Massachusetts Democratic Senator <a href="https://www.dailywire.com/topic/elizabeth-warren" target="_blank" rel="noopener">Elizabeth Warren</a> called for a new Federal Reserve Chairman on Sunday as she lashed out at Jerome Powell&#8217;s job performance.
Appearing on several Sunday talk shows, Warren accused Powell of taking a &#8220;flamethrower&#8221; to regulations on big banks and failing to control inflation. In the wake of the <a href="https://www.dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a> collapse, Warren called for the Federal Reserve and Congress to impose more regulations. She also said that Powell should not be chairman of the Fed.
&#8220;Donald Trump ran for president saying he would lighten the regulations on these banks,&#8221; Warren said on CBS News&#8217;s &#8220;Face the Nation.&#8221; &#8220;And then Jerome Powell just literally took a flamethrower to these regulations in order to make them less and less effective.&#8221;
&#8220;Jerome Powell has said that all he wants to do is lighten regulations on the banks,&#8221; she added. &#8220;I opposed him as Chairman of the Federal Reserve Bank precisely for that reason. I said he was a dangerous man to have in this position.&#8221;
Warren went on to call for &#8220;accountability&#8221; from Powell and the financial regulators who &#8220;clearly fell down on the job&#8221;; and from financial executives who she says enabled the SVB collapse with risky investments.
<blockquote class="twitter-tweet">
“We need accountability for our regulators who clearly fell down on the job,” <a href="https://twitter.com/SenWarren?ref_src=twsrc%5Etfw">@SenWarren</a> tells <a href="https://twitter.com/margbrennan?ref_src=twsrc%5Etfw">@margbrennan</a> on the Silicon Valley Bank collapse, adding that it “starts with” Federal Reserve Chairman Jerome Powell, who she says “was a dangerous man to have in this position.” <a href="https://t.co/B2VYr0uZYM">pic.twitter.com/B2VYr0uZYM</a>
— Face The Nation (@FaceTheNation) <a href="https://twitter.com/FaceTheNation/status/1637447666903777281?ref_src=twsrc%5Etfw">March 19, 2023</a></blockquote>
Warren echoed similar sentiments on NBC&#8217;s &#8220;<a href="https://www.nbcnews.com/meet-the-press/video/full-warren-calling-data-privacy-a-tiktok-issue-by-itself-misses-the-elephant-in-the-room-165659205854" target="_blank" rel="noopener">Meet the Press</a>.&#8221;
“He has a dual mandate,&#8221; she said. &#8220;Yes he is responsible for dealing with inflation, but he is also responsible for employment. And what Chair Powell is trying to do– and he has said fairly explicitly– is that they are trying to, in effect, slow down the economy so that – this is, by the Fed’s own estimate – two million people will lose their jobs. And I believe that is not what the chair of the Federal Reserve should be doing.”
NBC&#8217;s Chuck Todd then asked Warren whether Powell should be fired.
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&#8220;My views on Jay Powell are well known at this point,&#8221; Warren responded. &#8220;He has had two jobs. One is to deal with monetary policy. One is to deal with regulation. He has failed at both.&#8221;
&#8220;Look, I don&#8217;t think he should be chairman of the Federal Reserve,&#8221; she concluded. &#8220;I have said it as publicly as I know how to say it. I&#8217;ve said it to everyone.&#8221;

US-POLITICS-VOTE-WARREN

‘I Don’t Think He Should Be Chairman’: Elizabeth Warren Blows Up At Jerome Powell Over Inflation, Bank Failures

