The Fed has been trying to tame employment and wages to keep inflation in check. It ain’t working.
- Assistant Professor of Economics, Clark University
A drop in gas prices helped tame inflation in December 2022. But grocery prices and housing costs continued to rise.
Usually when jobs and wages are rising, it’s a good thing, but right now they may signal higher odds of a nasty recession – and Americans aren’t ready for it.
Inflation remained near a 40-year high due to a jump in the cost of food and shelter. But that might not mean the Federal Reserve will get more aggressive when it comes to monetary policy.
Until recently the Federal Reserve had been purchasing roughly $120 billion of assets every month to support the US economy. The Fed began scaling back those purchases in November and doubled the pace on Dec. 15.
The Federal Reserve decided to slow its pace of bond-buying, potentially the beginning of the end of a program that’s been supporting the economy since March 2020.
Job creation might well have slowed, but a deeper dive into employment data suggests the picture is actually pretty rosy.
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