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Fed Describes Economy as ‘Strong’ for the First Time Since 2006 

U.S. economy grew at a 4.1% rate in the second quarter.

By Jeanna Smialek | Updated on August 03, 2018

So long, modest, moderate and solid. Strength is making a comeback.

The Federal Reserve described economic activity as “strong” in Wednesday’s statement, the first time it’s done so since it called it “quite strong” in May 2006 — in the late stages of the last economic expansion, shortly before the housing market drove the economy into meltdown. Morgan Stanley highlighted the change in a research note.

“The Fed upgrading its language supports our late cycle view,” Hans Redeker and Gek Teng Khoo wrote in the bank’s FX Morning note. That will lead to “monetary authorities taking the liquidity punch bowl away, turning excess liquidity into a shortage, eventually driving cost of capital higher.”

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