Gyver or Gruber?
Submitted by Atlas Indicators Investment Advisors on July 28th, 2022
Angus “Mac” MacGyver was the lead character in the television series MacGyver. This guy could find his way out of seemingly impossible pickles. His background provided him with skills from physics and engineering to bomb dismantling. Invariably (at least as I recall), he would find himself in a jam right before a commercial break. When the advertisers went away, he figured a way out, often doing so with the tools offered by a Swiss Army Knife.
Jerome Powell might be ready for a commercial break. He sort of has one too, since the next Federal Open Market Committee meeting won’t happen until September. In the meantime, he has a set of tools he is using to get the American economy out of a jam, but they aren’t as varied as those in MacGyver’s pocket.
America is caught between two challenges. First, inflation remains an ongoing problem. Optimist might argue that the worst of it is now behind us as energy prices have come off their recent highs. Others might counter that even with that deceleration, upward price pressures are still well above the Fed’s target trend of 2.0 percent inflation, so the central bank will have to take more action to slow it further. Second, the economy is faltering, now having experienced back-to-back quarters of negative output (more on that in next week’s note on Gross Domestic Product). And that’s the rub, most actions available to Jerome Powell and his committee will likely put further downward pressure on the economy’s growth trajectory.
During the aughts, Saturday Night Live ran a sketch parodying MacGyver called MacGruber. Unlike the hero of the late 1980s and early 1990s, this character never managed to extricate himself and those around him from their deleterious circumstances.
Realistically neither the MacGyver nor MacGruber outcomes are the only ones possible. Instead, they represent extremes. Most likely, some combination of the two will materialize. Some will be harmed like those being saved by MacGruber, and others will make it out relatively unscathed like in an episode of MacGyver. However it turns out, it will be worth watching.
