The Latest from the Prospect
 â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â
Â
View this email in your browser
<[link removed]>
**JUNE 13, 2023**
Kuttner on TAP
****
****
****
****
****
****
****
**** Memo to Jay Powell: Quit While You Are
Ahead
The May inflation report was sublime. Time to start cutting interest
rates.
The Bureau of Labor Statistics May inflation report
<[link removed]>
released this morning showed that prices in May rose just 0.1 percent.
That's 1.2 percent on an annualized basis. Annualized inflation has
risen just 2.4 percent in the last 3 months and 2.75 percent in the past
six months.
The economy has hit a sweet spot where it keeps generating
jobs-another 339,000 in May
<[link removed]>-but the inflation
created by supply shortages during the pandemic is just about gone. The
economy is close to full employment. But because of the weakness of the
labor movement after decades of attacks by industry, workers in most
sectors lack the bargaining power to get raises beyond the inflation
rate, if that.
The more you drill down, the better the inflation picture looks.
Apartment rental costs have subsided and are now up less than 2 percent
over the 12 months ended in May compared to double-digit increases a
year ago. Gasoline prices declined 5.6 percent in May from April, and
other energy prices also dropped. Costs of food consumed at home also
subsided, increasing just 0.1 percent in May. In short, a normal
economy.
The inflation rate should be under 3 percent for all of 2023. To get it
below that using more rate hikes, in the hope of reaching the Fed's
entirely arbitrary target of 2 percent, would create a needless
recession.
The Fed has now raised interest rates ten times between March 2022 to
May 2023. The rate hikes have reached a point where high interest rates
themselves are now a prime cause of inflation, increasing the costs of
mortgage payments and other borrowing costs.
As the Federal Open Market Committee meets this week, some Fed officials
such as Raphael Bostic, president of the Atlanta Fed, have called for a
"pause"
<[link removed]>
in the Fed's relentless drive to crush the economy. A pause in the rate
hikes would be welcome. A cut in rates would be even better.
Jay Powell could be remembered as the Fed Chair who understood just when
to take his foot off the brake; or as the obsessive who needlessly
strangled the economy out of a determination to hit a target that makes
no economic sense.
~ ROBERT KUTTNER
To receive this newsletter directly in your inbox, click here to
subscribe. <[link removed]>
Follow Robert Kuttner on Twitter <[link removed]>
[link removed]
[link removed]
Republicans in Disarray
<[link removed]>
The temper tantrum on House floor votes masks a much more consequential
lack of consensus on upcoming spending bills-which could give
Democrats an opportunity. BY DAVID DAYEN
[link removed]
In North Carolina, the Uninsured Say Medicaid Expansion Will Be
Life-Changing
<[link removed]>
After years of contentious battles amid a rural health crisis, the state
voted to expand the program. BY JACKIE DUDA
[link removed]
Can British Labour Return to Government?
<[link removed]>
Under leader Keir Starmer, Labour is favored to win the next British
general election, unless the party again snatches defeat out of the jaws
of victory. BY ROBERT KUTTNER
Â
[link removed]
Click to Share this Newsletter
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM
<[link removed]>
The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States
Copyright (c) 2023 The American Prospect. All rights reserved.
To opt out of American Prospect membership messaging, click here
<[link removed]>.
To manage your newsletter preferences, click here
<[link removed]>.
To unsubscribe from all American Prospect emails, including newsletters,
click here
<[link removed]>.
