One of the more difficult areas for investors to negotiate is differentiating and distinguishing between all the day-to-day noise that bombards us about the state of the economy on a cyclical basis and what are ultimately the more powerful longer-term structural trends playing out across the economy. It is also the case that these two cycles may not always be heading in the same direction, although being able to differentiate between the two can help open investment opportunities. Disentangling the two is also proving hard for the Fed as this week’s FOMC meeting showed.
Following the publication of its latest Summary of Economic Projections (SEP), in this Economics Weekly we break down those projections and assess what they are telling us about the Fed’s views both the cyclical and structural outlooks.
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Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.