- Under normal circumstances, the economy is relatively close to its steady-state glide path, and the fixed-income market is quite reasonably jittery with respect to the latest growth rates.
- The reality is that current conditions are nowhere near normal. At the beginning of the last cycle, the only labour market series that offered useful information was the employment-to-population ratio. We are still below the lows of the last cycle.
- From a markets standpoint, one can argue that the markets are not pricing in much tightening on a multi-year horizon.
For further details see:
U.S. Economy Getting Better, But...