Fed Thoughts: Poles Apart
The magnetic North Pole is moving south and east relative to the geographic North Pole at about 35 miles per year. Apparently, there is a tug of war beneath the earth’s crust between two masses of magnetic magma, one under Canada and the other under Siberia. Siberia is winning, at least for the one-and-a-half centuries the game has been monitored.
This is an apt metaphor for the economic and financial outlook for two reasons.
For one, nothing is constant. A compass pointing to “true” North shifts over time. That may be rounding error for a Cub Scout on a weekend outing, but such perturbations matter for the Global Positioning System. Do not worry, the Uber or Lyft driver will still find their way, albeit with a wider margin of error.
For another, geophysicists understand the need to update measurements of the gravitational contours of the globe, which they do periodically in the World Magnetic Model. Except, the National Oceanic and Atmospheric Administration is closed right now because of the partial US government shutdown and the update has been put off.
An even further distance from the magnetic and geographic poles separates US political leaders, and the climate is equally frigid. The result has been the longest closure (albeit partial) on record.