Staff Reports
If you thought the economy in the United States wasn't hurting badly enough, the Federal Reserve looks to be sending a message to the people of the United States that things are going to get even more challenging.
This was made very clear by Fed Chairman Jerome Powell earlier this week, when the bank forecasted that its benchmark rate would reach 4.4 percent by the end of the year. This prediction was made regardless of whether or not it would cause an economic recession.
In his estimate for the economy, which was released on September 21, Powell indicated that it is extremely likely that there would be some easing of labor market conditions. We are going to keep working at it until we are certain that the task has been completed.
This is a term for unemployed people, to put it more simply. The Federal Reserve projects that the unemployment rate will increase to 4.4 percent in the following year, which is an increase from the current rate of 3.7 percent; this might indicate that an additional 1.2 million people will be without jobs.
Powell expressed his wish that there was an easy method to do what needed to be done. The answer is No.
The objective behind raising the unemployment rate in the country is that it would help to bring inflation under control. If an additional million or two people were working, those who have lost their jobs and their families will significantly reduce the amount of money they spend, while the incomes of those who have jobs will remain the same. When companies believe that they will not have to pay for their staff, and when their labor expenses are anticipated to increase, the reasoning suggests that price increases will come to an end from businesses. As a result, this slows down the rate at which prices are increasing.
In a speech she gave on Monday, Susan Collins, president of the Federal Reserve Bank of Boston, said the following: I do anticipate that maintaining price stability will entail weaker employment growth and a somewhat higher unemployment rate. [Citation needed] Also, I take it very seriously that being unemployed is a difficult experience, and that the costs of unemployment have been unfairly concentrated among populations who have historically been underserved."
However, there are other economists who are unconvinced that reducing employment is necessary in order to keep inflation down.
The Federal Reserve unambiguously desires for the labor market to experience a significant downturn. According to Ian Shepherdson, chief economist of Pantheon Macroeconomics, who was quoted in the study, What's not clear to us is why. He forecast that there would be a dramatic drop in inflation the next year as a result of the normalization of supply chains.
The preceding is a summary of an article that originally appeared on News Sloth.
