Posted 12/2/2023, 10:49:17 AM
Economy Showing Momentum Despite Fed Tightening
- Real GDP grew 3% in 2023, inflation falling, stocks poised to move higher, yet Fed continues quantitative tightening
- Since March 2023, $655.9B securities left Fed balance sheet; since March 2022, $1.2T securities declined
- Question is how much more quantitative tightening needed to normalize economy after massive pandemic stimulus
- Signs of ample liquidity still in system (bank reserves, money in asset management funds) to fuel growth
- Velocity of money picking up - economy being "underwritten" by past stimulus, Fed may just need to stay out of the way