Posted on 02/27/2023 4:29:58 PM PST by RomanSoldier19
Americans' spending spree is keeping inflation elevated and sticky, meaning the Federal Reserve must crush consumer demand with more interest rate hikes that will likely induce a recession, according to Bank of America.
In a Monday note, analysts explained that the Fed is unlikely to reach its 2% inflation target unless it leans into much more interest rate hikes. The odds of a downturn are high in that scenario, they maintained, because the non-consumer sectors of the economy already look weak.
"The strength in the January activity and inflation data suggests that the Fed might have to hike considerably further to find the point of pain for the consumer," BofA analysts wrote. "Right-tail risks to the terminal rate are growing.
(Excerpt) Read more at markets.businessinsider.com ...
What is not being said by this... “crush the consumer” BS line of crap article... is that the consumers are not wildly spending because they cannot. Inflation has driven prices for even necessities sky high..Food for example. So this jacka@@ Bank of obama oops America, says the consumer needs to be crushed to stop spending— sorry pal the American consumer is already stopping spending in order to survive.
But gubmint-— why just keep on spending money you haven’t taken in in revenue and just borrow it from the bottomless Federal Reserve Bank. Andy Jackson— please come back and crush the National Bank, pllllease!!
In fairness, increased consumer demand has accompanied the current inflation, but is of course not the cause of it. Both the inflation and the increased consumer demand have the same ultimate cause, government spending. Government spending, in the form of stimulus checks and increased unemployment benefits, resulted in consumers having an increased amount of money to spend, resulting in the observed higher demand for consumer goods. Squashing inflation most likely will be accompanied by lowering this demand since spending reductions will reduce the amount of money consumers have for discretionary spending. I’m not saying that we shouldn’t reign in inflation, but as usual, the cost of misguided government policies will be borne by ordinary Americans
Then move rates to 10% tomorrow!
So the only way to cut demand in a tight supply market is to reduce the number of people demanding goods and services.
Paging Mr. Thanos. Me Thanos. Please pick up the courtesy phone…
Exactly and to be honest with you it’s a smart move because if you have $3,000 in the bank and a widget cost $1,000, today, in 30 days the widget will cost $2000 but you will still only your $3000 in the bank.
BS. They should lower interest rates and lower taxes.
Old people hate low interest rates and young people love them. I guess the old farts will win again. Get your basements ready to recieve the incomiing unemployed youngins’.
Your post will not be heard or understood by the old fart brigade.
Volker was an a$$hole. Good riddance. The 80’s could have been even better if the Feds just held the line on rates. Lower taxes worked despite the Feds raising rates and sending unemployment through the roof. I was a victim of his evil policies. F Volker. May he rot in F’ing h3ll.
Inflation is not caused by oil prices. Inflation is defined as “too many dollars chasing too few goods”.
Do you work for the Bee?
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