Skeptical of the recovery and firmly in the dove camp not long ago, St. Louis Fed chief has turned strongly bullish on the economy. In an interview ahead of a speech today, Bullard brushes aside talk the quickly falling unemployment rate is sending a false signal about the strength of the economy.
“The bottom line is then you should take the signal from the unemployment rate decline as a signal of an improving labor market and an improving economy ... “The economy is much closer than normal than what we’re used to thinking about over the last five years ... Further declines in inflation would put pressure on Fed to take some sort of policy action."
Admitting (how kind) he has no model of how the harsh winter is affecting this year's economy, Bullard - instead relying on his "gut instinct" - says the weather is behind the soft numbers. Even if it's not the weather, he says, a few bad prints over the last few weeks wouldn't change his overall strong outlook.
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