Sen. Elizabeth Warren (D-Mass.) is mad at Federal Reserve Chairman Jerome Powell after Powell announced that the Fed was going to raise interest rates another half a percent.
“He’s pushing hard to get more people fired because he thinks that is one way to help bring down inflation,” Warren told HuffPost on Wednesday. “But it’s sure painful for the families who lose their jobs.”
Yes, it is painful if you lose your job. Perhaps Warren’s boss, Joe Biden, should have thought about that before pouring $5 trillion into the economy,
And it’s not only Powell who thinks this is “one way to help bring down inflation.” It’s every economist who isn’t a socialist loon who thinks that way.
Democrats are beginning to get very nervous that the Federal Reserve’s efforts to bring down inflation will be so successful that it will tip the U.S. economy into a recession.
At this point, that’s a foregone conclusion. The only question remaining is how deep the recession will be.
So far, higher interest rates have crushed home sales, which are highly sensitive to borrowing costs, but had apparently no effect on the labor market. The unemployment rate remained 3.7% in November, which is historically low.
In new projections published Wednesday, the Fed’s decision-makers said they expect unemployment to rise to 4.6% next year, which could represent a recessionary amount of job losses.
Powell said that the projected increase in unemployment would not necessarily indicate a recession, but declined to say whether he thought higher unemployment would result more from job losses or just less employer demand for workers.
Inflation has gone from a catastrophic 8.2% in September to November’s still uncomfortable 7.1%. Contrary to boasts from the Democrats and the White House, 7.1% inflation does not represent appreciably less pain for the American consumer than 8.2%. In fact, it’s a long way to the Fed’s target inflation rate of 2%, and there are likely to be bursts of price increases before we get there as energy remains a volatile issue and Biden’s idiotic green policies will make everything more expensive.
For our own good, of course.
As for the future, the Fed tries to be optimistic, but these numbers seem Pollyannaish.
Officials clearly expect the economy to slow as they hold rates high. Growth is expected to eke out at 0.5 percent next year, and the labor market is expected to soften, with the central bank forecasting the unemployment rate to reach 4.6 percent at the end of 2023. Inflation is expected to end 2022 at 5.6 percent, using the Fed’s preferred gauge, before falling to 3.1 percent next year.
Those numbers are highly dependent on Vladimir Putin not doing something stupid (using nukes in Ukraine) or the Chinese doing something crazy (like invading Taiwan). In many respects, the American economy is at the mercy of world events, and no matter what the Fed does with interest rates or how Democrats look to absolve themselves of the blame for inflation and the coming recession, outside forces will play a big role in what happens next.
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