Good economic news isn't what it used to be

CHRISTOPHER WALLER, a respected governor of the Federal Reserve, brought what would normally pass for glad tidings to an influential Asian audience this week.

- By Daniel Moss

Whether people were in the mood to receive positive messages was another thing entirely.

It’s not clear anymore what favorable developments look like. Inflation is receding and, with a bit of luck, the Fed should be able to cut its main interest rate a few times this year, Waller told the conference organized by the Bank of Korea. What about President Donald Trump’s tariffs? He’ll try to look through any short-term price spikes that flow from the levies. Assuming employment holds up, rate reductions would be “good news,” Waller added. A poor outcome, presumably, would be one where easing is required to counter tanking growth. On Friday, figures showed the Fed’s preferred gauge of inflation was a whisker above the central bank’s 2% target.

Don’t expect the Fed to be exultant, but that’s a pretty solid performance compared with some parts of Asia. In China, deflation is the chief domestic danger. The latest Bloomberg poll of analysts forecasts that consumer prices will increase by just 0.3% this year after a soft 2024. As much as the Fed fumbled the post-pandemic surge, things are much better now. The People’s Bank of China might privately wish to have America’s problems. Trump’s broadsides tend to obscure President Xi Jinping’s home-grown difficulties.