The U.S. Federal Reserve's experiment with running a 'hot' economy has edged into historically uncharted territory, with an unemployment rate never reached without associated central bank rate increases and now levels of inflation that in the past also prompted a policy response.
Howard SchneiderShoppers show up early for the Black Friday sales at the King of Prussia shopping mall in King of Prussia, Pennsylvania, U.S. November 26, 2021. REUTERS/Rachel Wisniewski/File PhotoWASHINGTON, Dec 10 - The U.S.
The Fed's new approach hoped to drive an array of labor market indicators like the participation rate back to pre-pandemic levels, but Hubbard said "running the economy hot...is a risky bet" if it aims to offset structural economic forces like demographics that aren't responsive, at least not quickly, to central bank policy.
Yet once adjusted for inflation wages have fallen for nine of the past 11 months, with growth in "real" wages moving little beyond the pre-pandemic trend. "Price increases continue to squeeze family budgets," Biden said. "We are making progress on pandemic-related challenges to our supply chain which make it more expensive to get goods on shelves, and I expect more progress on that in the weeks ahead."The strong CPI data for November were expected, but still "only solidify the case for a faster tapering of asset purchases" when the Fed meets next week, said Rubeela Farooqi, chief U.S.
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