A top Federal Reserve official says that if you want to debate whether or not America is experiencing a recession you should be asking the wrong questions.
Neel Kashkari of the Federal Reserve Bank of Minneapolis said that “whether we’re technically in recession or not does’t affect my analysis.” “I am focused on the inflation statistics. The wage data is what I am focusing on. So far inflation has surprised us all to the upside. The wages continue to rise.”
The U.S. Inflation Rate jumped last month to a four-decade record highThis is 9.1% more than a year ago. The labor market was strong, however: Nonfarm payrolls increased by 372,000 last monthAlong with a 3.6% national unemployment rate,
New Labor Department data on Thursday showed that there was a slowdown in the job market, with first jobless claims at their highest point since November. Kashkari maintained that the labor force is still “very strong.”
Recessions are usually marked by high job loss and high unemployment. These can be devastating for American families. “And we aren’t seeing anything like this,” he stated.
The problem, Kashkari said, is that even in a strong job market, inflation is outpacing wage growth — giving many Americans a functional “wage cut” as living costs increase nationwide. He said that the Federal Reserve is currently working to solve this problem through reducing inflation.
Kashkari explained that even though we technically are in recession, it doesn’t alter the fact the Federal Reserve still has work to do and is committed to doing so.
On Thursday, the Bureau of Economic Analysis announced that Brazil’s Gross Domestic Product was a record. shrunk for the second straight quarterThis is often an indicator of economic recessions. Kashkari sees this as a good sign. A slowdown in the economy could reduce inflation until it is no longer above wage growth.
“We want some slowing.” [of economic growth]He replied, “Yes.” “We don’t want the economy to overheat. “We would love to see a transition from a unstable economy that doesn’t lead to recession.
The Fed faces significant challenges in doing so. Kashkari admitted that slowdowns can be difficult to manage, especially if the central bank is causing them.
He said that the bank would do everything necessary to control inflation.
Kashkari stated that while we will do our best to prevent a recession from happening, we also have a commitment to bring down inflation and are willing to take the necessary steps. It is still far away from reaching 2% inflation in the economy. That’s exactly where we have to go.”