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On CNN’s “The Situation Room” on Friday, a Harvard professor, economist, director of the National Economic Council under President Barack Obama and Treasury secretary under President Bill Clinton’s Larry Summers said that while employment Reports show that people finding jobs is a good thing and wages are increasing, “no” suggests “we are controlling inflation, not the other way around.” While wages in dollar terms are up, purchasing power is falling because prices are rising faster, And “you’re entering an increasing cycle” that will make it harder to avoid recession and lower inflation.

Summers said: “Look, it’s always welcome news when people get jobs. When wages go up, it’s good news. But I have to say, I don’t think it’s what your report says. So optimistic. For a while now, the main problem with the economy has been inflation. Nothing in this report suggests we are getting inflation under control, quite the opposite. Yes, wages did go up by half a percentage point last month. But that’s about It’s 6% annual growth, and inflation over the past year has been around 9%. I think our core issue is that our economy is overheating unsustainably, leading to high inflation, which is cutting people’s salaries, unfortunately , the news in this report doesn’t address that. So, I’m glad to see it, it’s good news for a lot of families. But I’m afraid we’re still in that imbalanced situation you and I’ve been talking about — — Talked about it for a long time on this show.”

he added,”[W]We still do it when you have a lot of vacancies, we still do when you have a labor shortage like this, when your wages are rising rapidly in dollars, but not in purchasing power, because prices are rising even more Quick, your loops are getting bigger and bigger. That makes the proverbial soft landing more difficult for the Fed. “

Summers further said that while he was pleased with the positive development of the economy from the Settlement Act and the CHIPS Act, “I am more worried about inflation tonight than I was last night. And I think it would be misleading not to look at things that way.” The report Doesn’t change his belief that there’s a 75% chance of a recession in the next two years because “the fundamental challenge for the economy is some kind of overheating, and it just shows that we’re overheating worse.”

Follow Ian Henchett on Twitter @ianhanchett

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