Relax: Fed follies are over

Commentary: Little danger economy will overheat on slow road back to 'normal'

Relax, everybody. The Fed follies are over for now, for weeks and maybe months. Interest rates won’t do much until we get a stream of data either confirming or denying the Fed's relatively rosy forecast. The economy is in no danger of "overheating" into inflation, and the greater risk is still on the stall side. Give yourself a soft summer moment to look backward, not in anxiety, but to mark the ever-so-gradual transition toward normality -- and the period we have survived. Normal. In normal times the 10-year T-note yield has tended to be about 2 percent over inflation, or about the same as nominal GDP (not inflation-adjusted). "Core" inflation today is running about 1 percent, which would equate to a 3 percent 10-year T-note. The Fed's Aunt Blappys have gotten us almost there in the last 60 days, right or wrong. GDP is trickier -- a lot trickier. The Fed forecasts 2.6 percent real GDP for 2013. That, plus 1 percent inflation, would equal a 3.6 percent 10-year T-note. The...