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Bull Session: How could high inflation end without recession?

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Chatterbox Moo wrote a column · Sep 8, 2022 03:14
FED Chairman Jerome Powell has stopped talking about "soft landing," when the economy slows enough to bring down inflation but not push unemployment up much, and has begun warning of pain. ToastedToastedToasted
Source: Labor Department
Source: Labor Department
But the chances of a soft landing aren't zero, and they might have improved with Friday's report that job growth continued in August while wage growth eased and the labor force expanded. Thinking FaceThinking FaceThinking Face
Source: Goldman Sachs
Source: Goldman Sachs
The main obstacle to a soft landing is the historical record. In the three soft landings since World War II—1965, 1984 and 1994—the Fed wasn't trying to push inflation down; it was merely trying to keep it from going higher. At times like the present, when inflation was too high and the Fed set out to push it lower, a recession always occurred.
It is a long way from July's 8.5% increase in CPI to the Fed's inflation target of 2%. But that overstates how much work the Fed has to do. Easing of supply disruptions such as for used cars will further lower core inflation with no push from the Fed, Mr. Hatzius predicted. He also thinks inflation only needs to fall to 2.5%, not to 2%, for the Fed to stop tightening. The reason, he argues, is that the Fed wants inflation to average 2% over the business cycle, so it can tolerate 2.5% inflation during a strong economy to offset below-2% readings during recessions.
Mooers, what do you think of the "soft landing" and how to lower inflation without recession? Leave your comments here. Cool GuyCool GuyCool Guy
Source: THE WALL STREET JOURNAL, Labor Department, Goldman Sachs
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  • 151359817 : Sleepy Joe and the freaking US government stop shitting on Mainland China and its SARs,and pull back  freaking biases. Under this hard time the only way for the world to overcome the inflation and recession is to COOPERATE as a whole, NOT DIVIDING everyone with prejudices and INSITIGATE  the WARWorship

  • What is your name : use this chance to accumulate more good fundamental companies with lots of cash. things don't always go up . they don't always go down too. it's just at different stage of the cycle only

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