The Fed’s Credibility Is on the Line, Ed Yardeni Warns

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**Ed Yardeni** (1:26)
If we got a bulletproof economy, it's because the consumer is bulletproof. The Fed's credibility is on the line again. I think they should move in September. You could have a revolt on the long end.

**Maggie Lake** (1:42)
Hello and welcome to Wealthion, I'm Maggie Lake. Joining me today to discuss the outlook for the economy and inflation is Ed Yardeni, the president of Yardeni Research. Hey, Ed, welcome back. Great to have you on.

**Ed Yardeni** (1:52)
Thank you, Maggie.

**Maggie Lake** (1:54)
So we are coming, we're coming off a week of really strong earnings, fantastic performance by the stock market, really reflecting strength on the corporate side of the ledger. What's your assessment of the US economy overall?

**Ed Yardeni** (2:10)
Well, the US economy overall has been remarkably resilient. It's had gone through lots of stress tests if you think about it. The pandemic, the lockdowns, the lockdowns were followed by supply chain disruptions, inflation, the Fed raised interest rates. We had many financial crisis in 2023
Trump comes in with tariffs and the war and tariffs again. And yet here we are without a recession and real GDP at all-time record high, consumer spending at an all-time record high, capital spending at an all-time record high, and the stock market at all-time record high. That's pretty impressive. And so I conclude that the economy is gonna remain resilient through the end of the decade. I don't think we're gonna have a recession. And I think earnings will continue to surprise to the upside and that'll continue to drive the market higher.

**Maggie Lake** (3:02)
Amazing. I know you've kind of referred to this as the roaring 20s, or at least asked the question, are we in this period of the roaring 20s? And I think some people look at this and say, listen, as you say, we've thrown everything at this. And yet, we see this kind of performance. It's time to kind of lean into it and acknowledge the fact that, you know, we're in the middle of this, maybe another tech revolution.
And then there are other people who have a much sort of glass half empty and are saying, everything's at a record. What could possibly go wrong? The bottom's about to fall out. This is a bubble. You know, there are all sorts of imbalances brewing. How do you, where do you come down? And how do you, if you're bullish, what's driving this strain?

**Ed Yardeni** (3:43)
Well, I think that what a lot of economists have missed is the strength of the consumer. And I think what they really missed is the whole demographic story.
I sort of have inside information on this. I'm a baby boomer, and I'm still working for a living, but a lot of my friends are retiring. And then I went and looked at the data that the Federal Reserve collects. And the baby boomer generation, not all of them retired, but increasingly retiring, the baby boom generation are sitting on something like almost 100 trillion dollars. It's between them and the folks from the so-called silent generation, there's 110 trillion dollars in net worth.
So it's the richest retiring senior generation we've ever had. And you know what? Think about it. When, what do they, do they really care about interest rates going up? They love it because 60% of baby boomers, baby boomers account for 60% of money market funds. So when interest rates go up, they're getting a benefit. Do they really care about the labor market?