Source: The Guardian —
Experts say raising rates ‘isn’t working’ and that the real culprits are corporate pricing, energy costs and supply chain
A fresh round of US inflation data released last week showed persistently high prices, raising more questions about whether the Federal Reserve’s interest rate hikes are missing what many economists contend are the real inflationary culprits: corporate pricing, energy costs and supply chain disruptions.
The news is further stirring fears of unnecessary economic pain should the Fed push America into recession.
“Raising interest rates isn’t working, and the Fed’s overly aggressive actions are shoving our economy to the brink of a devastating recession,” said Rakeen Mabud, chief economist at the progressive Groundwork Collaborative think tank. “Supply chain bottlenecks, a volatile global energy market and rampant corporate profiteering can’t be solved by additional rate hikes.”
The Fed and some economists maintain that demand generated by a hot labor market and higher wages are driving inflation, and higher unemployment and interest rates are panaceas.
To that end, the Fed has hiked rates five times in 2022 and indicated more increases are to come, moves the Federal Reserve board chair, Jerome Powell, has acknowledged will “bring some pain” to households and businesses.
Data shows the Fed is making some progress in its aim: mortgage rates are soaring and home sales are plummeting. Meanwhile, the latest employment numbers show a sharp decline in job openings, as well as slowing job and wage growth.
But Thursday’s Consumer Price Index numbers for September revealed the approach has yielded few gains on pricing. Inflation inched up to 8.2%, while month-to-month it climbed 0.1% in August and 0.4% in September.
The real culprit is bad Federal Government Policy and keeping interest rates too low for too long.
Two trillion in sending and ultra low interest rates caused the mess we’re in now. We need less spending! Reduce the size of Government and stop buying Federal dept… it’s a viscous circle and sooner or later we need to pay the piper.
Really? What “experts” and economists are you referring to? I think you’re revealing your biases more than anything else. I got to the part where you named an economist from a ( (progressive) think tank and stopped reading. Rakeen Mabud! Really!
Inflation has been mega fast the last 1.5 years. You can’t stop a train on a dime and you can’t stop inflation in 90 days. Bend over and hold on to your ass. Sure it will hurt and the youngsters who don’t know what a recession is will cry, but in the end the economy will slow down, the greed and fear of high prices will subside and the newbies will get an education. The sky won’t fall
Every property sale involves many jobs and helps the unemployment #’s stay down. New construction also creates many jobs!!!! Hope they calm down with the rate hikes so more people will have a job. The real estate market drives the economy!