Re: Economists surprised???

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

I think that the excessive belief in the new economy gave the Fed the confidence to allow unemployment
to fall below the supposedly NAIRU limits.  I believe it also gave the Fed fear that the economy had
much more vigor than it did when they laid a series of interest rate hikes over and beyond what was
necessary to slow the economy down.

If the Fed backs down now and reignites economy, as Jim said, it will make the current imbalances even
more extreme.  Perhaps Bush will have the same run of luck that Clinton did.

--

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx