The above chart is from the Fed’s Summary of Economic Projections for March 2024 and December of 2023.
Summary of Economic Projections March 2024 vs December 2023 
Compared to December of 2023 the Fed upped its central tendency of GDP expectations, core inflation, and the expected Fed Funds Rate.
pic.twitter.com/akY0JlY5lj
— Hedgeye (@Hedgeye) March 20, 2024
The Fed is more hawkish in March than December, although differences are only a quarter point or so. Yet, the market is reacting as if the Fed is dovish.The S&P 500 is above the 5,200 level for the first time, and gold is up $27 to $2,187.In one aspect the Fed is dovish. In the press conference, Powell said the Fed is discussing the end of Quantitative Tightening (QT), the opposite of Quantitative Easing (QE).The market and gold seem to like that news. Yet, it’s hard to precisely what the market is reacting to. Perhaps it’s QT, something else, or nothing at all.Regardless, a booming stock market and higher housing prices support consumption and inflation. Unless rents come down sharply, inflation will continue to be stronger than the Fed and the market expects.
What Will the Fed’s Interest Rate Be a Year From Now?I asked that question in December of 2023.Here’s the chart.
Rate Cut Probabilities on December 13, 2023, for December 2024 
Image from CME Fedwatch, annotations by Mish.
Target Rate Probabilities Dec 2024 as of March 20, 2024 
The market has priced out slightly over one full quarter-point cut.But note yesterday vs today. That’s another reason for a rally today.I expect inflation will surprise to the upside. It would be most damaging if that happens after the Fed gets in a rate cut.
The Fed’s Big ProblemI keep returning to the central problem for the Fed: There Are Two Economies But Only One Interest RateThe asset holders are going OK. Renters and those age 35 and younger are increasingly struggling.
Who’s Unhappy?Those looking to buy a home but cannot afford the record-high prices, are not faring well in this economy.Also please note US Drops to Number #23 in the World Happiness ReportFor those age 30 an younger, the US slipped to #62. Please check out the report.
ConclusionsTwo completely different polls show millennials and zoomers are unhappy. And they are unhappy for the reasons I stated.Many have concluded they will never be able to afford a house or have kids. Those who have concluded that are likely correct.For more discussion, also see Gen Z, the Most Pessimistic Generation in History, May Decide the ElectionMore By This Author:US Drop to Number 23 in the World Happiness ReportHow Much Did The BLS Overstate Job Expansion In 2023?Austin Is Reeling, But What Does That Mean For Housing And Rent Nationally?