Elizabeth Warren Blasts Jerome Powell Over Inflation, Bank Failures

Congress

Elizabeth Warren

Face The Nation

Federal Reserve

Inflation

Interest Rates

Meet the Press

Politics

Silicon Valley Bank

<a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Chair Jerome Powell warned lawmakers on Tuesday that the central bank would continue to increase the target <a href="https://www.dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds rate</a> as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflationary</a> pressures remain elevated.
Policymakers gradually hiked interest rates 4.5% over the past year amid a rollback in monetary stimulus implemented during the lockdown-induced recession. A robust labor market and persistent inflation in some product categories necessitate further rate hikes, Powell commented in <a href="https://www.federalreserve.gov/newsevents/testimony/powell20230307a.htm" target="_blank" rel="noopener">prepared remarks</a> before the Senate Banking Committee.
“We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” he said. “We are seeing the effects of our policy actions on demand in the most interest-sensitive sectors of the economy. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”
The Dow Jones Industrial Average fell 1.2% and the S&amp;P 500 Index fell 1% after the release of the prepared remarks.
Rate hikes tend to increase borrowing costs for consumers and businesses, applying downward pressure to economic activity and price levels. Officials at the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-raises-target-interest-rates-by-quarter-point-marking-slowdown-of-aggressive-hikes" target="_blank" rel="noopener">announced</a> a 0.25% increase in the target federal funds rate last month, marking a slowdown from the previous 0.75% and 0.5% rate hikes. Target interest rates presently sit between 4.5% and 4.75%.
Powell affirmed that the Federal Reserve intends to encourage a 2% inflation rate, which had been largely maintained in the three decades preceding the lockdown-induced recession. The Personal Consumption Expenditures Price Index, the price level metric favored by the central bank, rose 5.4% between January 2022 and January 2023, while the version of the measure excluding more volatile food and energy categories rose 4.7% over the same time horizon, according to <a href="https://www.bea.gov/news/2023/personal-income-and-outlays-january-2023#:~:text=Personal%20consumption%20expenditures%20(PCE)%20is,and%20personal%20current%20transfer%20payments." target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis.
“As supply chain bottlenecks have eased and tighter policy has restrained demand, inflation in the core goods sector has fallen,” Powell said in response to the data. “And while housing services inflation remains too high, the flattening out in rents evident in recently signed leases points to a deceleration in this component of inflation over the year ahead.”
Food prices have especially pressured American households in recent months: expenses for food at home increased 11.3% between January 2022 and January 2023, according to Consumer Price Index <a href="https://www.dailywire.com/news/inflation-rises-more-than-expected-in-january-after-biden-claimed-prices-are-coming-down" target="_blank" rel="noopener">data</a> released by the Bureau of Labor Statistics, while costs for food away from home rose 8.2% over the same period. A recent <a href="https://www.dailywire.com/news/crying-fowl-government-warns-of-turkey-shortage-ahead-of-thanksgiving" target="_blank" rel="noopener">bout</a> of the avian flu has <a href="https://www.dailywire.com/news/the-price-of-eggs-soaring-138-is-no-coincidence" target="_blank" rel="noopener">decreased</a> the size of poultry flocks, raising costs for chicken and turkey while causing a severe increase in egg prices.
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Real wages, which account for the effect of inflationary pressures, decreased 1.5% between January 2022 and January 2023. “Strong wage growth is good for workers but only if it is not eroded by inflation,” Powell told lawmakers.
President Joe Biden, who entered office when price levels were rising at a 1.4% rate, has <a href="https://www.dailywire.com/news/biden-claims-families-have-a-little-bit-more-breathing-room-after-another-dismal-inflation-report" target="_blank" rel="noopener">reflected</a> economic confidence over the past several months as headline inflation declined.  “When I travel the country, I see optimism for this year and the years ahead,” the commander-in-chief said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/24/statement-from-president-joe-biden-on-january-pce-report/" target="_blank" rel="noopener">statement</a> from the White House. “We must finish the job in transitioning to stable and steady growth that benefits all Americans, while laying the foundation for strong and shared growth for years to come.”

Fed Chair Jerome Powell Delivers Semiannual Monetary Report At Senate Hearing

Federal Reserve Chair Jerome Powell Tells Congress More Rate Hikes Are On The Way

Jerome Powell Tells Congress More Rate Hikes Are On The Way

Economy

U.S.

Median <a href="https://www.dailywire.com/topic/housing" target="_blank" rel="noopener">home</a> prices fell year-over-year for the first time since February 2012, but elevated <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">mortgage rates</a> are still rendering properties less affordable for prospective buyers.
The typical home in the United States sold for approximately $350,200 in February 2023, marking a 0.6% decline since the same month last year, according to <a href="https://www.redfin.com/news/housing-market-update-home-sale-prices-fall-first-time/" target="_blank" rel="noopener">data</a> released on Thursday by real estate brokerage Redfin. The typical monthly mortgage payment has nevertheless surpassed $2,500 as interest rates rise across the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a>.
“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis. But it’s not surprising and in many ways, it’s welcome,” Redfin Deputy Chief Economist Taylor Marr commented. “Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows. Mortgage rates rising to the 7% range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.”
Rates for a 30-year fixed mortgage approached 6.7% as of March 2023 after nearing 7.1% in November 2022, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac. Mortgage rates generally remained below 3% during the lockdown-induced recession but started to rise as the Federal Reserve hiked the target federal funds rate to combat inflationary pressures, thereby applying upward pressure to interest rates.
Median home sale prices previously increased from $322,600 in the second quarter of 2020 to $467,700 in the fourth quarter of 2022, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development. Costs plateaued in the second half of last year as mortgage rates soared.
Homeowners who acquired mortgages at low rates over the past several years have reason to avoid selling their properties, a phenomenon which could further limit the number of houses on the market and decrease affordability for buyers. Redfin noted that mortgage applications have now declined to their lowest levels in three decades.
“Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck,” Marr continued. “That’s because so few homeowners are listing their homes for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up, and high rates will continue to be a hit on affordability.”
The housing market had witnessed a shortage of 3.8 million houses as of 2019, according to <a href="https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage" target="_blank" rel="noopener">data</a> from government-backed mortgage company Fannie Mae. The National Association of Realtors <a href="https://www.nar.realtor/newsroom/once-in-a-generation-response-needed-to-address-housing-supply-crisis" target="_blank" rel="noopener">estimates</a> that homebuilders should have constructed between 5.5 million and 6.8 million more houses over the past two decades to match current demand.
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Members of the Senate Banking Committee drew attention to the phenomenon during their first <a href="https://www.dailywire.com/news/senators-call-to-increase-housing-supply-as-affordability-plummets" target="_blank" rel="noopener">hearing</a> of the new Congress last month, calling for federal action to remove barriers that prevent home construction. “There just isn’t enough quality housing at prices that people can afford,” Sen. Sherrod Brown (D-OH) said in his <a href="https://www.banking.senate.gov/newsroom/majority/brown-housing-expensive-families-seniors" target="_blank" rel="noopener">opening statement</a>. “And because there aren’t enough homes, renters, and homeowners are stuck paying more every month or living with peeling lead paint or leaks.”

