The MIT Enterprise Forum of Texas (Houston) held its monthly meeting at the Dallas Federal Reserve – Houston, on January 8, 2018: 2018 Economic Business Forecast Luncheon. Guest speakers were John Duca, Vice President and Senior Policy Advisor at Federal Reserve Bank of Dallas; and Boyd Nash-Stacey, Senior Economist at BBVA Compass.
Overall, the speakers stated that the outlook for the economy is “good”, not great; but not bad. John Duca informed the group that the economy has a stellar unemployment rate, below 4%, and this figure is actually lower than the natural rate of unemployment. He also mentioned that interest rates and inflation are very low as well. Low unemployment and low inflation means a check in the “good” column.
Boyd Nash-Stacey added that his survey of the economy indicates that industry has a high optimism about the future of the economy. He also states that profits currently are increasing, profits have not returned to previous levels; yet the good news is that they are increasing. That is another check in the “good” column.
I recently saw a few interviews on Bloomberg TV where experts were discussing this very dilemma: high employment and low inflation. At the heart of the discussion is that this just does not fit current economic theory – that is, the Keynesian economic model and the Phillips Curve both claim that high employment and high inflation must go together. Some experts even stated that if what the economic data says is true, then a new theory is needed.
MIT Enterprise Forum of Texas (Houston) http://miteftexas.org