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Slowdown in inflation due to wage component of inflation falling. What, didn't you hear that the Fed was very interested in pulling on that lever? Just yesterda

Slowdown in inflation due to wage component of inflation falling. What, didn't you hear that the Fed was very interested in pulling on that lever? Just yesterday Powell complained about the labour market being tight, guess businesses heard him all right.

JumpCrisscross 4y ago
> Powell complained about the labour market being tight No, he didn’t [1]. He justified a rate rise in a faltering economy by pointing to the labor market’s strength. Were the labor market weaker we’d be in stagflation and monetary policy would have no room to manoeuvre. [1] https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20221102.pdf https://www.federalreserve.gov/mediacenter/files/FOMCprescon...
- im-a-baby 4y ago
  Powell has previously said that he wants higher unemployment. He believes this is the only way to decrease demand and bring down prices. > The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers. The labor force participation rate showed a welcome uptick in August but is little changed since the beginning of the year. FOMC participants expect supply and demand conditions in the labor market to come into better balance over time, easing the upward pressure on wages and prices. The median projection in the SEP for the unemployment rate rises to 4.4 percent at the end of next year, ½ percentage point higher than in the June projections > We’re never going to say that there are too many people working, but the real point is this: Inflation—what we hear from people when we meet with them is that they really are suffering from inflation. And if we want to set ourselves up, really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn’t. That is why the market goes down when low unemployment numbers are released. Powell will continue to raise rates until the labor market cools. He's not using the labor market to determine whether or not the economy can handle more rate increases. He's absolutely determined to increase unemployment via rate hikes.
  - andrekandre 4y ago
    > He's absolutely determined to increase unemployment via rate hikes. either i'm deluded or there has to a better way to run an economy than this...
    - bombcar 4y ago
      It's literally the mandate of the Fed and the only levers they have are rate changes and threats of future rate changes. Something something the measure becomes the means or something.
    - stingrae 4y ago
      Their goal is to reduce inflation. Increasing unemployment, is a side effect of rate hikes but ultimately, reduces demand for consumer goods thus reducing inflation.
      - seanmcdirmid 4y ago
        Their goal is to keep inflation steady at a manageable rate, and to prevent any deflation at all. Since inflation indicators haven't been too reliable in the last 20 years, they were caught horribly off guard. But ideally, they would make small changes one way or the other to maintain a nice equilibrium that would keep employment levels relatively stable.
        stingrae 4y ago
        True in the ideal case.
      - hajile 4y ago
        Inflation in staple supplies and food are radically inflated too and they aren’t reducing when people go on unemployment.
    - baq 4y ago
      the economy runs itself, mostly. rates are one of the very few direct knobs anyone has that are sort of predictable. well you can also commit fiscal suicide like the recent has-been-a-PM of UK showed, but in that case the economy runs you quite explicitly.
- mamonster 4y ago
  I don't see how what you posted contradicts what I said. I guess it all depends on how you interpret what Powell says, but him saying the labour market is overheated is a signal to the market that unless the labour market stops overheating the Fed pivot is not becoming more likely(which is all that market participants care about as of today with regards to the Fed meeting, i.e when is the pivot coming).
  - JumpCrisscross 4y ago
    > him saying the labour market is overheated is a signal to the market that unless the labour market stops overheating the Fed pivot is not becoming more likely The labor market isn’t being targeted. We have had tight labor markets with low inflation before. The Fed doesn’t spike them for the sake of it. What’s targeted for reduction is inflation. Labor market tightness permits the Fed to respond to it, which is why it’s constantly talked about. If you are on a road trip and decide you can take a detour because you have ample gas, it wouldn’t be correct to say you took the detour to burn gas.

JumpCrisscross 4y ago

> Powell complained about the labour market being tight No, he didn’t [1]. He justified a rate rise in a faltering economy by pointing to the labor market’s strength. Were the labor market weaker we’d be in stagflation and monetary policy would have no room to manoeuvre. [1] https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20221102.pdf https://www.federalreserve.gov/mediacenter/files/FOMCprescon...

im-a-baby 4y ago
Powell has previously said that he wants higher unemployment. He believes this is the only way to decrease demand and bring down prices. > The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers. The labor force participation rate showed a welcome uptick in August but is little changed since the beginning of the year. FOMC participants expect supply and demand conditions in the labor market to come into better balance over time, easing the upward pressure on wages and prices. The median projection in the SEP for the unemployment rate rises to 4.4 percent at the end of next year, ½ percentage point higher than in the June projections > We’re never going to say that there are too many people working, but the real point is this: Inflation—what we hear from people when we meet with them is that they really are suffering from inflation. And if we want to set ourselves up, really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn’t. That is why the market goes down when low unemployment numbers are released. Powell will continue to raise rates until the labor market cools. He's not using the labor market to determine whether or not the economy can handle more rate increases. He's absolutely determined to increase unemployment via rate hikes.
- andrekandre 4y ago
  > He's absolutely determined to increase unemployment via rate hikes. either i'm deluded or there has to a better way to run an economy than this...
  - bombcar 4y ago
    It's literally the mandate of the Fed and the only levers they have are rate changes and threats of future rate changes. Something something the measure becomes the means or something.
  - stingrae 4y ago
    Their goal is to reduce inflation. Increasing unemployment, is a side effect of rate hikes but ultimately, reduces demand for consumer goods thus reducing inflation.
    - seanmcdirmid 4y ago
      Their goal is to keep inflation steady at a manageable rate, and to prevent any deflation at all. Since inflation indicators haven't been too reliable in the last 20 years, they were caught horribly off guard. But ideally, they would make small changes one way or the other to maintain a nice equilibrium that would keep employment levels relatively stable.
      - stingrae 4y ago
        True in the ideal case.
    - hajile 4y ago
      Inflation in staple supplies and food are radically inflated too and they aren’t reducing when people go on unemployment.
  - baq 4y ago
    the economy runs itself, mostly. rates are one of the very few direct knobs anyone has that are sort of predictable. well you can also commit fiscal suicide like the recent has-been-a-PM of UK showed, but in that case the economy runs you quite explicitly.
mamonster 4y ago
I don't see how what you posted contradicts what I said. I guess it all depends on how you interpret what Powell says, but him saying the labour market is overheated is a signal to the market that unless the labour market stops overheating the Fed pivot is not becoming more likely(which is all that market participants care about as of today with regards to the Fed meeting, i.e when is the pivot coming).
- JumpCrisscross 4y ago
  > him saying the labour market is overheated is a signal to the market that unless the labour market stops overheating the Fed pivot is not becoming more likely The labor market isn’t being targeted. We have had tight labor markets with low inflation before. The Fed doesn’t spike them for the sake of it. What’s targeted for reduction is inflation. Labor market tightness permits the Fed to respond to it, which is why it’s constantly talked about. If you are on a road trip and decide you can take a detour because you have ample gas, it wouldn’t be correct to say you took the detour to burn gas.