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Mixed Data 'Complicates Matters' For the Federal Reserve in 2019

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From weak GDP numbers, to employment numbers beating estimates in January, to earnings growth revisions downwards, to employment numbers that missed estimates in December, there's a Jackson Pollack of macro economic data the Federal Reserve must contend with. 

Plus, banks' lending activity continues to be strong, but mortgage applications have fallen. 

This could make the Fed's job really hard. 

"It complicates matters for the people sitting around the Federal Open Market Committee," said Danielle DiMartino Booth, former adviser to the president of the Dallas Federal Reserve. "You get one economic report from ADP, for example, that suggests that the employment market continues to expand at a robust pace. At the same time you see that mortgage applications to buy homes are down 7% year-over-year," she added. 

She said, "It is very difficult to make monetary policy if you're data dependent, which the Federal Reserve is, when the economic data are going in diametrical opposite directions."

One key factor that is important to remember, DiMartino said, is that data can sometimes be mixed at the end of an economic cycle,. which the globe is currently in. "The beauty with expansions is that there's the very comforting aspect of consistency in the data," she said. The recent jobs report was strong, but "Employment is the most lagging of all economic indicators," DiMartino said, adding that "this is obviously the last gasp." 

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