Welcome to Thoughts on the Market.

I'm Chetanaya, Chief Economist and Global Head of Economics for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about the

U.S. economic recovery and the debate over the part of policy tightening.

This Tuesday, February 9th at 11 a.m. in New York.

Are you familiar with the term a high-pressure economy?

If not, now might be a good time to get acquainted with this phrase coined by economist Arthur

Okun and referenced by current Treasury Secretary Janet Yellen back in 2016.

Why now?

Because this phrase encapsulates where we think the U.S. economy is headed over the coming

quarters.

In short, a high-pressure economy is when continued expansionary policy creates stronger

than average economic growth and low unemployment.

Drawing on the experience from the past cycle, policymakers believe that such a high-pressure

economy will create a broad base and inclusive economic growth environment.

And this will help to both reduce the impact on lower-income households from the effects

of the recession as well as address the pre-existing condition of income inequality.

With 2024 quarter data in hand, we now know that final domestic demand has already reached

99% of its pre-COVID levels and is expected to rise to 100% by this quarter.

Yet, if you've been following the comments of policymakers in the U.S., you are probably

familiar with the narrative that the Fed views any talk of tapering its asset purchases as

premature and has hinted that the first rate hike in this cycle could be later than

...