fine economic news is not always fine for everyone. On February 2nd it was revealed that average hourly wages grew by 2.9% in the year to January—the fastest growth since 2009,at the stop of the recession. Stocks promptly tumbled around the world (see article). Investors fretted that inflation might rise, forcing the Federal Reserve to raise interest rates further and faster than expected. Whether the jitters are justified, and however,depends on how an extraordinary experiment in economic policy plays out. America is poised to stimulate an economy that is already growing strongly, at a time of historically low unemployment.
Most of the stimulus will come from tax cuts that President Donald Trump signed into law in December. These are worth 0.7% of projected GDP in 2018 and 1.5% of GDP in 2019. On February 7th Senate leaders sketched out a...
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Source: economist.com