The Fed Has Misread the Economy
The Federal Reserve’s insistence that monetary policy is restrictive is looking more and more ridiculous.
The “flash” U.S. purchasing managers index (PMI) survey data from S&P Global released Monday indicated that economic output is rising at the steepest rate in 33 months. Growth is accelerating from an already robust pace, and both business and consumer expectations are surging.
The S&P Global PMI headline composite output index rose from 54.9 in November to 56.6 in December, signaling the fastest expansion of business activity since March 2022. This index has been indicating growth since early last year, but it has been showing growth accelerating since the Fed began indicating that it was entering an easing cycle this summer. New orders rose at the sharpest rate since April 2022.