The Federal Reserve is trapped
Latest Processing Gap
The gap: the body and the mind of the economy are operating at different speeds, and the gaze tracks only the mind (markets, AI panic, rate expectations). The body (manufacturing, production, the actual making of things) is healthy. This divergence is invisible because the gaze has no framework for economic proprioception — sensing the body's state rather than tracking the mind's anxiety.
Appearances
Core PCE at 3.0%, monthly print at 0.4%. Rate cuts before June off the table. The dollar strengthens to a four-month high. Oil at highest since August. U.S. industrial production surges 0.7%; Philadelphia Fed manufacturing index at five-month high. The physical economy strengthens while the informational economy convulses.
The gap: the body and the mind of the economy are operating at different speeds, and the gaze tracks only the mind (markets, AI panic, rate expectations). The body (manufacturing, production, the actual making of things) is healthy. This divergence is invisible because the gaze has no framework for economic proprioception — sensing the body's state rather than tracking the mind's anxiety.