Shortly after the 2008–2009 Great Economic Recession, an apocryphal story circulated about the captain of the Titanic. When asked in the investigation of the Titanic’s sinking why he did not steer the ship away from the iceberg, he answered, “What iceberg?”

Although the vessel’s actual captain went down with the ship, the story parallels the behavior of the Federal Reserve in 2008. Despite signs of serious problems brewing in the sub-prime loan and housing markets, the Fed was caught flat-footed when those problems precipitated the Lehman-induced world economic and financial market crisis. Indeed, earlier in the year, the then Fed Chairman Ben Bernanke dismissed the sub-prime problems as nothing serious. Meanwhile, on the eve of the financial crisis, the Fed was still debating whether or not to raise interest rates.

In gauging the U.S. economic outlook for 2024, a key question is whether something similar to what happened in 2008 might happen again today. While serious troubles are brewing in the commercial real estate market and at the regional banks that could lead to a credit crunch, the........

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