Houses on suburban block, Apopka, Florida

Home Prices Fell Year-Over-Year For The First Time In A Decade, But There’s A Massive Catch

Home Prices Fell Year-Over-Year For The First Time In A Decade

Housing

Officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> announced a 0.25% increase in the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate, marking a slowdown from previous 0.75% and 0.5% rate hikes meant to combat <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>.
Price levels declined slightly last month amid a decrease in energy prices: year-over-year inflation fell from 7.1% in November to 6.5% in December, marking the largest overall decline in nearly three years even as food and shelter prices continue to increase, according to a <a href="https://www.dailywire.com/news/the-tide-has-turned-inflation-sees-largest-drop-since-2020-lockdowns" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. Members of the Federal Open Market Committee said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm" target="_blank" rel="noopener">statement</a> on Wednesday that &#8220;ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive.&#8221;
Federal Reserve Chair Jerome Powell previously <a href="https://www.dailywire.com/news/federal-reserve-chair-jerome-powell-discusses-future-slowdown-of-rate-hikes" target="_blank" rel="noopener">confirmed</a> that officials would “moderate the pace of our rate increases.” Target interest rates now sit between 4.5% and 4.75%.
“Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said. “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”
Rate hikes increase the cost of borrowing money for consumers and businesses, decreasing inflationary pressures as a result of lower aggregate demand. The effects of higher interest rates are especially noticeable in the housing sector, where 30-year fixed mortgage rates soared from 3% at the beginning of last year to 7% in October before decreasing to roughly 6%, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac.
Monetary policymakers are seeking to reverse nearly three years of aggressive monetary stimulus, including near-zero target federal funds rates. Officials <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">raised rates</a> by 0.75% on four consecutive occasions before implementing a 0.5% increase at the end of last year.
The Federal Open Market Committee expects that efforts to achieve 2% inflation, the benchmark largely maintained for three decades before the lockdown-induced recession, will take “some time,” as revealed by <a href="https://www.federalreserve.gov/monetarypolicy/fomcminutes20221214.htm" target="_blank" rel="noopener">minutes</a> from their December meeting. “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path,” a summary said. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
Inflation has diminished buying power among American households and increased the extent to which they <a href="https://www.dailywire.com/news/some-consumers-financed-holiday-spending-with-record-amounts-of-debt" target="_blank" rel="noopener">utilize</a> debt to make purchases. Rising price levels have outpaced nominal wage increases, producing a 1.7% year-over-year decline in real average hourly earnings as of December, according to <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
The latest rate hike comes after the economy <a href="https://www.dailywire.com/news/economy-grew-in-fourth-quarter-as-recession-fears-loom-for-2023" target="_blank" rel="noopener">grew</a> at a 2.9% annualized rate in the fourth quarter of 2022, surpassing expectations even as recessionary concerns loom. Economists are divided on whether the nation will soon witness a contraction: Bank of America Chief Investment Strategist Michael Hartnett said in a <a href="https://business.bofa.com/en-us/content/year-ahead-2023/investment-market-outlook-forecasts.html" target="_blank" rel="noopener">report</a> that a recession would occur in the first half of the year before markets attain a “much more solid footing,” while an <a href="https://www.dailywire.com/news/economists-predict-whether-2023-will-see-a-recession" target="_blank" rel="noopener">outlook</a> from Goldman Sachs Chief Economist Jan Hatzius noted analysts at the company believe “there are strong reasons to expect positive growth in coming quarters.”

Chairman Jerome Powell Holds A Press Conference At The Federal Reserve

Federal Reserve Raises Target Interest Rates By Quarter Point, Marking Slowdown Of Aggressive Hikes

