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**NOVEMBER 4, 2022**
Kuttner on TAP
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**** The Federal Reserve's Overkill
The central bank needs to take a pause and give its past rate hikes time
to work.
The Fed's decision Wednesday to raise short-term rates by another
three-quarters of a point, and its signaled intent to keep raising
rates, flies in the face of evidence that inflation is already subsiding
and that supply chain bottlenecks-the main driver of price
increases-are easing.
Used-car prices
<[link removed]>,
which spiked during the pandemic because of new-car production
bottlenecks, are way down. Lumber prices
<[link removed]> are also down
dramatically. Housing costs, a big driver of inflation, are moderating.
Rental prices
<[link removed]> are actually
trending down.
Wages are certainly not driving inflation. As Josh Bivens of the
Economic Policy Institute points out, "Average hourly earnings from the
Current Employment Statistics (CES) data compiled by the BLS have grown
at an average annualized rate of 3.6% over the past two months. This is
down significantly relative to mid-2021."
Bivens adds that this is a pretty normal pace of wage growth and is
consistent
<[link removed]> with
the Fed's goal of 2 percent price inflation over the long run. For an
excellent summary of the state of inflation, see Bivens's overall
analysis
<[link removed]>.
Meanwhile, Paul Donovan, the chief economist at UBS Global Wealth
Management, not exactly a Bolshevik outfit, writes in the
**Financial Times** that corporate windfall profits
<[link removed]> are a
prime driver of inflation-as the
**Prospect** and our friends at the American Economic Liberties Project
<[link removed]>
and the Open Markets Institute have long been pointing out.
Inflation hawk Larry Summers
<[link removed]>, a champion
of the tortured metaphor, argues, "When a doctor prescribes antibiotics,
the worst thing you can do is stop taking the moment you feel better.
It's a mistake to not carry through." A better use of this metaphor is
the caution that too much medication can kill you.
Inflation is already subsiding. The Fed's zealotry could turn a soft
landing into a needless recession. Fed Chair Jay Powell should stop
behaving like a reformed sinner who belatedly got religion and start
taking a closer look at the evidence.
~ ROBERT KUTTNER
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The Week Corporate Power Started to Dissipate
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Aggressive antitrust enforcement is starting to notch some victories. BY
DAVID DAYEN
Parents Fear Culture Wars Have Hijacked K-12 Learning
<[link removed]>
While candidates battle over book lists, kids fall behind in the
classroom and worry about bullying and school shootings. BY SUNNI BEAN
Altercation: The Pelosi Attack as a Right-Wing Big Laugh
<[link removed]>
And the New York Times story notwithstanding, the attack had nothing to
do with rising rates of San Francisco homelessness. BY ERIC ALTERMAN
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