The ongoing decline in wage increase combined with interest rate increase will result in a decline in demand and result in a recession!! Period! A failed monetary policy led by obsolete economic thinking of the FED!
The Federal Reserve Board led by Chairman Jerome Powell was unanimous in raising the federal funds rate a quarter percentage point – a 3rd time this year! A terrible mistake that will be studies as the source of the next recession! Period the End!
Fed are wrong! No good reason for this! It will hurt wages! (See March 21 2018! THE FED ARE WRONG! RAISING INTEREST RATES HAS NO GOOD REASON AND WILL HURT WAGES! , March 2018. The risk of high inflation is minimal! Yet, “the rise in consumer prices over the last year has effectively wiped out any wage increases. Despite full employment, wages are not increasing! This reality contradicts economic modeling that suggests that “a tight labor market, with low unemployment will result in wage increase of 4%! Reality is that full time minimum wage workers can “NOT afford to rent a modest 2 bedroom apartment anywhere in U.S!” (NLIHC) What is the purpose of raising interest rates while the U.S economy’s most significant challenge is wages stagnation and a concern of decline of spending – decrease in demand for goods and services! Also resulting in alarming inequality and a challenge to our democracy and the American dream! The U.S. economy has experienced long-term real wage stagnation. The median income for a worker in 2017 was only slightly more than in 1979! The ongoing decline in wage increase combined with interest rate increase will result in a decline in demand and result in a recession! The FED have no framework to understand the new economy and are using yesterday thinkking for tomorrow’s challenges!