Federal Reserve Raises Target Interest Rates By Quarter Point

Recession

Higher <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">interest rates</a> are translating to record <a href="https://www.dailywire.com/topic/cars" target="_blank" rel="noopener">car</a> payments among Americans borrowing money to purchase new vehicles.
Actions from policymakers at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> to tame <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflationary</a> pressures have led to the fastest increase of the target federal funds rate in decades, impacting interest rates across the economy and raising the cost of borrowing money for consumers and businesses. The average annual percentage rate on new financed vehicles increased from 5.7% in the third quarter to 6.5% in the fourth quarter, according to <a href="https://www.edmunds.com/industry/press/rising-auto-loan-interest-rates-drive-share-of-1000-monthly-payments-to-record-levels-in-q4-according-to-edmunds.html" target="_blank" rel="noopener">data</a> from the car review website Edmunds, while the rate for used financed vehicles increased from 9% to 10%.
&#8220;At the onset of the pandemic, consumers benefited from low interest rates and elevated trade-in values, helping shield even the more questionable financing decisions from resulting in negative equity,” Edmunds Director of Insights Ivan Drury said. “But as we shifted toward an environment with diminished used car values and rising interest rates over the past few months, consumers have become less insulated from those riskier loan decisions, and we are only seeing the tip of the negative equity iceberg.&#8221;
Negative equity, which occurs when a debtor owes more money than an asset is worth, applied to 17.4% of new vehicle sales in the fourth quarter, marking an increase from 14.9% of sales in the third quarter. “Rapidly rising interest rates created an even greater barrier to entry for consumers who rely on financing,” added Drury, “which is the vast majority of car shoppers.”
Although the typical monthly car payment was $717 in the fourth quarter, constituting an increase from $659 in the previous quarter, the share of consumers paying $1,000 or more each month reached 15.7%, the highest reading on record. Average down payments surged to $6,780 from $5,921 over the same period as more consumers sought to avoid high rates.
Payments are unlikely to subside in the near future since <a href="https://www.federalreserve.gov/monetarypolicy/fomcminutes20221214.htm" target="_blank" rel="noopener">minutes</a> from the most recent Federal Open Market Committee meeting show that central bankers are prepared to take a “restrictive policy stance” on rising price levels for “some time.”
Supply chain pressures that continue to grapple the economy following the lockdown-induced recession have worsened surging vehicle prices. Average costs increased some 43% between February 2020 and September 2022, according to <a href="https://www.jpmorgan.com/insights/research/when-will-car-prices-drop#:~:text=In%20the%20U.S.%2C%20the%20average,February%202020." target="_blank" rel="noopener">data</a> from JPMorgan Research, which forecasted prices for used vehicles will adjust by falling as much as 20% this year.
Demand for automobiles still outpaces supply despite the advent of elevated interest rates, according to <a href="https://www.jdpower.com/business/press-releases/jd-power-lmc-automotive-forecast-december-2022" target="_blank" rel="noopener">data</a> from J.D. Power and LMC Automotive, which indicated that sales for new vehicles increased 9.6% between the fourth quarter of 2021 and the fourth quarter of 2022.
“While the inventory situation has improved modestly in the fourth quarter, supply remains well below the level at which consumer demand for new vehicles can be met,” J.D. Power Data and Analytics President Thomas King commented.
As inflation continues to outpace wage increases, rising price levels have prompted Americans to meet expenses by spending <a href="https://www.dailywire.com/news/burning-up-their-plastic-bidenflation-fueling-soaring-credit-card-debt-report-says" target="_blank" rel="noopener">beyond their means</a>. The portion of disposable personal income used to service consumer debt rose from 5.4% in the fourth quarter of 2021 to 5.8% in the third quarter of 2022, exceeding levels seen before the lockdown-induced recession, according to <a href="https://fred.stlouisfed.org/series/CDSP" target="_blank" rel="noopener">data</a> from the Federal Reserve.

Top View Concrete Car Parking Lot. Aerial View Of Car Parked At Car Parking Area Of Apartment.

More Americans Than Ever Have Monthly Auto Payments Over $1,000

Average Car Payments Surge Alongside Interest Rates

Cars

Officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by half of a percentage point, marking a slight slowdown in the most aggressive contractionary policy rollout in decades.
The move comes after the Federal Open Market Committee raised target rates in June, July, September, and November. The current target rate is now set between 4.25% and 4.5%.
“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Federal Reserve’s Board of Governors said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htm" target="_blank" rel="noopener">statement</a>.
Officials are presently seeking to end nearly three years of aggressive monetary stimulus, including near-zero target interest rates and the purchase of government securities from market actors, established in response to the lockdown-induced recession. Policymakers have <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">raised rates</a> by three-quarters of a percentage point on four consecutive occasions, raising the cost of borrowing money for consumers and businesses and heightening the risk of a recession.
Federal Reserve Chair Jerome Powell recently <a href="https://www.dailywire.com/news/federal-reserve-chair-jerome-powell-discusses-future-slowdown-of-rate-hikes" target="_blank" rel="noopener">confirmed</a> that officials would “moderate the pace of our rate increases” as soon as this month. “Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said. “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”
The rate hike comes shortly after the most recent inflation <a href="https://www.dailywire.com/news/november-inflation-surges-less-than-expected" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics showed that the Consumer Price Index rose 7.1% year-over-year as of November in a reading that was below analysts’ forecasts. An increase in food prices of 0.5% and an increase in shelter prices of 0.6% contributed to the headline number as energy prices fell 1.6%.
Policymakers at the Federal Reserve, which has a dual mandate of ensuring stable inflation and low unemployment, have likewise been carefully tracking the labor market. Joblessness remained historically low in November as the number of new positions soared past economists’ forecasts, according to another <a href="https://www.dailywire.com/news/unemployment-down-robust-labor-market-as-holidays-approach-jobs-report-shows" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. The unemployment rate, 3.7%, was unchanged from the previous month.
Labor force participation rates have nevertheless lagged as many workers did not return to their positions after lockdowns produced significant job loss. Powell recently <a href="https://www.dailywire.com/news/federal-reserve-chair-jerome-powell-discusses-future-slowdown-of-rate-hikes" target="_blank" rel="noopener">remarked</a> that the workforce “participation gap” is largely a result of “excess retirements” that occurred beyond “what would have been expected from population aging alone,” even as younger cohorts generally return to the job market.
“In the labor market, demand for workers far exceeds the supply of available workers,” Powell continued, observing that nominal wages have grown faster than the rate expected under 2% inflation. “Thus, another condition we are looking for is the restoration of balance between supply and demand in the labor market.”
Rising mortgage rates induced by efforts from the Federal Reserve to control inflation have caused volatility in the housing market. The 30-year fixed mortgage rate remained below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac, before briefly rising above 7% last month. Rising rates have decreased affordability even as evidence of a <a href="https://www.dailywire.com/news/home-prices-are-dropping-at-fastest-pace-ever-recorded-by-key-index" target="_blank" rel="noopener">decline in home prices</a> continues to mount.

