Interest Rates' Psychological Impacts
The Federal Reserve's interest rates influence consumer psychology and inflation, but they don't directly determine consumer spending. Their economic impacts are indirect.
People mistake the Fed's attempts to cool down or stimulate growth via rates as linked to spending, but the relationship is not close.
82
710 reads
CURATED FROM
IDEAS CURATED BY
The book Ahead of the Curve by Joseph Ellis discusses improving economic forecasting by using the right indicators and tracking year-over-year data instead of short-term fluctuations. It argues that recession definitions are overrated, and that slowing growth is more damaging than commonly realized. The book advocates focusing on consumer spending as the main economic driver, and provides guidance on relating indicators like incomes, interest rates and stock markets to spending. It aims to help readers make better forecasts for economies, industries and companies.
“
Similar ideas to Interest Rates' Psychological Impacts
Federal Rates
The Fed rate is also tied to inflation, which impacts earnings, which affects consumer spending. Inflation also moves hourly wages and direct interest rates. This can create the impression that interest rates and consumer spending are more closely related than they are.
The Federal Reserve...
The Link Between Federal Deficits and Interest Rates
To figure out the relationship between the federal deficit and interest rates, you have to remember that federal debt is just one category of all the debt in the economy.
There’s also state and local government debt, not to mention consumer debt and corporate debt. In fact, of all the deb...
Read & Learn
20x Faster
without
deepstash
with
deepstash
with
deepstash
Personalized microlearning
—
100+ Learning Journeys
—
Access to 200,000+ ideas
—
Access to the mobile app
—
Unlimited idea saving
—
—
Unlimited history
—
—
Unlimited listening to ideas
—
—
Downloading & offline access
—
—
Supercharge your mind with one idea per day
Enter your email and spend 1 minute every day to learn something new.
I agree to receive email updates