“Housing is really what’s continuing to drive CPI, and we don’t get relief in the housing market with higher interest rates.”
Today, Groundwork’s Executive Director Lindsay Owens joined Bloomberg Radio’s Balance of Power to discuss the March CPI report and latest PPI numbers, why they show that the Fed’s tools for fighting inflation are not well-suited, and overall economic outlook. Find excerpts from her conversation below and listen to the full segment here.
Email press@groundworkcollaborative.org to speak with Lindsay Owens on the state of inflation and the path forward for the Federal Reserve on interest rates.
“Why would the Fed continue this high interest rate environment for longer given what we saw under the hood yesterday in the CPI numbers? Housing is really what’s continuing to drive CPI, and we don’t get relief in the housing market with higher interest rates…The Fed’s interest rate tool is not very well matched for housing inflation and if anything, it may be exacerbating housing inflation.”
“We’ve also got geopolitical factors, now and looming, that are going to affect energy prices. And again, I would just point out this is yet another area where the Fed is not going to be much help and so we are really in a little bit of a predicament here where the primary tool we’re using to bring down prices is probably not going to give us a lot of relief.”
“Right before the Easter break, we saw corporate profits come in at an all time record high – not a post pandemic record high – a true all time record high and markups are up as well. And the President has said repeatedly that he thinks markups are a place where we could see softening in prices…Yesterday he mentioned that he’d like to see the record high grocery margins be passed back to consumers in the form of lower food prices.”
“Jobs day was great last week. We saw continued strength in the labor market – that’s building on continued strength in the economy overall.
“We’re really optimistic about the continued likelihood of a soft landing. We’ve been saying for years that it is possible to have both a strong labor market and low prices, we didn’t have to choose between those. The path forward for bringing down prices wasn’t eviscerating the labor market, making us all too poor to buy stuff, and bringing down prices that way.”
“Overall, what we’ve seen now is 26 full months of unemployment below 4% and inflation coming down off its peak for a year and a half now…the pattern is a strong labor market and continued disinflation, and that’s the story of a soft landing and the story of a strong economy that we’re hoping to see.”