St. Louis Fed chief James Bullard believes rate increases by the central bank over the course of the year may cripple the economy. Federal Reserve chief Jerome Powell thinks otherwise, to some extent because of gross domestic product growth and high interest rates. Each may be charting the right course, depending on a small number of factors.

Bullard’s case, which is well beyond his own worry, is that the yield curve could invert. Beyond that, a trade war, low wage growth, exhausted consumers or high oil prices could kick the economy off track. Harder to forecast, the collapse of a relatively large economy like Turkey’s could have unforeseeable consequences. Such a collapse could certainly damage the balance sheets of big European Union banks.

Bullard may be right, on the other hand. Wage growth could pick up and, along with energy prices, inflation could break above 2%. Unemployment could stay below 4%, and it might even drop toward a nearly unprecedented 3.5%. Such low unemployment might be a cause for wage growth, although the so-called gig economy creates armies of low-paid workers who are without benefits. There is an argument, however, that many companies that continue to post record earnings could trigger higher wage prices. So could serial minimum wage increases across many states.

The holiday season, which is only four months away, will be telling. It is the period during which most retailers make their annual profit. It is also the largest signal of consumer confidence.

Bullard and Powell can debate as much as they like. It will not be long before the economy shows who is right.

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