I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?
In terms of military spending, you may have heard of an illegal invasion and war happening in Eastern Europe...
Inflation is outpacing wage increases so effective wages are actually lower in terms of buying power.
Housing is getting more expensive at a faster rate than wages are increasing.
If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business.
the fed presents its goals as balancing low unemployment against low inflation. any projections for unemployment have it increasing as the fed tightens. i haven’t seen anyone say who these newly unemployed are, nor where they end up. but if the tradeoff were “low unemployment, but those at the bottom of the wrung have to move to cheaper housing (and commute further, etc)” vs “higher unemployment: those at the bottom of the wrung are SOL and end up on the streets”… well, i certainly hope that’s not the tradeoff we’re actively choosing here.
The fed has specifically stated that reducing wages is one of their goals.
I'm not against the fed raising rates. But any benefit workers see from such a policy is unintentional.
Citation? I would be surprised for the fed to have such a thing as their goal.
So we think, through our policies, through further healing in the labor market, higher rates, for example, of vacancy filling and things like that, and more people coming back in, we like to think that supply and demand will come back into balance and that, therefore, wage inflation will moderate to still high levels of wage increases, but ones that are more consistent with 2 percent inflation. That’s our expectation."
"So in principle, it seems as though, by moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially."
Implicit in all this is the idea that wages are currently too high, and need to be suppressed.
https://www.wsj.com/articles/transcript-fed-chief-powells-po...
Energy in the general sense underpins the entire economy but there is so much more on top of that making inflation more complex.
So the price decrease we see is probably more from the later, but there is still impact from the former. As a reminder, this goes more specifically for gas prices and not necessarily all prices on all items in general.
> The CPI figures in the latest report were grim. Food prices rose 1.0% in June and are 10.4% above year-ago levels. Food at home costs 12.2% more than a year ago. Energy prices overall rose 7.5% in June and stand 41.6% above where they were in June of 2021. Gasoline prices rose 11.2% in June and are a whopping 60% higher than a year ago. The so-called “core” inflation measure of goods and services other than food and energy rose 0.7% in June and are 5.9% above year-ago levels.
2. The economy is more than just gas