Friday’s jobs report capped a week of mostly solid economic news, once again spurring chatter about whether and when the Fed will taper.
Ahead of the jobs data, I spoke with Roger Altman, chairman of Evercore Partners and former Deputy Secretary of the Treasury, about the outlook for monetary policy.
While acknowledging the “huge debate” over the efficacy of quantitative easing and the exit strategy to (presumably) come, Altman broadly praised the Fed’s efforts since the 2008 crisis.
“The Fed has done yeoman’s work,” he says. “The country is better off for the Fed having been as aggressive on monetary policy than if it hadn’t.”
Specifically, Altman cites the “considerable repair” to household balance sheets, thanks in large part to the recovery of the stock market and U.S. home prices. The ‘reinflation’ of those assets was “a very explicit goal of QE,” he says.
However, the investment banker does believe the Fed should declare ‘mission accomplished’ and reduce its accommodation because overall economic growth remains “subpar.”
To Altman, that is not a sign of QE’s failure but “the limits of monetary policy” and the huge challenge the Fed faced after the credit bubble burst. (Of course, the Fed’s role in helping pump up that bubble is another story.)
On another separate but related issue, Altman does not believe the stock market is in another bubble, a view that was gaining credence before the 5-day slide in stocks that is set to be halted by Friday’s gains.
“I don’t see much sign of bubble-like activity a la 2006 and 2007 [in housing] or going back to 1998-1999-2000 in the tech sector,” he says in the accompanying interview, taped at a Hamilton Project event in Washington D.C. earlier this week. “Stock prices are pretty high by historical standards but I don’t think they’re crazy high.”