Despite high inflation, Americans are spending like crazy; it's kind of puzzling(text.npr.org)
text.npr.org
Despite high inflation, Americans are spending like crazy; it's kind of puzzling
https://text.npr.org/1159284378
4 comments
If inflation is high and expected to remain high, it would make sense to purchase things now rather than to wait for them to get even more expensive.
As the fed learned in the 1980s, only pain can break the expectations of inflation once entrenched. Severe, multi-year, economic pain.
Unfortunately, the current fed with its focus on a "soft landing" and "consensus" seems like it has forgotten that lesson.
And unfortunately, once the fed DOES remember this lesson, it's likely that all the highly paid software people on this board (myself included) are going to take the economic impact straight to the face.
Unfortunately, the current fed with its focus on a "soft landing" and "consensus" seems like it has forgotten that lesson.
And unfortunately, once the fed DOES remember this lesson, it's likely that all the highly paid software people on this board (myself included) are going to take the economic impact straight to the face.
This is exactly it. The goal with rising rates is to cool the economy (soft landing vs a crash). That almost always means a rise in unemployment - the late 70s and early 80s economic crisis played out exactly like this.
Despite tech layoffs unemployment still remains relatively low. The hikes are not having the intended effects.
Despite tech layoffs unemployment still remains relatively low. The hikes are not having the intended effects.
I think people are spending because they feel safe in their jobs in the tight labour market. Most don’t follow the markets and have no idea what the Fed is supposed to do. They just see what’s in front of them.