Federal Reserve Lowers Key Rate By Three Quarters Of A Point

Federal Reserve Hikes Target Interest Rates Half A Percentage Point

Federal Reserve Hikes Target Interest Rates By 0.5%

<a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Chair Jerome Powell remarked during a Wednesday speech that central bankers will likely slow their implementation of contractionary monetary policy this month.
In an attempt to stimulate the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a> after the onset of the lockdown-induced <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a>, policymakers <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">established</a> a 0% target interest rate and began acquiring government bonds from market actors. Powell and other Federal Open Market Committee members have since raised rates by 0.75% on four consecutive occasions.
During a <a href="https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm" target="_blank" rel="noopener">speech</a> at the Brookings Institution’s Hutchins Center, Powell said that policymakers will “moderate the pace of our rate increases” as soon as December. “Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said. “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”
Powell also acknowledged that officials still intend to maintain rates “at a restrictive level for some time,” as “history cautions strongly against prematurely loosening policy.” The Federal Reserve is charged with maintaining stable inflation and low unemployment.
Rate hikes from the central bank have the impact of decreasing macroeconomic demand, as Powell repeatedly emphasized. Interest rates across the economy, such as <a href="https://www.dailywire.com/news/pending-home-sales-plummet-as-housing-market-is-rocked-by-soaring-mortgage-rates" target="_blank" rel="noopener">mortgage rates</a> and the premiums faced by businesses and consumers to borrow money, have quickly risen amid the rollback of the quantitative easing regime.
Some analysts have <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> monetary policymakers for causing harm through their excessive zeal to manage inflation soon after a prolonged increase in the money supply. Tesla and SpaceX CEO Elon Musk recently <a href="https://www.dailywire.com/news/elon-musk-warns-a-severe-recession-will-be-more-likely-if-federal-reserve-doesnt-take-action-on-rate-hikes" target="_blank" rel="noopener">said</a> that the Federal Reserve is “massively amplifying the probability of a severe recession” and “needs to cut interest rates immediately.”
Though Powell acknowledged that the October inflation <a href="https://www.dailywire.com/news/breaking-october-inflation-surges-but-less-than-expected-energy-prices-up-ahead-of-winter" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics had an unexpected downside, he observed that the two preceding months contained upside surprises. “Despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation,” he commented.
Among other concerns, Powell noted that <a href="https://www.dailywire.com/news/americans-continue-to-opt-out-of-the-workforce" target="_blank" rel="noopener">labor force participation</a> rates continue to lag following the lockdown-induced recession. He remarked that the “participation gap” is mostly a result of “excess retirements” that occurred beyond “what would have been expected from population aging alone,” even as younger individuals largely return to the workforce.
“In the labor market, demand for workers far exceeds the supply of available workers,” Powell continued, adding that nominal wages have grown faster than the rate expected under 2% inflation. “Thus, another condition we are looking for is the restoration of balance between supply and demand in the labor market.”
The logic behind recent rate hikes rests upon the intentional reduction in demand to match lower levels of supply, constituting an approach that some economists <a href="https://www.dailywire.com/news/sound-fiscal-policy-is-missing-from-the-battle-against-inflation-report-argues" target="_blank" rel="noopener">question</a>. Powell, recognizing that the Federal Reserve does not advocate for specific legislative measures approved or rejected by elected lawmakers, noted broadly that “policies to support labor force participation could, over time, bring benefits to the workers who join the labor force and support overall economic growth.”

