March 20, 2024
A routine checkup of America's economic condition indicated a nation as hale and hearty in body and mind as that sprightly, energetic fellow
sitting in the Oval Office. Let's review the details.
Inflation Remains Elevated
The check-up began, as they all do, with the blood-pressure cuff, which found that the pressure is still too high. (In this analogy, currency is the
lifeblood circulating through an economy, and inflation is the blood pressure.) …
Meanwhile, those cardiovascular economists at the Federal Reserve are contemplating an end to America's high inflation-pressure medication --
raising interest rates -- due to the unpleasant side effects. Federal Reserve Chairman Jerome Powell said last week that the Fed was "not far" from
the economic confidence it would need to start cutting interest rates.
As for the patient's heightened inflation-pressure, the doctors seem to hope it will go away on its own. It's true that core inflation is steadily
declining, but only slowly. Core inflation has fallen 0.1 percentage point every two months since September 2023. At that rate, reducing core
inflation from 3.8% to 2.0% (the target rate) will take 36 months, or three years. Given the (unlikely) assumption that interest rate cuts will not
rekindle inflation, the Fed would not meet its target rate until 2027.
Consumer Necessities Are Painfully Expensive…Read more