
and is expected to occur in 2023. The discussion is now when in 2023 for recession,
some are saying 2nd quarter, others late in the year. The shouting
has gone from no recession or few saying it was possible, including the governmental
officials, to many saying recession is possible even likely. Notice there hasn’t
been as much said (or at least not said by the mainstream newsies) about supply
chain bottlenecks or the Ukrainian war. Employment figures have become sparce
in the last little while. The stock and bond market movements are getting some
attention on a periodic basis, mainly when a new high or low is hit. Notice I
didn’t specify just how high or low or how relevant it might be. Movement is what
seems to be interesting the newsies. Again it comes back to volatility and
uncertainty. With uncertainty newsies can make wild statements and maybe they
get it right. If they don’t there is very little consequence to being wrong.
Remember that, no or very minor consequences for being wrong. Look at Yellen
and Powell. No job loss, little or no censure but it is important to have an
excuse, the greatest one is “unforeseen circumstances”. In that context
everything can be considered unforeseen.
Good
luck and hang in there. Take everything with a grain of salt until some time
has passed. Remember the definition of recession requires a look back meaning
that we have to have historical data meeting certain criteria before a
recession can be declared. It is past tense. We won’t know when a recession has
started until after the fact. Many financial situations are like that. It’s not
worth getting worked up and panicky about. Enjoy life, family, friends and the
beauties around us.
CNN Article
Reuters Article