Federal Reserve Chair Powell Speaks At The Brookings Institution

Federal Reserve Chair Jerome Powell Discusses Future Slowdown Of Rate Hikes

Jerome Powell Says Rate Hikes Will Slow Next Month

<a href="http://dailywire.com/topic/elon-musk" target="_blank" rel="noopener">Elon Musk</a> warned that a significant <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a> would occur in the United States if policymakers at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> do not adjust their current approach to interest rates.
The central bank has <a href="https://www.dailywire.com/news/what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy" target="_blank" rel="noopener">increased</a> target federal funds rates by 0.75% on four consecutive occasions, marking the most aggressive rollback of loose monetary policy in decades. Interest rates across the economy, such as mortgage rates and the premiums faced by businesses and consumers to borrow money, have quickly risen as a result.
Vincent Yu, the founder of Tesla accessories provider Tesmanian, predicted a “real economic recession” next year, leading Musk to <a href="https://twitter.com/elonmusk/status/1597878869910253569" target="_blank" rel="noopener">call</a> the present direction of the economy “concerning.” He added that the Federal Reserve is “massively amplifying the probability of a severe recession” and “needs to cut interest rates immediately.”
Some analysts, including Wharton School finance professor Jeremy Siegel, have <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> the central bank amid the return to a contractionary monetary regime, contending that officials who were slow in their response to rising price levels are now causing harm through their excessive zeal to manage inflation. Musk, who <a href="https://www.dailywire.com/news/elon-musk-has-a-super-bad-feeling-about-the-economy-wants-a-massive-layoff-at-tesla" target="_blank" rel="noopener">said</a> over the summer that he has a “super bad feeling” about the economy, <a href="https://twitter.com/elonmusk/status/1573624036957065217" target="_blank" rel="noopener">commented</a> on social media that Siegel is “obviously correct.”
In an attempt to stimulate the economy, policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a 0% target interest rate and began acquiring government bonds from the marketplace immediately following the onset of the lockdown-induced recession.
The stock market generally dislikes rate hike decisions because of their negative implications for future economic activity. However, investors <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">reacted positively</a> in the immediate aftermath of the most recent announcement since a statement from the Federal Reserve Board of Governors affirmed that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” The new language had not been included in previous releases.
Musk, who serves as the chief executive of SpaceX, Tesla, and Twitter, also <a href="https://www.dailywire.com/news/elon-musk-predicts-how-long-global-recession-will-last" target="_blank" rel="noopener">predicted</a> that a global recession could last through 2024. He remarked that the former two companies are in “good positions” to weather the economic headwinds.
In an <a href="https://www.dailywire.com/news/elon-musk-makes-bold-predictions-about-tesla-performance-global-recession-twitter-deal" target="_blank" rel="noopener">earnings call</a> for Tesla last month, the world’s richest man said that China is experiencing “a recession of sorts” while Europe is likewise seeing “a recession of sorts driven by energy.” He believes that North America is in “pretty good health” and forecasted that the Federal Reserve would eventually pivot toward a more moderate approach to inflation.
Twitter was among several technology firms that recently eliminated a significant portion of staffers. Musk <a href="https://www.dailywire.com/news/read-it-elon-musk-tells-twitter-staff-to-work-long-hours-at-high-intensity-or-hit-the-road" target="_blank" rel="noopener">told</a> remaining employees that they must be prepared to work “long hours at high intensity” to keep their positions and will “be much more engineering-driven.” Some investors have <a href="https://www.dailywire.com/news/meta-shares-fall-to-lowest-level-since-2016-as-company-burns-billions-on-metaverse-inflates-payrolls" target="_blank" rel="noopener">voiced criticism</a> of Silicon Valley for ballooning headcounts, arguing that the current macroeconomic climate presents an opportunity to reduce costs by reconfiguring staff.
Though the labor market has generally remained strong over the past two years, central bankers warned that their actions might increase unemployment. Federal Reserve Chair Jerome Powell <a href="https://www.dailywire.com/news/jerome-powell-vows-to-restore-price-stability-even-though-federal-reserve-must-first-bring-some-pain" target="_blank" rel="noopener">vowed</a> that policymakers are committed to returning the economy to a 2% inflation rate, which had been largely maintained over the past three decades.

SpaceX And T-Mobile Hold Joint Event In Texas

Elon Musk Warns A ‘Severe Recession’ Will Be More Likely If Federal Reserve Doesn’t Take Action On Rate Hikes

