U.S. Economys Staying Power Poses Big Questions for the Fed
The Federal Reserve has been trying to slow growth without tanking it. Now, officials must ask if inflation can cool amid signs of resilience.
Employers are hiring rapidly. Home prices are rising nationally after months of decline. Consumer spending climbed more than expected in a recent data release.
Americas economy is not experiencing the drastic slowdown that many analysts had expected in light of the Federal Reserves 15-month, often aggressive campaign to hit the brakes on growth and bring rapid inflation under control. And that surprising resilience could be either good or bad news.
The economys staying power could mean that the Fed will be able to wrangle inflation gently, slowing down price increases without tipping America into any sort of recession. But if companies can continue raising their prices without losing customers amid solid demand, it could keep inflation too hot forcing consumers to pay more for hotels, food and child care and forcing the Fed to do even more to restrain growth.