It is, of course, possible that this time around, the economy won’t falter under the burden of higher interest rates, and the Fed rate cut will simply come when the central bank judges inflation to be under control. There may be a “soft landing,” as the Federal Reserve chair, Jerome H. Powell, has said.
I hope so. But I’m not counting on it.
A Perplexing Indicator
The unemployment rate remains low — despite a recent uptick — and the economy, as measured by gross domestic product, has been growing nicely. But another important indicator has been signaling trouble for months.
That is gross domestic income, or G.D.I., a close cousin to G.D.P.
Over the last year, G.D.I. has shown the economy to be shrinking, not growing as the G.D.P. numbers have indicated. The gap between the two measures has been wide and baffling.
A decade ago, the contours of the economy were also being obscured by a bewildering data fog. As I wrote then, G.D.I. and G.D.P. should, in theory, be equal. One measures gross income, the other gross production. They ought to match, but in real time, they frequently don’t, because they use different sources, deadlines and definitions.
G.D.P., for example, depends heavily on sales receipts, while G.D.I. tracks paychecks, which are often issued well after sales are made, as J. Steven Landefeld, then the director of the federal Bureau of Economic Analysis, told me in 2013.
Source: | This article originally belongs to Nytimes.com
