Jerome Powell, Rachel Siegel, Janet Yellen discussed on News, Traffic and Weather

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It all seemed to catch Washington D.C. by surprise Rachel Siegel is covering it all for The Washington Post and spoke with Taylor van zeiss Rachel you and I have spoken several times in recent months about inflation back in March of 2021 We even spoke about ballooning used car prices and the fear of inflation at the very least was on our radar How did D.C. go from saying this was all temporary to everything short of the sky is falling today It really is remarkable to think back not seems like super long time ago but really wasn't There was such a missed message from officials at the Federal Reserve at The White House over what inflation would turn out to be whether it would be temporary whether it would spread to other parts of the economy And the used car examples takes us right back to when it was thought that inflation would be more limited to parts of the economy that were hit hard by the pandemic or by supply chains Now it's clear that that really turned out to be completely wrong It was hard for policymakers to see through confusing data and to make sense of it in real time It means that now they're really having to catch up to inflation look very different from what they expected in March of 2021 So back in February March April of 21 who was sounding the alarms what were they saying There were a couple exceptions and there were some voices that were very loud in saying that inflation would turn out to be a really overwhelming source over the economy One of the most notable voices is Larry summers who was one of the top economic advisers in the Obama administration Specifically pointed to the size of the American rescue plan as going to something that was going to overwhelm the economy that it was going to infuse so much cash so much spending that they were just going to be nowhere for all of that money to go Now even economists who acknowledge that they themselves were wrong in predicting inflation say that Larry summers argument wasn't entirely you know the reasons that he gave are totally matched the world that we're living in now but there were certainly voices who pushed back against a lot of the conventional thinking at the time Now that was also a time before the war in Ukraine It was before even the delta variant of COVID came around and now we've got omicron version three or four or whatever We're Jerome Powell and Janet Yellen the heads of the fed and treasury respectively Are they viewed as just being wrong from the get go or did the equation just change too much for their strategy I think that they're viewed as being wrong now but all with the benefit of hindsight And I think that even some of the sharpest critics of Jerome Powell or Janet Yellen or others in the administration with the fed are now made the best decisions that they could with the information that they had at the time is really such an unprecedented situation to have a pandemic overlaid with we to the virus that make it difficult to read the labor market overlaid with supply chains from around the world that are also responding to different ways of the virus And at times the information that officials were looking at was actually wrong one of the main things that the Federal Reserve looks at to judge the strength of the economy is how many jobs are being added every month And government data vastly underestimated the number of jobs that were coming back online last summer These are all things again that are much much clearer with hindsight but we're essentially looking through the fog when officials had to make very consequential decisions So what's the strategy now All of this being present in hindsight at this point what's happening moving forward with economic policy So now the sudden reserve has increasingly acknowledged that they have a lot of catching up to do Jerome Powell and President Biden actually met in the Oval Office today and agreed that inflation was the top economic priority for all policymakers But it's unclear if how quickly the fed could catch up and whether even a more aggressive and steady series of interest rate hikes over the course of the year are going to be enough not only to lower inflation but to help claw back some of the areas in which prices and high prices have become even more embedded in the economy Rachel Siegel with us on northwest news radio economics reporter for The Washington Post you can find Rachel's work online at Washington Post dot com Thank you That's Taylor van seiss Your stock chart dot com money update on northwest news radio The Wall Street saw choppy session to start the short and week the majors bouncing back and forth across the unchanged line before settling lower the Dow off over 200 Stocks fell following President Biden's meeting with fed chair Jerome Powell this afternoon The White House unveiling a three part plan to battle inflation Conference board report shows a modest drop in consumer confidence in me Lynn Franco who's the senior director of economic indicators of the conference board said surging prices and interest rate hikes would continue to pose downside risks to consumer spending Home prices continue to climb even despite rising mortgage rates the S&P core logic case schiller index for March showing a 20.6% annual jump in home prices And shares of Amazon putting in their best performance in.

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