So far, the pain has been plunging stock values and higher borrowing costs for homes, cars, credit-card purchases and business investments
Powell, for his part, argues that the risk of a recession is worth tolerating because persistent inflation would cause “greater pain later on.” He’s not wrong about the nasty effects of prolonged inflation, which go way beyond the high gasoline prices that unnerved drivers during the summer. The worst may be the decline in living standards that comes as wages fail to keep up with rising prices, especially the cost of essentials.
Unemployment, obviously, can be a pernicious problem for those experiencing it. In addition to lost income, joblessness disconnects workers from the labor market, which can make it harder to find work even when the recession is over. Some jobs disappear completely during a recession, as employers take advantage of layoffs to replace workers with technology.
Inflation and unemployment both hit lower-income workers harder than those who are better off. Lower-income workers simply lack the cushion to absorb higher prices or comfortably ride out a bout of unemployment. Inflation hurts little-by-little over a long period of time. Unemployment hurts a lot right away, and for as long as it lasts. Choosing one form of pain over the other is a Hobson’s choice.
Even Powell has begun to hint it may take a recession, and millions of lost jobs, to lower inflation to acceptable levels. The Fed’s own prediction is for the unemployment rate rising to 4.4% during the next 12 months, which would equate with about 1.3 million lost jobs. “We think we need to have softer labor market conditions,” Powell said, euphemistically, after the Fed’s last meeting, on Sept. 22. “We’re never going to say there are too many people working, but … people are really suffering from inflation.” And soon, from unemployment.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Do changes in the weather actually make our bones hurt?ICYMI: Do changes in the weather actually make our bones hurt? - via healthing_ca healthing healthnews
Read more »
Do changes in the weather actually make our bones hurt?ICYMI: Do changes in the weather actually make our bones hurt? - via healthing_ca healthing healthnews
Read more »
Do changes in the weather actually make our bones hurt?ICYMI: Do changes in the weather actually make our bones hurt? - via healthing_ca healthing healthnews
Read more »
'Perplexing problem': Whale mystery solved by B.C. scientistsA new study sheds light on why whales don't get brain damage when they swim.
Read more »
'Perplexing problem': Whale mystery solved by B.C. scientistsA new study sheds light on why whales don't get brain damage when they swim.
Read more »