But, it is not one he believes was made in September 2015, rather, he told Portfolio Adviser, it was probably made around 2014.
“In spite of the fact that the recovery is not as strong as they would perhaps like, I think the labour market is really strong. It is tightening, there are more people in jobs, there are more jobs being created, there is a skills shortage and, when you have a labour market that is operating pretty much at full capacity, you should no longer have emergency interest rates,” he said.
Adding that the current labour market is stronger than in either of the two most recent economic bull markets, between 2004 and 2007 and the 1990s and, in those cases, when it got toward such levels, the Fed was tightening rates.
While he does not believe the timing of the first rate hike is particularly important, what should be talked about is the path of the hikes thereafter.
“Because the Fed has waited so long, we shouldn’t believe what we are being told about the path being gentle and gradual. In the early parts of next year people are going to see wages moving up, we are going to get into a strong, sustainable, consumption-led economic recovery, at which point the Fed will have the confidence to hike rates, and you are going to see wages continue to strengthen and employment continue to improve. Inflation will then start to emerge and we are going to very soon see they are well behind the curve.”
