A change in perspective is the only way to determine where the US is headed economically.
While most on Wall Street are looking at the prospect of a rate rise in 2015, despite the growing weakness in employment and retail sales.
If you look at the alternative view that we are heading into another recession or zero growth, then the latest numbers make far more sense.
As the past seven years showed, 6-8 months after QE ends — whether it was QE 1, 2, Twist or 3 — the economy was on its knees again.
While Janet Yellen and the Fed governors are using the bully pulpit to talk up the growth, this is just jawboning as I have called it, to see if they can talk us out of a recession.
This tactic will not work since the numbers are going against them, but the Fed really doesn’t have many other tools besides back pedaling to QE4, which would be admitting defeat.
Once the Fed faces the economic reality and kicks the rate rise can down the road, QE4 talk can weaken the strong dollar, which has US exports falling to 5 year lows.
My guess for the rest of this month will be more talk about June or perhaps September, until we get the first read on Q1 2015 GDP at the end of the month. After a zero print, the talk will die.
That is unless we get a first print of 2.5% — which will be revised down in further updates — could allow the talk to continue.