An Age of Fiscal Limits. Unlike the 1980s, however, politicians don’t seem interested in changing course.

Has the Inflation Threat Passed? We think the optimism is overdone. The M2 measure of the money supply has dropped in the past year and we think that drop is starting to gain traction, including in the form of lower headline inflation.

Burns of Volker? We are forecasting that when all is said and done that the economy ends up a little weaker than the Fed expects this year, but inflation stays higher than the Fed thinks

Closer to a Turning Point. Ultimately, recessions are about mistakes...Almost always, it is government policy mistakes that cause this over-investment (or “malinvestment”).

January Surge Kept Q1 Positive...The problem with forecasting the economy right now is we have never been in this position before, where an unprecedented two-year surge in the money supply (plus massive temporary transfer payments) were closely followed by a dive in the money supply unlike anything we’ve seen in decades.

Still Bearish. Given the drop in the money supply, we are headed for a much colder economy; we’re just not there yet.

Ignore the Crazy!... It’s the growth in the money supply, or continued lack thereof, that will determine what happens to economic growth and inflation in the next couple of years.

Hard Landing, Soft Landing, or No Landing? In the past few weeks, a growing chorus of economists and investors have decided that the pessimistic narrative had it wrong all along, that the US isn’t headed for a hard landing,...or soft landing...

Monetary Mayhem Clouds Crystal Ball. At present, the futures market appears to be pricing in three more rate hikes this year, 25 basis points each, with one rate cut of 25 basis points very late this year.

January Data Get Hot. A hot inflation report for January might be a surprise to some investors, but it really shouldn’t be. Put all these reports together and we have an economic stew that signals that a “data sensitive” Federal Reserve isn’t done hiking rates.