The U.S. economy has been remarkably resilient, defying a year’s-worth of recession calls. From the labor market to consumer spending to inflation, key readings on the economy have been running hot. Although that might sound like good news for Main Street, it’s a problem for the Federal Reserve, according to an analysis from CNN Business. “The latest economic data have come in stronger than expected which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Federal Reserve Chairman Jerome Powell told lawmakers Tuesday. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.” Translation: The Fed needs to keep cranking up interest rates to cool off the economy. Although that could help tame inflation, hiking rates even more aggressively could slow the economy so much that people lose their jobs, the housing market slows and loan rates surge for millions of Americans. That is raising the ire of progressives like Senator Elizabeth Warren who accuses the Fed of trying to weaken the job market to achieve its inflation goals. By the Fed’s own estimate, higher rates could lead to unemployment in the mid 4% range, which would mean 2 million more people out of work. Powell acknowledges that the needs of the many (keeping inflation in check for hundreds of millions of working people) outweigh the needs of the relatively few (the single-digit millions who may lose their jobs as the central bank purposefully slows the economy). “It’s hurting the working people of this country badly. All of them, not just 2 million of them. But all of them are suffering from high inflation. And we are taking the only measures we have to bring inflation down.”
