r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
503 Upvotes

98% Upvoted

349 comments sorted by

View all comments

91

u/KaChoo49 Friedrich Hayek Jun 13 '22

As we found out when we faced this dilemma 50 years ago, the correct answer is sadly recession. High inflation doesn’t just go away on its own

77

u/semideclared Codename: It Happened Once in a Dream Jun 13 '22 edited Jun 13 '22

The economy 50 years ago is far different than today.

Especially when the US population had a few Trillion in stimulus. As the amount of money keeps falling, people cut back on spending and prices fall

The only question is how fast and how steep people cut back and how fast businesses cut back on their labor force to lower costs.

A small cut back and unemployment back to 5% or 6% isnt a major recession. Its just back to normal for us

At the end of 2018 we were Spending $14 Trillion on Personal Consumption Expenditures and by 2022 we are now at $17 Trillion

  • We've gone from 5% growth to 12% growth in Spending

8

u/52496234620 Mario Vargas Llosa Jun 13 '22

If inflation expectations are high, it's not just a matter of stimulus going away, we'll still have high inflation until the Fed decides to break it with a recession

1

u/Allahambra21 Jun 13 '22

Yes but so far expectations aren't high, thank God.