The always excellent Financial Revolutionist asks this question. In their words:
“One factor may be that the Fed’s data sources don’t capture the rapid shifts taking place in the economy. Consider these facts: 1) Since 2008, U.S. student debt has risen by over 50%; 2) Uber, Airbnb and WeWork — each possessing asset-light, freelance-driven business models that millennials love — were all founded; and 3) one company (Amazon) has come to utterly dominate America’s Retail industry. Our hope is that as the Fed looks to build its new framework for understanding economic growth prospects and inflation pressures (or lack thereof), its analysts look to fintech leaders on the front lines of incorporating innovation into various kinds of economic transactions. Who knows, maybe next year a group of entrepreneurs can form a group called FintechUp and join FedUp in ushering the Fed into the modern era.”
It is a great question because the model of how the economy works (which drives Fed decisions which drives the global economy) is based on a historically brief era that we might call the golden age of industrialization.
Anecdotally we all know that the gig economy is real and therefore that official stats may miss a lot of economic activity. Just recently JP Morgan added some hard data to this anecdotal observation, specifically how seniors are working in the gig economy.
What do you think? Is the Fed working to some old models that need some Fintech help?