- Mr. Greenspan, the Federal Reserve chairman
Two times per year central bank's chairman or chairwoman gives Fed's assessments of the economic state to Congress and it is a perfect time to find out what the Fed thinks about the world's largest economy. Last week Janet Yellen's testimony showed the economy is on the right track, even though some problems still persist. Nevertheless, it seems the U.S. economy is approaching another inflection point. It is a well-known fact that the economy goes up and down in a wave pattern. The last inflection point was noticed in 2008, at the height of the Great Recession. Usually it takes around five to eight years before another point approaches, hence, the United States is entering the window for the next inflection point.
The economy posted a surprise contraction in the first quarter. While nobody at the Fed thinks that the economy is heading towards recession, policymakers are not going to react, either positively or negatively. While unemployment rate hovers around 6%, the lowest since recession, the participation rate has not yet recovered from the Great Recession. Additionally, the participation of those 20 to 24 years of age has fallen even below levels seen in 1975. The inflation rate is still low, however, is on the mend. This is not an alarmist statement, however, it should be taken into account that a long-term economic cycle defied all possible attempts to interrupt it.
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