The slow-motion tidal wave consuming the economy

THE US economy today has been described variously as “weird”, “really weird” and “very, very weird”.

Weird because this is a yo-yo economy where gas prices shot up to more than US$5 a gallon and then settled back down. The inflation rate for used cars dropped, then accelerated at a 40 per cent rate before deflating at record speed. Housing has gone from boom to bust, then to boom again. Economic indicators have been described as “a Jackson Pollock painting of data points and trends”.

Economists can’t figure it out. Economic models are only getting us as far as separating top-flight economists into Team Stagflation and Team Soft Landing. Alan Blinder, the Princeton economist, talks about the prospects of the Federal Reserve nailing a soft landing like he is handicapping a team’s Super Bowl prospects: “I think they still have a chance, but it’s a tougher chance than it was.”