The good news lately has been that the rate of inflation is slowing…..that report made most of the MSM……good news indeed….but is it all show much smoke and mirrors?
While many economists are anxious to have the Fed push forward with an aggressive path of rate hikes, there is good reason to be cautious. If we deliberately raise the unemployment rate, and throw millions of people out of work, it will be the most disadvantaged in the economy and society who will be hardest hit.
And, the impact is not just on the people who actually lose their jobs, but on millions more who will be fearful of losing their jobs. In addition, tens of millions may feel stuck at dead end jobs with poor working conditions and abusive bosses. We should always be cautious about a policy that deliberately throws people out of work and try to avoid going this route unless it is absolutely necessary. (We should also come up with better routes for dealing with inflation, but I’ll skip that one for now.)
The recent government data on inflation, along with a wide variety of private measures, give us good reason to believe that we are seeing at least a temporary pause where the monthly inflation data will be moderate. As noted, there is clear evidence of substantial labor market weakening, which could slow the pace of wage growth to a rate consistent with moderate inflation. The Fed should take advantage of this pause to slow its path of rate hikes and get a better sense of where the labor market now stands.
The things that I buy shows no slowing….food is still up….gas is down….
Economists see things that we mere mortals do not……but I can only say how it is affecting me and my family…..so far inflation is still biting hard.
How about you?
I Read, I Write, You Know
“lego ergo scribo”