{"id":1476424,"date":"2022-05-16T08:44:38","date_gmt":"2022-05-16T12:44:38","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1476424"},"modified":"2022-05-16T08:44:39","modified_gmt":"2022-05-16T12:44:39","slug":"feds-powell-cant-promise-hell-avoid-recession-in-fight-against-inflation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/feds-powell-cant-promise-hell-avoid-recession-in-fight-against-inflation\/","title":{"rendered":"Fed\u2019s Powell Can\u2019t Promise He\u2019ll Avoid Recession in Fight Against Inflation"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffeds-powell-cant-promise-hell-avoid-recession-in-fight-against-inflation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1476424&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Federal Reserve Chair Jerome Powell said Thursday that persistent supply chain disruptions and \u201chuge\u201d geopolitical events happening around the globe could foil the Fed\u2019s attempts at engineering a so-called \u201csoft landing\u201d for the U.S. economy, with the central bank chief\u2019s statement amounting to an acknowledgment of the possibility of a <a href=\"https:\/\/www.theepochtimes.com\/t-recession\">recession<\/a>.<\/p>\n<p>Powell made the remarks <a href=\"https:\/\/www.marketplace.org\/2022\/05\/12\/fed-chair-jerome-powell-controlling-inflation-will-include-some-pain\/\">in an interview<\/a> on NPR\u2019s \u201cMarketplace,\u201d in which he was asked whether he\u2019s more concerned about the prospect of high inflation sticking around or the notion that the Fed\u2019s monetary tightening response to surging prices could spark a recession.<\/p>\n<p>\u201cIt\u2019s a very challenging environment to make monetary policy,\u201d Powell replied. \u201cOur goal, of course, is to get inflation back down to 2 percent without having the economy go into recession, or, to put it this way, with the labor market remaining fairly strong.\u201d<\/p>\n<p>Calling price stability the \u201cbedrock\u201d on which the economy rests, Powell insisted that the Fed\u2019s key objective is to tame runaway prices, saying that \u201cnothing in the economy works\u201d unless inflation is reined in.<\/p>\n<h2>\u2018Prepared to Do More\u2019<\/h2>\n<p>Powell reiterated his expectation that the Fed would tighten monetary settings by hiking rates by 50-basis-point increments over the next two meetings but added that the central bank is prepared to act more aggressively if conditions warrant.<\/p>\n<p>\u201cWe have a series of expectations about the economy. If things come in better than we expect, then we\u2019re prepared to do less. If they come in worse than when we expect, then we\u2019re prepared to do more,\u201d Powell said, prompting a question about whether the Fed would consider a 75-basis-point hike, which he declined to do, saying only that policymakers would \u201cadapt to the incoming data and the evolving outlook.\u201d<\/p>\n<p>Powell was then asked about a pathway to \u201cthis mythical soft landing,\u201d where the policy tightening doesn\u2019t tip the economy into a recession.<\/p>\n<p>\u201cIt will be challenging, it won\u2019t be easy,\u201d Powell replied, admitting that it \u201cwould have been better\u201d to have started raising rates earlier than in March.<\/p>\n<h2>Soft Landing<\/h2>\n<p>Addressing challenges, the Fed chief said that monetary policy can cool surging demand, which is part of the inflationary puzzle, but that the central bank has no tools to address supply-side factors.<\/p>\n<p>\u201cSupply is a big part of the story, here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so,\u201d Powell said.<\/p>\n<p>\u201cSo the question whether we can execute a soft landing or not, it may actually depend on factors that we don\u2019t control. But we should control the controllable. And what we control is there\u2019s a job to do on demand, demand is out of whack with supply.\u201d<\/p>\n<p>Powell said that Fed policymakers would try to \u201cmoderate demand in a way that lets the labor market get back in balance and help inflation get back to 2 percent.\u201d<\/p>\n<p>The post-pandemic economic recovery, coupled with \u201cGreat Resignation\u201d dynamics, has led to a situation where job openings have surged to a record high, as has the number of people quitting. There are now around two job openings for every unemployed person, putting upward pressure on wages as businesses struggle to attract and retain workers.