Elon Musk Urges Federal Reserve To Take Action On Rate Hikes

Elon Musk

The Bureau of Labor Statistics is expected to release Consumer Price Index data Thursday morning that will indicate whether <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">rate hikes</a> from the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> have had a meaningful impact on <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>.
As of two months ago, prices had been rising year-over-year at an 8.2% rate, according to a <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. Core inflation, which factors out food and energy, rose 6.6% during the same period, reaching the highest pace in more than four decades.
Bankrate Chief Financial Analyst Greg McBride called the most recent data “disastrous” in remarks provided to The Daily Wire. “It isn’t just the ongoing pace of increase that is troublesome but the pervasiveness of surging prices across various spending categories that has scarred household budgets,” he said. “Food and shelter continue to exert outsized pressure on the inflation rate and consumers’ pocketbooks. Energy has been a mixed bag, with gasoline prices having declined in recent months but electricity and natural gas still rising at a whopping pace. As weather turns cold, the cost of heating homes will further strain household budgets.”
Indeed, the average household primarily using natural gas for space heating will spend $931 on power from October to March, marking a $206 increase since last year, according to the most recent <a href="https://www.dailywire.com/news/heres-how-much-power-bills-could-rise-this-winter" target="_blank" rel="noopener">winter fuels outlook</a> from the Energy Information Administration. Meanwhile, expected growth between 6% and 8% in holiday season retail sales are expected to be entirely eclipsed by rising price levels, according to <a href="https://www.dailywire.com/news/rise-in-holiday-spending-to-be-outpaced-by-inflation-forecast-says" target="_blank" rel="noopener">data</a> from the National Retail Federation.
The Federal Reserve raised the target federal funds rate by 0.75% this month for the <a href="https://www.dailywire.com/news/what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy" target="_blank" rel="noopener">fourth consecutive time</a>. McBride noted that “any broad-based, significant, and sustained easing of inflation pressures remains elusive” despite the moves, noting that Federal Chair Jerome Powell has said there is “a ways to go” in rolling out the contractionary monetary regime.
President Joe Biden responded to the most recent inflation data by claiming that his legislative agenda has helped reduce cost pressures. “Today’s report shows some progress in the fight against higher prices, even as we have more work to do,” he said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/13/statement-by-president-joe-biden-on-the-september-consumer-price-index-report/" target="_blank" rel="noopener">statement</a>. “But even with this progress, prices are still too high. Fighting the global inflation that is affecting countries around the world and working families here at home is my top priority.”
The midterm elections were expected by many pundits to be a referendum on the Biden administration’s economic performance, although Republicans lost a number of high-profile statewide races in what many conservative commentators attributed to poor candidate quality. The economy and inflation were key issues among voters preparing to cast ballots, with 84% considering the former to be a top factor on their minds, according to a <a href="https://www.dailywire.com/news/new-midterm-poll-spells-bad-news-for-democrats-on-the-economy" target="_blank" rel="noopener">poll</a> from ABC News and The Washington Post.
Households have been spending beyond their means amid elevated price pressures. The total level of consumer loans increased from $1.5 trillion at the beginning of the Biden administration to $1.8 trillion as of two months ago, according to <a href="https://fred.stlouisfed.org/series/CONSUMER" target="_blank" rel="noopener">data</a> from the Federal Reserve. Meanwhile, the personal savings rate has dropped from 20% to slightly more than 3% over the same period, according to <a href="https://fred.stlouisfed.org/series/PSAVERT" target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis, marking a significant decline from typical rates witnessed before the lockdown-induced recession.

Jerome Powell

All Eyes Are On Thursday’s Inflation Data Dump After Aggressive Federal Reserve Moves

Last Month’s Inflation Data Is Coming Out Thursday. Here's What To Expect.

The <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by 0.75% on Wednesday, but indicated that officials will avoid an overly zealous contractionary policy even as economists warn of a lagged effect that could reach into next year.
The <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">fourth consecutive</a> 0.75% increase occurs as inflation remains elevated at four-decade highs. Target interest rates are now set between 3.75% and 4%.
“In the face of stubbornly high inflation, the Federal Reserve raised interest rates aggressively once again,” Bankrate Chief Financial Analyst Greg McBride remarked in a statement provided to The Daily Wire. “Unfortunately, we’re likely to feel the pain of a slower economy before we see the gain of lower inflation.”
The stock market reacted positively in the immediate aftermath of the rate hike announcement since a statement from the Federal Reserve Board of Governors affirmed that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” The new language had not been included in previous announcements.
McBride affirmed that the central bank does not intend to pause or reverse their contractionary monetary policy. “Upcoming meetings will bring smaller rate hikes, but a higher eventual stopping point and for a longer period once we get there,” he continued. “They want interest rates to be an economic headwind, but they want to be guarded about overdoing it. If only inflation will cooperate.”
Policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a near-zero target interest rate immediately following the onset of the lockdown-induced recession, also moving to acquire government bonds in order to increase the money supply and stimulate economic activity. Many leading analysts have more recently <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> the central bank amid the return to a contractionary regime, contending that officials who were lackluster in their response to rising price levels are now causing undue harm through their zeal to manage inflation.
Target interest rate decisions carry impacts across every corner of the economy. The 30-year fixed mortgage rate, for instance, rose above 7% after remaining below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac.
“The lagged effect of all these interest rate hikes means a rapidly slowing economy in 2023,” McBride said. “The abrupt slowdown in the housing market is a harbinger of broader economic slowing to come.”
Federal Reserve officials have indeed <a href="https://www.dailywire.com/news/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates" target="_blank" rel="noopener">warned</a> on multiple occasions that economic growth will be “essentially flat” in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href="https://www.dailywire.com/news/economy-turns-positive-in-third-quarter-biden-takes-credit" target="_blank" rel="noopener">technical recession</a>. A recent <a href="https://www.imf.org/en/Publications/WEO" target="_blank" rel="noopener">report</a> from the International Monetary Fund projected that the global economy will grow at a meager 2.7% in 2023, following 3.2% growth in 2022 and 6% growth in 2021, marking the weakest expansion in two decades.
Federal Reserve Vice Chair Lael Brainard <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">cautioned</a> last month that the “moderation in demand due to monetary policy tightening is only partly realized” so far, with particularly interest-sensitive sectors like housing anticipated to see the greatest detriment first. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer,” she said. “The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”

Biden Open To Options On Spending As Congress Takes Over

What The Federal Reserve’s Changing Approach Toward Rate Hikes Could Mean For The Economy

What The Federal Reserve's Changing Approach Toward Rate Hikes Could Mean For The Economy

