Despite low gasoline prices and good employment numbers this economy is not my parent’s consumer driven economy. In my parent’s economy these factors would drive robust, broad based economic growth. In today’s economy it doesn’t. With economic gains focused almost exclusively on health care and auto sales it is fascinating that low gasoline price and good employment numbers have had almost no on the other sectors. This violates everything we have come to expect about America’s consumer driven economy. Since it is not my parent’s economy, what will trigger robust, broad base economic growth if low gasoline prices and good employment numbers will not do the job? With such a “meh” economy, why is the Federal Reserve raising interest rates? The economic fundamentals are still too weak to encourage inflation and higher interest rates traditionally slow down the economy. Despite the changed circumstances it is still reasonable to expect that an interest rate increase will drive the economy into a recession. What is the Federal Reserve worried about that is worse than a recession? Today I saw a quote from Stanley Druckenmiller that possibly explains the consumer driven economy dilemma facing the Federal Reserve.

“The problem with this is when you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there’s one thing that doesn’t diminish, which is unintended consequences.”