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shrapnelblockchain| Powell's luck as the "worst rated Federal Reserve chairman" in 25 years may be running out

Home 2024年05月08日 11:01 9 editor

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The latest Gallup poll showsShrapnelblockchainAs persistent inflation and high prices infuriated American consumers, Powell struggled to shake off his label as the "worst-reviewed Fed chairman" in the past 25 years.

According to the survey, 39 per cent of US adults said they had "great" or "considerable" confidence that the Fed chairman would make the right decisions for the economy, up slightly from 36 per cent when prices rose faster a year ago. The change is within the margin of error of 4 percentage points in the poll.

Us inflation reached its highest level since the early 1980s in 2022 as Mr Powell and his colleagues were slow to respond to the surge. The Fed then took aggressive action to raise interest rates, with inflation falling rapidly last year, but still above the Fed's target, and recent data suggest that progress in cooling inflation may have stalled. Fed policymakers have had to keep interest rates at more than 20-year highs, complicating Biden's efforts to restore confidence in the economy in an election year.

In fact, political factors have largely contributed to Powell's low approval rating. Former US President Donald Trump has hinted that Powell will use his influence to help Democrats win the general election in November. Only 30% of Republicans said they had confidence in Powell, about half as many as Democrats (56%).

Powell has repeatedly said that politics and elections play no role in the Fed's decision-making. Trump nominated Powell in 2017 and Biden re-nominated him in 2021 for a new five-year term. Trump has said that if he is elected, he will not extend Powell's term when his term expires in 2026.

Many economists expect that reducing high inflation will come at the expense of severe damage to the labour market. But so far, Powell has made remarkable progress at the lowest cost.

"the bad thing is, his luck may be running out." So says Steven Steven Davis, a renowned workplace economist and senior fellow at the Hoover Institute.

Davis believes that the "extraordinary force" that hindered wage growth after the COVID-19 epidemic, especially the explosive growth in the number of people working at home, is now dissipating. By providing employees with the opportunity to work from home, companies can pay less, he says. Based on a survey of companies in 2022, he estimates that this dynamic may have slowed the rise in labour costs by about 2 percentage points. In addition, the expansion of labour supply in the wake of the epidemic has also weighed on wages. "it helps to reduce inflation without generating too much unemployment," Davis said, but added, "I think the process is basically over."

Powell repeatedly stressed that the Fed's goal is prices, not wages, because the Fed is trying to curb inflation without triggering a recession. Still, he did suggest last week that wage increases may need to cool further before the Fed can meet its 2 per cent inflation target. If Davis is right, Powell could face some upheaval as he tries to design a soft landing for the world's largest economy.

Editor: Ma Mengwei

shrapnelblockchain| Powell's luck as the "worst rated Federal Reserve chairman" in 25 years may be running out

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