The <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised their target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by three-quarters of a percentage point, with markets spiking as officials hinted that they could slow down the pace at which they tighten monetary policy.
The move comes after the central bank raised target rates in June, July, and September, meaning that the current federal funds rate is now set between 3.75% and 4%.
“Recent indicators point to modest growth in spending and production,” the Federal Reserve’s Board of Governors said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">statement</a>. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
The Dow Jones Industrial Average rose 300 points in the immediate aftermath of the announcement, which implied a future slowdown in rate hikes by saying that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” 
The rate hike comes after the most recent inflation <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics showed that the Consumer Price Index rose 8.2% year-over-year as of September, with the 0.4% month-to-month increase exceeding analysts’ forecasts. Despite energy costs falling in some categories, a 0.8% surge in food prices and a 0.7% increase in shelter prices contributed to the headline number.
Policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a near-zero target interest rate and acquired government bonds to stimulate the economy over much of the past two years to mitigate the effects of the lockdown-induced recession. Many leading economists have more recently <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> the central bank amid the return to a contractionary monetary regime, contending that officials who were slow in their response to rising price levels are now inflicting undue harm through their zeal to handle inflation.
Fallout from the rising interest rates has especially impacted the housing market as elevated mortgage rates decrease affordability. The 30-year fixed mortgage rate has remained below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac. Since the beginning of the year, however, the rate has surged from just over 3% to surpass 7%, including a jump of nearly 1% in less than one month.
Federal Reserve officials have <a href="https://www.dailywire.com/news/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates" target="_blank" rel="noopener">repeatedly warned</a> markets that economic growth will be “essentially flat” in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href="https://www.dailywire.com/news/economy-turns-positive-in-third-quarter-biden-takes-credit" target="_blank" rel="noopener">technical recession</a>.
“The moderation in demand due to monetary policy tightening is only partly realized so far. The transmission of tighter policy is most evident in highly interest-sensitive sectors like housing, where mortgage rates have more than doubled year to date and house price appreciation has fallen sharply over recent months and is on track to soon be flat,” Federal Reserve Vice Chair Lael Brainard commented last month during a conference in Chicago. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer. The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”
In a similar speech delivered over the summer, Federal Reserve Chair Jerome Powell affirmed that the central bank remains committed to stable inflation. “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” he said. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.”

Federal Reserve Chair Powell Holds Press Conference On Interest Rate Announcement

Federal Reserve Hikes Interest Rates Three-Quarters Of A Point, Markets Spike As Officials Hint At New Approach

Federal Reserve Hikes Interest Rates By 0.75%

Two of the major players in the financial industry warned that the U.S. is on the verge of a recession and that the Federal Reserve might well raise the interest rate from its current 3-3.25% all the way to 4.5-4.75%.
David Solomon, CEO of Goldman Sachs, and Jamie Dimon, the chairman and chief executive of JPMorgan Chase, <a href="https://www.dailymail.co.uk/news/article-11359191/Goldman-Sachs-JPMorgan-CEOs-predict-Fed-raise-rates-4-75-expect-recession.html">spoke</a> on Tuesday at a conference in Saudi Arabia.
“If they don&#8217;t see real changes — labor is still very, very tight, they are obviously just playing with the demand side by tightening — but if they don&#8217;t see real changes in behavior, my guess is they will go further,” Solomon said of the Fed. “And I think generally when you find yourself in an economic scenario like this where inflation is embedded, it is very hard to get out of it without a real economic slowdown. The U.S. is most likely going to have a recession.”
“American consumers, eventually the excess money they have is running out,” Dimon predicted. “That will probably happen sometime mid-year next year, and then we will know more about what is going on with oil and gas prices and that kind of thing, so we will find out. &#8230; there is a lot of stuff on the horizon which is bad, and could — not necessarily, but could — put the United States in a recession.”
In early September Fed Chair Jerome Powell declared, “We’ve got a dual mandate—maximum employment and price stability—and it comes down to: Is nominal income [GDP] targeting the best way to promote that? We don’t think it is; I don’t think it is.”
“The basic idea behind nominal income targeting is that the central bank would establish a target growth rate for nominal income in the economy (as measured by, for example, nominal GDP),” Joshua Hendrickson of George Mason University stated.   “When nominal income is below its target, the central bank would engage in expansionary monetary policy by increasing the money supply.”
“Powell is concerned that estimates of the trend growth of output are ‘highly uncertain’ and that a decline in trend growth would require higher inflation,” James A. Dorn of the Cato Institute <a href="https://www.cato.org/blog/case-nominal-gdp-targeting-reply-fed-chair-powell">explained</a>. “Thus, under a nominal gross domestic product (NGDP) target, he thinks there would be communication issues’ as well as ‘big chances of policy error because we just don’t know any of the starred variables’ (e.g., the equilibrium values of real output, employment, and interest rates).”
Clive Crook of Bloomberg opined, “The Fed can’t control how much growth in NGDP is from higher real output and how much is from higher prices, the quantities it cares about. Using NGDP as an intermediate target to guide monetary policy recognizes this,” Dorn noted.

Major Financiers Warn Fed May Spike Interest Rates

Goldman Sachs

JP Morgan

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