The late summer news cycle is not exactly brimming with important or interesting topics this week. With the election less than 50 days away, the mainstream media is intently focused on bringing down President Trump – nothing new there. So today, I’ll touch briefly on several developments which deserve our attention and I think you’ll find interesting.
IMF Still Expects Strong Economic Rebound in 2021
For starters, the International Monetary Fund recently updated its economic forecasts for the US in 2020 and 2021. The IMF now forecasts the US economy will decline by only 4.9% in 2020. That assumes, of course, there has been a significant economic recovery in the 3Q and it will continue between now and the end of the year – which remains to be seen.
The other good news is, the IMF predicts the US economy will rise by 5.4% in 2021, more than making up for this year’s loss. That also remains to be seen.
I would be remiss not to point out that the IMF does not have the greatest track record when it comes to forecasting US economic growth. However, in this case, its estimates for 2020 and 2021 are in-line with most other forecasts I read.
The bottom line is, most forecasters believe the US economy is recovering and will stage a strong rebound between now and the end of the year, followed by a surge of over 5% in 2021. Again, both remain to be seen (meaning I have some doubts).
Fed’s Last Policy Meeting Before the Election
Next, the Federal Reserve ended its latest policy meeting yesterday, and this was the last Fed Open Market Committee (FOMC) meeting before the election. As was widely expected, the Fed made no meaningful changes to its policy of keeping short-term rates near zero. No surprise there.
The policy statement for the latest FOMC meeting did, however, reflect the Fed’s late August commitment to higher inflation, including allowing it to rise above 2%, in the months and years ahead. As I wrote on September 1, I did not consider the latest policy tweak to be a big change. I still don’t, and I continue to argue the Fed doesn’t have a lot of impact on the inflation rate in the current economic environment.
However, the central bank has since received increasing criticism from many Fed-watchers who believe the central bank is irresponsible for targeting higher inflation. I’m a little surprised at this response, but some critics have gone so far as to call it “dangerous.”
I find that criticism too dramatic. Essentially, what the Fed said in late August was that it is expanding the 2% inflation target going forward and would tolerate 2.25%-2.50% core inflation in the next few years. That doesn’t sound dangerous to me, especially when it is not remotely clear the Fed can boost inflation from its current level around 1%-1.25% to 2.25%-2.50%.
Thus, I suggest you ignore warnings that the Fed’s latest shift in policy is irresponsible or dangerous. I’ll tell you if we need to be worried.
Felons Get to Vote – Could They Swing the Election?
I’m guessing you haven’t heard about this: About two million additional felons are believed to have regained their voting rights this year and will be able to vote in the upcoming elections in November. This is a change which could impact close races in states like Florida, Iowa, North Carolina and others.
Felon rights to vote vary widely among US states. In a few states, felons can vote in certain elections even while incarcerated. In most states, however, they can only vote after they have served their sentence, if they meet certain requirements. And in some states, felons’ voting rights may be denied permanently depending on the crime they committed.
Last month, Iowa Governor Kim Reynolds issued an executive order restoring voting rights to felons who have completed their prison sentences. Until that order was issued, Iowa was one of the last states in the US which banned felons from voting, even after they completed their sentence.
An amendment to Florida’s constitution last year allows felons to vote after they complete their sentence – if they have paid off any outstanding fines associated with their conviction. Nevada passed a bill last year restoring voting rights to felons upon their release from prison – outstanding fines notwithstanding. Judges in North Carolina recently voided a state law which required felons to pay any outstanding fines or fees before voting again.
The point is, more convicted felons will be eligible to vote this year than ever before, and media pundits argue they could have a significant influence in the presidential race, as well as state and local elections. Yet this raises several questions.
For one, will newly eligible to vote felons go to the trouble of re-registering to vote? Maybe, maybe not. For two, if they do re-register to vote, will they lean toward Democrats or Republicans? The media assumes they will lean strongly for the Democrats. I’m not so sure. The point is, no one knows. We’ll know soon enough.
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