The Fed's crackdown, along with similar moves by other central banks, have raised the risk of a global economic slowdown. Fed chairman Jerome Powell warned last week that rates will likely have to go even higher than expected next year, although the increases may come in smaller increments. Since March, the Fed has raised its benchmark rate six times, driving up borrowing costs for anyone trying to buy a house or a car or carrying a balance on a credit card. This spring, the Fed began raising interest rates in an effort to tamp down demand and bring prices under control. But inflation proved to be higher and more stubborn than the central bank expected. "And it's much easier to stop a bathtub from overflowing than it is to get the water back."įor much of last year, the Federal Reserve believed that prices would cool off on their own, once supply chain snarls caused by the pandemic came untangled. "Now the bathtub is overflowing," said former Treasury Secretary Larry Summers, who had cautioned his fellow Democrats about just such an outcome. Inflation has been even higher in the Eurozone and the United Kingdom than in the U.S., largely as a result of soaring energy costs tied to the Ukraine war.īut some prominent Democrats acknowledge that last year's relief package played a role in overheating the economy and pushing prices higher. Other factors have undoubtedly contributed to high inflation, including the lingering effects of the pandemic and Russia's invasion of Ukraine. Rick Scott, R-Fla., told NPR's Morning Editionlast week. "Inflation is caused because of reckless Democrat spending," Sen. But Republicans blame the aggressive relief bill - which passed with no GOP support - for fueling runaway prices. Employers have added more than 10 million jobs since Biden took office. But with COVID-19 cases climbing, the economy had lost 115,000 jobs the month before Biden was sworn in.Ĭongressional Democrats quickly passed a $1.9 trillion economic relief bill, which included direct payments of $1400 to most adults, along with expanded unemployment benefits and a new child tax credit.Īs economic stimulus, it was a success. The unemployment rate in January of last year was 6.4% - down from nearly 15% in the early months of the pandemic. The incoming administration was more concerned about jobs - fearing a repeat of the sluggish recovery that followed the global financial crisis. Although the pandemic had triggered isolated price increases for things like lumber - the overall cost of living was climbing at less than 2% per year. Inflation was of little concern when President Biden first took office. Inflation was not on the radar two years ago The surge in prices has fueled anxiety among Americans, who are paying more for gasoline, groceries and other necessities. The consumer price index for October is set to be released on Thursday. That's down only slightly from the 9% rate in June, which was the highest since 1981. The election comes as consumer prices are climbing at near the fastest pace in four decades. Republicans were seen as better than Democrats at tackling inflation by a wide margin. "Preserving democracy" was a distant second. More than one in three voters cited inflation as their most pressing priority, according to the latest NPR/PBS Newshour/Marist poll. Rising prices are the number one concern for voters in this year's midterm elections, outpacing abortion, crime and other hot-button issues. Like a movie monster from the 1970s, inflation is back and drawing crowds at a polling station near you. Follow live updates and results from Election Day 2022 here.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |