Expect several key reports this week on US economic health and consumer prices to offer a glimpse of how bad things could get. On Wednesday, the Federal Reserve is also expected to raise interest rates again in an attempt to tame inflation, though some experts think the Fed’s new aggressive strategy came too late and risks tipping the economy into a recession.
“But perception doesn’t always line up with reality, and the economists at the Federal Reserve are as susceptible to capricious economic shifts as you and I. There is no official rulebook to follow; they make their monetary policy through trial-and-error , and there have been errors,” she continues.
“The Fed, much like Madonna, is constantly evolving. This institution that aims to project an aura of stability is not beyond surprising us.”
Meanwhile, amid all the focus on inflation’s erosion of the strength of US paychecks, Goodkind notes that this week marks a sobering milestone for struggling American families: It’s been 13 years since the last time the US federal minimum wage was raised, to $7.25 an hour , making it the longest period without a raise since the federal minimum wage was enacted in 1938. (About 30 states and Washington, DC, have minimum wages above the federal standard.)
That can’t be helping Biden in the face of dismal poll numbers on the economy. Only 18% of Americans in that CNN survey described the nation’s economy as in good shape, while 82% said economic conditions are poor.
Responding to the news earlier this month that inflation had emerged to a new pandemic-era peak in June, with US consumer prices jumping by 9.1% year-over-year, the White House seized on a more recent dip in gas prices, while complaining that the tumbling price was not being covered by the average with the same intensity that accompanied the hike in prices.
But public perceptions of the economy aren’t likely to change that fast.
Even if this week’s data suggests that the economy isn’t heading for a recession, it will still be a hard sell for the White House. Any president arguing that the economy isn’t really as bad as it feels to voters is in trouble.