Big-spending Congress puts Federal Reserve in a bind

Complicated, somewhat contradictory economic signals in the past few days show that big-spending lawmakers are putting the Federal Reserve Board in an increasingly tough position. Unless President Trump and Congress suddenly demonstrate fiscal discipline, this autumn’s economy could be at least as unsteady as last fall’s was.

Conventional wisdom says the Federal Reserve should reduce interest rates when retailers are closing and when consumer spending slows. Conventional wisdom says the Fed should maintain interest rates or consider increasing them if inflationary pressures rise. Well, this week come reports that all three things are happening at once, thus giving extremely mixed signals to the Fed.