A narrator in Dashiel Hammett’s novel The Dain Curse attempts to persuade a woman that she is absolutely fine, while she believes she is under a curse:
Nobody thinks clearly, no matter what they pretend. Thinking’s a dizzy business, a matter of catching as many of those foggy glimpses as you can and fitting them together the best you can. That’s why people hang on so tight to their beliefs and opinions; because, compared to the haphazard way in which they arrived at, even the goofiest opinion seems wonderfully clear, sane, and self-evident. And if you let it get away from you, then you’ve got to dive back into that foggy muddle to wangle yourself out another to take its place.
Even the most intelligent people can become lost in a fog. Those who appear certain of themselves are trying to suppress their inner doubts. When it comes to Fed policy and inflation’s grip on the economy, we’d all be better off if we just admitted how confused we are.
We’re perplexed by Fed vice chair Richard Clarida’s remarks that lowering the unemployment rate to 3.8 percent next year, from 4.6 percent now, would be compatible with his assessment of maximum employment and warrant tighter monetary policy. Nine of the eighteen Fed officials are penciling in a 2022 liftoff.
In 1950, the Review of Economics and Statistics held a symposium titled “How Much Unemployment?” which debated the accuracy of the Census Bureau’s value for unemployment. Wharton professor Gladys Palmer, a renowned labor expert, argued that “a single figure of unemployment, regardless of how it is defined or derived, is inadequate” to guide monetary policy decisions. She claimed that no single number could fully sum up diverse labor force activity.
If we look beneath the headline unemployment rate, the jobless rate varies for adult women (4.4 percent), teenagers (11.9 percent), whites (4.0 percent), and blacks (7.9 percent). The present unemployment situation for black Americans is what white Americans experience during a recession. (The gap between the black and white...