Allen Sinai: Economy is Stronger Than the Fed Thinks

By on April 5, 2012

Allen Sinai - Decision EconomicsAllen Sinai was interviewed by Bloomberg’s Mark Crumpton and Michael McKee regarding the Fed’s March 13th meeting and comments which were released a couple of days ago.   Sinai is the chief global economist at Decision Economics Incorporated.

Sinai believes the economy is on the mend with unemployment declining and inflation percolating.  He thinks the Fed’s focus on GDP does not mirror what is actually occurring in the economy and they will need to raise rates before 2014.

Regarding the need for QE3, Sinai said the Fed will come to realize it isn’t necessary. He added the market would get over its disappointment with the cessation of quantitative easing. Sinai stated quantitative easing wasn’t mentioned in the Fed’s minutes.

Sinai said the structure of the U.S. economy is changing immensely because of new technology and the economy is much more lively than GDP indicates. Focusing on GDP doesn’t really tell us the state of the economy the way it used to. Sinai said the performance of the stock market is telling us the economy is better than the policy makers think.

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