The latest numbers suggest that the Fed is getting what it wants after all. The economy is cooling off, taking the edge off inflation . . . and on balance, things actually look pretty good from here.

On paper, the world remains blisteringly hot. GDP jumped 6.7% last quarter from the previous year’s level, adding over $400 billion to the U.S. economy. Coming on the back of 8.5% annualized growth over the summer and 6.6% growth in the first quarter, it’s hard to argue that we aren’t in a boom . . . on paper.

But it hasn’t felt anything like a boom because the price of everything has been climbing faster than the overall economy, leaving less real wealth behind. We’re working harder than ever to keep GDP moving at that rate. Inflation has been taking every bit of that progress away, leaving us increasingly exhausted as time goes by.

That’s finally changing. Real GDP . . . the paper growth rate minus inflation . . . was actually positive in the third quarter. All that hard work is finally paying off. Higher interest rates are actually making a difference.

Admittedly, the paper boom is cooling off. That’s what higher interest rates do. But while GDP growth is down 1.8% in the last three months, domestic inflation is down 3.9%. Do all the math and real GDP is up a healthy 2.6% from last year. That’s the amount of progress the economy has made since last fall . . . even counting for inflation.

We haven’t felt that positive real progress since 4Q21, when the world was still bouncing back from the pandemic lockdowns. After that, inflation ate up literally everything in 1Q and 2Q, leaving what amounts to a net recession on the books: two consecutive quarters of negative real GDP growth. That’s already happened. We’ve lived through that.

We survived. And now inflation is finally retreating to exactly where the Fed hoped it would be at the end of this year. After spending this year on hyperdrive and still falling behind, it feels incredible.

What else does the Fed see? Real disposable income is positive again. We’re working harder and finally seeing tangible returns. It isn’t much (1.7%) but it beats going backward.

The personal saving rate is not collapsing. People are still paying the bills and setting money aside. That’s great news for the banks that carry our credit card balances and underwrite our mortgages. Asset values are down but liquidity is still strong.

And corporate profit across the economy is tracking 25% above pre-COVID levels. It turns out much of the rally we’ve seen in the last few years was actually justified. This sets up stocks to once again recover their bull market peaks . . . maybe not yet, but it’s coming. American enterprise is alive and well.

Now if only the Fed would agree! We’ll know more next week.