The most anticipated economic data point of the week is due out Thursday morning, with the third estimate of fourth quarter GDP expected for release at 8:30 a.m. ET.
Overall, Wednesday was a quiet day in markets though the Dow did close in the red with the blue chip index being dragged down by losses of more than 1% from insurers UnitedHealth (UNH) and Travelers (TRV).
Since Monday morning’s sell-off and turnaround, markets have been pretty calm over the last couple days.
As good as it gets?
Here’s a great set of quotes from San Francisco Fed president John Williams, who spoke with Yahoo Finance’s Andy Serwer on Wednesday:
“[In terms of the} Goldilocks analogy, we don’t want it get too hot because that creates imbalances that lead to a recession but of course we don’t want to lose the hard won gains we’ve made since the end of the recession,” said Williams.
“I want to see an economy that’s basically running like it is now, with four, to four and a three quarters unemployment, that’s really low on a historical basis. Good steady income growth and inflation around 2% and I think that’s the track we’re on and as long as we stay on the path we’re on gradually removing monetary stimulus to the economy, I think we can navigate this.”
I asked Williams if he thought we’re in Goldilocks state right now.
“I think we’re getting closer to that. I feel like you’re setting me up for hubris here, right? In the sense that you never know what’s going to happen next. But I think we’re in a good place.”
“We have an economy close to where we want it to be,” Williams said. “Now let’s keep it growing.”
After Donald Trump’s election win, a commonly-cited reason why was “economic anxiety,” the vague idea that people left behind by globalization, or automation, or the recession were fueling the populist rhetoric we heard from Trump throughout the campaign.
But I think Williams’ comments on Wednesday illuminate part of how economists see the world and why this view is seemingly always in tension with how non-economists see the world.
With the unemployment rate below 5% and steady, with inflation rising just shy of the Fed’s 2% goal and not looking set to shoot higher, and with consumer confidence and stock prices on the rise, major economic indicators make the U.S. look downright idyllic right now. Or rather, idyllic in the context of a world in which some aspect of the economy is forever disappointing to someone.
When your neighbor loses a job, it’s a downturn. When you lose your job, it’s a recession. And while economists obviously can lose jobs like everyone else, this lens for viewing the world puts jobs into a more binary setting: you have one or you don’t.
And this more binary view of things either being good or bad goes down the whole run of economic indicators: is inflation rising or falling, confidence up or down, wages increasing or decreasing, and so on.
Run down the U.S. economy right now and a number (perhaps most) of these answers turn up positive. Walk down the street, ask 10 people how they are feeling about the economy, and the one person who is in dire straights, hasn’t had a job in years, and fears they’ll be evicted is the story that sticks with you. This is the one that matters.
Which gets back to the divide between economists and everyone else.
Economists see the data and a story that data tells about the economy. Most people just know how they feel — they know a story for themselves and others — and whether that is good or bad.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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