I don’t think it’s news to anyone that every time the market has faltered following the financial crisis, the Fed has turned “dovish” in some way, shape or form. This chart suggests why that may be.
Perhaps it’s because the recessionary bear markets in the 21st century, around the 2001 and 2007-09 recessions, are bigger than any other post-World War II bear market.
If the Fed really does consider avoiding a major bear market to be part of its informal mandate, you can understand why a recession must now be avoided at any cost.
Or perhaps it’s not about “us,” but rather about “them,” meaning it’s all about global growth, given that the word “global” was mentioned 22 times in the latest Fed minutes.
If it’s global growth that’s the problem, ECRI’s view has been for a while that we are in a global slowdown that will continue for the foreseeable future, so it’s hard to see those concerns receding in short order.
But for over a year, ECRI has argued that this is about the U.S. economic cycle.
Sure we’ve seen relatively decent job growth. But year-over-year (yoy) growth in nonfarm payroll jobs has been trending down since early 2015.
And, as you see, so has GDP growth, even without Q1 data.
Meanwhile, yoy industrial production growth is also trending down, and remains near a six-year low.
You can see similar downtrends in yoy income and sales growth, which are around 1½- and 2-year lows, respectively.