More Economic Pain This Year As The Fed Signals Its War On Inflation Will Continue – Signs That The Americans Have Begun Freaking Out About The State Of The Economy

The nation’s central bank wants to be sure it gets the job done in its fight against inflation before pausing its interest rate hikes.

On Wednesday, the Federal Reserve announced it’s raising interest rates 25 basis points — a slowdown from December’s 50 basis point increase. It’s a sign the Fed is responding to recent data showing the country is recovering from the pandemic, with inflation slowing (now at a level of 6.5% year-over-year in December) and the economy growing, and it’s the bank’s latest effort to get the country to the pre-pandemic 2% level of inflation.

But that doesn’t mean the Fed is done tightening the economy to lower prices for Americans, and Fed Chair Jerome Powell indicated during the press conference that it’s better to err on the side of raising interest rates too much, rather than too little, to fight inflation.

“I continue to think that it’s very difficult to manage the risk of doing too little and finding out in six or 12 months that we actually were close but didn’t get the job done and inflation springs back and we have to go back in, and now you really do worry about expectations getting unanchored,” Powell said.

“Of course, we have no incentive and no desire to over-tighten, but if we feel like we’ve gone too far and inflation is coming down faster than we expect, then we have tools that would work on that,” he added.

The Federal Open Market Committee (FOMC)’s meeting minutes from December noted that not one participant thought it would be appropriate to cut interest rates this year, and Powell reiterated that idea, saying that “a couple more” increases in 2023 will be warranted. 

This means that Americans are likely in for some more economic pain this year — and whether that will translate into a recession remains to be seen. As Insider previously reported, there’s a lag in monetary policy where it takes time for consumers to feel the implementation of a policy, like interest rate hikes, and Powell said he is taking those lags into account when deciding how much to raise rates.

The impact for consumers will primarily be felt when looking to borrow money to buy a car or get a new credit card because rates will be higher, and continuing to raise those rates amplifies the risk of a recession as the labor market remains tight. 

And Treasury Secretary Janet Yellen recently said the promising economic data shouldn’t lead people to downplay the risk of a recession. Some Democratic lawmakers are concerned that continued tightening will worsen that risk.

“We want to bring down inflation, but that means landing the plane not crashing it,” Massachusetts Sen. Elizabeth Warren wrote on Twitter on Wednesday. “Chair Powell should pause his interest rate hikes and remember his dual mandate: fight inflation without throwing millions out of work.”

Still, as Powell has long expressed, fighting inflation will take time — and he wants to be sure he gets the job done before easing up. 

“I think that certainty is just not appropriate here,” Powell said. “It’s just hard to forecast inflation. It may come down faster, it may take longer to come down. And our job is to deliver inflation back to target, and we will do that, but I think we’re going to be cautious about declaring victory and sending signals that we think that the game is won because we’ve got a long way to go.”

All over America, restlessness and frustration are growing. It has now been almost three years since the great financial crash of 2008, and yet the U.S. economy is still a complete and total mess.

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In fact, there are all sorts of signs that things are about to get even worse, and the American people are just about fed up.

Virtually every major poll, survey and measure of consumer confidence shows that the American people are becoming more pessimistic about the economy.

Millions of hard working Americans that worked their fingers to the bone for their employers and that did everything “right” are sitting at home on their couches tonight staring blankly at the television. Many of them still have a hard time believing that they were laid off and that there is nobody out there that wants to give them a good job.

There are millions of other Americans that won’t get much sleep tonight because they will spend much of the night rolling around in bed wondering how they are possibly going to be able to pay the mortgage. We have never faced such an extended economic downturn in modern U.S. history, and a lot of people are starting to freak out about the condition of the economy. As Gerald Celente likes to say: “When people lose everything and have nothing left to lose – they lose it.”

Every single month, the number of good jobs continues to go down. Wall Street actually rewards companies that have a good “outsourcing strategy”. As I have written about previously, a growing percentage of the jobs that are being “created” these days are very low paying jobs. But you can’t support a family, pay a mortgage or even afford decent health insurance on what you would make stocking shelves at Target or passing out buckets of chicken for KFC.

The American people keep waiting for “hope” and “change” to show up, but all they get instead are more helpings of “despair” and “frustration”.

Sadly, most Americans still cling to the hope that if the “next election” will just turn out the right way that things will be okay. But the truth is that things seem to stay on pretty much the same course no matter who we put into office.

For many years the status quo seemed to be okay for most people, but now we are starting to reap the results of the economic seeds that we have sown.

Now our economic decline is starting to accelerate and people are starting to panic. Most Americans may not know why all of this is happening, but what many of them do know is that something in their gut is telling them that things have gone terribly, terribly wrong somehow.

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