<\/p>\n<p>\u201cWages are moving up at levels that are unsustainably high and not consistent with low inflation. And so what we need to do is we need to get demand down, give supply a chance to recover and get those to align,\u201d Powell said.<\/p>\n<p>Asked to summarize in no more than five words his key concern, Powell said, \u201cget inflation back under control.\u201d<\/p>\n<h2>Peak Inflation<\/h2>\n<p>Inflation as reflected in the headline Consumer Price Index (CPI) data\u00a0showed prices climbing at a slightly slower 8.3 percent over-the-year pace in April compared to an 8.5 percent pace in March, prompting some analysts to suggest that peak inflation has arrived and the pace of price growth would start to fall. Others are not so sure.<\/p>\n<p>Bankrate Chief Financial Analyst Greg McBride told The Epoch Times in an emailed statement that he sees inflation as having become more broad-based, while cautioning against interpreting the decline in headline CPI data as meaning that inflation has peaked.<\/p>\n<p>\u201cThe pace of price increases moderated, but not as much as expected. Excluding a decline in energy prices\u2014which appears outdated by this point\u2014the increases remain widespread,\u201d McBride said. \u201cWith the annual rate ticking down from 8.5 percent to 8.3 percent, it can be tempting to say we\u2019ve seen the peak, but we\u2019ve also been head-faked before as was the case last August.\u201d<\/p>\n<p>While the headline CPI inflation data showed price pressures moderating, a measure of underlying inflationary pressures accelerated, suggesting more upside for price growth.<\/p>\n<p>Core inflation, which strips out the volatile categories of food and energy and is viewed by economists as a more accurate measure of underlying inflationary pressures, picked up its pace in April.<\/p>\n<p>Both on a year-over-year and on a month-over-month basis last month, core inflation accelerated to 6.2 percent and 0.6 percent, respectively. The monthly core inflation reading, in particular, was twice as high as the 0.3 percent pace notched in March, suggesting inflationary pressures may not have peaked.<\/p>\n<h2>\u2018Cost-of-Living Crisis\u2019<\/h2>\n<p>Allianz chief economic adviser Mohamed El-Erian warned in a <a href=\"https:\/\/www.theepochtimes.com\/americas-inflation-problem-will-turn-into-cost-of-living-crisis-el-erian_4460088.html\">recent interview<\/a> that the\u00a0inflation\u00a0problem in the United States would invariably morph into a cost-of-living\u00a0crisis\u00a0as price pressures broaden into more categories, further eroding the wage gains of many American households and denting demand.<\/p>\n<p>Nominal wages, which are not adjusted for inflation, climbed by 5.5 percent in the year through April, but the faster 8.3-percent pace of consumer price growth means that inflation-adjusted real wages actually declined 2.8 percent.<\/p>\n<p>In an interview on CNBC\u2019s \u201cSquawk Box\u201d on May 11, El-Erian was asked about real wages declining in April and what the implications are for the economy of inflation outpacing wage gains and making products less affordable to American households.<\/p>\n<p>\u201cThat\u2019s when an inflation problem becomes also a growth problem. Why? Affordability. The extent to which high prices destroy demand,\u201d the economist replied.<\/p>\n<p>\u201cIt\u2019s just a matter of time until we talk about a cost-of-living crisis\u2014and this is what it is,\u201d he insisted.<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-tom-ozimek\"><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he&#8217;s ever heard is from Roy Peter Clark: &#8216;Hit your target&#8217; and &#8216;leave the best for last.&#8217;\n<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Federal Reserve Chair Jerome Powell said Thursday that persistent supply chain disruptions and \u201chuge\u201d geopolitical events happening around the globe could foil the Fed\u2019s attempts at engineering a so-called \u201csoft<\/p>\n","protected":false},"author":498,"featured_media":2315279,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1476424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1476424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/498"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1476424"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1476424\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1476424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1476424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1476424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}