The Fed’s Preferred Inflation Gauge and the Strutiny Problem of the Central Bank in the Deep Down and the Age of the Incentive
The Federal Reserve’s preferred inflation gauge remained elevated in new data released on Friday, further evidence that the central bank is contending with a stubborn problem as it tries to choke off the worst inflation in four decades.
The price of gas is going down which has partly caused inflation to be moderate on a yearly basis. During the year through August, inflation climbed after stripping out food and fuel. That is lower than the 5 percent the month before. On a monthly basis, the core index increased by 0.6 percent, the fastest increase since June.
CNN’s Christine Romans has an excellent rundown of all the prognosticating about the economy and notes there is a “surplus of uncertainty ahead.” While few predict a downturn like the Great Recession, many or most economists are still predicting a recession of some kind.
It’s scary when a recession is happening. Businesses close and people lose jobs. But inflation is also scary. And it will take a slowing economy – maybe even a recession – to control soaring prices,” she writes.
Try figuring out the winning political message about people losing jobs being a good thing. It probably doesn’t exist, which is why Republicans have found so much success blaming Democrats for inflation this year – but the messaging from the White House and Democrats just sounds confusing.
The Fed’s Game Plan: Why the U.S. is in a Recession and Why the Fed is Doing Too Much Too Soon
Or, as House Minority Leader Kevin McCarthy pointed out on Twitter, the price of Halloween candy is way up. The Republicans blame government spending and Democrats for the inflation, which is true but also says that supply chain problems and the war in Russia are to blame.
The Democrats have criticized oil companies for using the excuse of inflation to pad their profits. The Mars company was called out by the senator over the price of candy.
While the GDP report will quiet the argument that the US is technically in a recession, it’s probably not going to do much to change the Fed’s inflation game plan, CNN’s Matt Egan said on “Newsroom” on Thursday.
Rana Foroohar, an analyst for CNN, said that the Fed’s rate hikes are supposed to hurt the economy and cause consumer spending to go down.
The US is, as usual, the cleanest dirty shirt in the closet, so it may be a better option than wearing less dirty laundry.
A response is necessary because of high inflation. But the concern is the Fed is doing too much too soon,” Hickenlooper wrote in a letter on Thursday to Fed Chairman Jerome Powell that Egan obtained. We should wait for the effects of the changes to be seen.
“No matter how many letters Democrats write to Powell, the Fed chair has pledged to stay out of politics and base the central bank’s decisions solely on what is happening in the economy,” Egan writes. The White House respects the Feds independence, a significant shift from the Trump administration.