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Jay Powell always has a difficult job. The idea is to take care of the U.S. economy while avoiding partisan holes along the way. Tough might be the kindest version of this task.
And rarely is that position more precarious than when Mr. Powell is hounded by lawmakers, as he was on Wednesday and again later this morning.
“It's a very difficult situation,” Seth Carpenter, Morgan Stanley's chief global economist, said on Yahoo Finance's new afternoon streaming show “Market Domination.”
“We've had inflation that's worse than anything we've ever seen. We've all seen prices go up. So the Fed is really caught in the middle and trying very hard to find balance.” ”
As my colleague Ben Welskull recently pointed out, Democrats and Republicans emphasize different time frames when it comes to inflation.
The left is focused on disinflation, with prices currently accelerating at a much slower pace than at the peak of inflation, which reached nearly 9% in the summer of 2022. On the other hand, those on the right point out that prices in absolute terms will still be much higher than they were in 2022. years ago.
But, of course, politics is not an area where you can have a nuanced discussion that recognizes the validity of both sides. Inflation is slowing and prices are rising enough to make the cost of living even more difficult for many Americans.
Yahoo Finance columnist Rick Newman was troubled by recent polls that found a wide gap in perceptions of the economy between Democrats and Republicans, and as he pointed out, the stock market was at a record unemployment is near its lowest since 1969.
And much of it reflects the psychology of many people experiencing significant price increases for the first time in their adult lives.
On Wednesday, Democratic Representative Ayanna Pressley pressed Powell on the issue of housing affordability, telling the Fed chair that “interest rates are too high.”
House Financial Services Committee Chairman Patrick McHenry (R-North Carolina) told Chairman Powell, “I believe that we will not allow politics to cloud our judgment when it comes to combating inflation.''
Comments that leave room for each proponent to speculate the opposite. All the while, of course, the Fed insists that politics are not involved in its policy decisions.
“Everything we do is in service of the public mission,” Powell said in prepared remarks Wednesday.
This mission, along with inflation, appears to be the most attention-grabbing in recent decades. And most people will be just as unhappy.
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