Uh-oh, the Federal Reserve has gone and done it again. No, I’m not referring to raising interest rates – it’s been doing that for a while. No, it’s backed off its prediction of a recession next year. Now that the Federal Reserve has said there won’t be a recession, we can all calm down, right?
Yeah, no. Now it’s definitely time to panic.
OK, I want you to sit down for a moment. Take a deep breath. Gather your thoughts. Because I’m ready to reveal to you an astonishing truth: Well-educated, well-informed experts are often astoundingly wrong when they wade into the prediction-making territory.
Do you remember when we were all concerned that the vast hole in the ozone layer would bring about cataclysmic impacts on the environment? Well, yeah, it turns out that wasn’t such a big deal. All we had to do was ban bad chemicals and we fixed it. No superhuman efforts were necessary.
If you’re old enough, you may remember when overpopulation was the biggest problem the world faced. Remember when your parents told you to eat your vegetables, because kids are starving elsewhere? Well, that never made much sense, but right now China’s biggest problem is actually losing population – not gaining it. In fact, they’ve completely rolled back their infamous one-child policy.
You remember when the entire world – even allies of Ukraine – were absolutely certain that Russia would simply steamroll them, rolling into Kyiv in a matter of weeks? Even the Ukrainian high command wasn’t terribly optimistic. Then the astonishing leadership of Volodymyr Zelensky, and the stubborn resistance of the Ukrainian people kicked in, and here we are, 18 months later, with no end in sight.
So, when you hear that the Federal Reserve is convinced that the economy is going to be just fine, thank you very much, that’s the time to panic. You see, for a couple of years now, the Federal Reserve has been very confidently predicting a recession, so much so that it’s now baked into economic indicators. Now it’s decided that recession isn’t a big problem after all – which is why it’s back to raising interest rates. The problem is that the Federal Reserve, like economists as a whole, tends to be rather bad at predicting things, just like other experts.
So, when the Fed was predicting a recession, there was more reason to be optimistic; now that it isn’t, I’d begin to worry. The question is, what happens if a recession hits? Regardless of the exact time, if it happens before the election, it will be politically impactful. Right now, President Biden’s political team seems to be operating under the assumption that it will be an incredibly close election; that’s why he did a quick visit to Maine recently, in an attempt to shore up his standing in the 2nd District. If the White House were truly confident that Biden could simply steamroll their way to a second term, Biden wouldn’t be doing drop-bys in Auburn.
In this case, however, the supposedly brilliant White House political team is probably missing the forest for the trees. Sure, it’s not dumb to show up in Maine, but despite popular mythology, Hillary Clinton didn’t lose in 2016 because she failed to appear in the Midwest enough. Instead, she lost because basically nobody liked her: The only reason almost half the country voted for her is that they thought the other guy was even worse. That was the real macro-level factor that turned the election in favor of Donald Trump.
Now, that’s probably not quite the problem for Joe Biden, the shenanigans of his son and the ire of his liberal base notwithstanding. Everybody in both parties seems to agree, however much Republicans might not want to admit it, that Biden is both more likable and less corrupt than Hillary Clinton. The problem is that that’s not a terribly high standard to which to hold anybody.
For Biden, the macro-level factor won’t be likability; it’ll be the economy. That’s why he’s hoping and praying that the Fed is right and no recession is coming. That’s why it’s not worth the Democrats’ effort to meddle in the Republican primary. Right now, the country is so sharply divided that all it will take to turn the fate of the nation is the timing of a recession, even a relatively mild one. That’s the position we’re all in, like it or not, and Joe Biden and Donald Trump are just along for the ride, just like the rest of us.
Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
jwfossel@gmail.com
Twitter: @jimfossel
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