美国国家公共电台 NPR--Why orchestrating a soft landing for the high-flying economy is so tough（在线收听）

Why orchestrating a soft landing for the high-flying economy is so tough

Transcript

NPR's Leila Fadel talks to economist Claudia Sahm about interest rate hikes by the Federal Reserve, and this week's release of quarterly economic growth numbers.

LEILA FADEL, HOST:

Joining us now to talk more about the expected Federal Reserve rate hike is Claudia Sahm. She's a senior fellow at the Jain Family Institute and a former Federal Reserve economist. Welcome to the program.

CLAUDIA SAHM: Thank you. Happy to be here.

FADEL: Glad to have you. So the Fed has this daunting task, to orchestrate a soft landing for the high-flying economy. We've already seen markets tumble and that slowdown we just heard about in home purchases and construction. Why is this soft landing so hard to achieve?

SAHM: Well, there's a lot of reasons. The Federal Reserve has a very blunt tool. When it increases its interest rate, then it moves throughout the financial world, they can't really control it. Mortgage rates have gone up more than the Federal Reserve has increased its policy rate. So it's a very blunt instrument. We have a very complex economy - more than a $20 trillion economy. Layer on top of that 2 1/2 years of a pandemic with COVID.

FADEL: Yeah.

SAHM: And now we have a war in Ukraine. So it's extremely hard to read. It's hard to even understand where the economy is right now, let alone where it is headed. And so - and the Federal Reserve policy takes some time to work its way through the economy. So they're - they really have a tough road ahead of them. But I think, as was said in the last segment, they are not trying to cause a recession, right? And that's a big difference 'cause if they wanted to, the Federal Reserve has tools that could make that happen.

FADEL: Now, some economists say we might need a recession to cool down inflation. Is that something you agree with?

SAHM: Absolutely not. I - the thinking behind that is rules of thumb - frankly, outdated methods within the economics profession. And the stakes are so high here. A recession is worse than inflation. It doesn't just affect the people who lose their jobs. It's - you want a raise; you want to move to a better job. That just - it's happening right now because we have a very strong labor market. We lose that when we go into a recession, and that's bad.

FADEL: There's been a lot of debate about when we actually are in a recession. Can you define when that is defined in the economy? When is the country in a recession?

SAHM: Yeah. It's been a very robust debate and one that, frankly, I don't think is very productive. I - you know, times - there's a lot of hardship right now.

FADEL: Right.

SAHM: Inflation is high. That's bad. Recessions are bad. So I think there's a lot of connection between the two. To me, the reason that we hate recessions the way we - the reason we fight recessions is because millions of people lose their jobs. We're not seeing that right now.

FADEL: Right.

SAHM: Like, GDP is not the end-all, be-all. It's people. But we could get there. And that, I think, is what we should be really concerned about, not, what do we label what's happened in the first half of this year?

FADEL: Now, you mentioned it will take time to see whether what the Fed is doing is actually working. Where do we look for those signs?

SAHM: Right. Well, we're going to look in jobs. We talked a lot about the labor market. We're going to look for is - what the Fed needs to do right now is cool off demand, get consumers not to buy at so fast a pace. What we've seen, you know, in - for several months, you know, well into last year, is consumers buying more and more at a pace that is above average. I mean, that really wasn't sustainable. So it's trying to cool off demand - same in businesses - just cool it off a little bit with investment but not throw it into reverse. So the Fed is going to look for signs that demand is cooling off.

But above all, they have been very clear that they are looking for a convincing step down in inflation, at least month over month. And we haven't seen that. And they are not going to stop until they see that 'cause they don't want inflation to get out of control and continue into the future. So above all, they're looking at the prices we pay and how much they are increasing month over month.

FADEL: So they're looking for a slowdown in inflation, which they're not seeing yet. But we have seen some modest decline in gas prices. Is there any expectation that there could be a broader retreat in costs like that?

SAHM: Yeah. I think gas prices are tricky. For the Fed - I mean, they're one of those areas, like food, where the Fed has very little control. It's about supply, right? The Federal Reserve cannot go out and drill oil. They cannot, you know, plant wheat. So the Fed isn't going to get too excited about gas prices coming down. Where they need to see it is in other places in the economy, like the used cars and the housing, right? They need to see a cool there. There are some signs. But we got burned last year. There were some signs last year, and then inflation took off again.

FADEL: Claudia Sahm, a senior fellow at the Jain Family Institute and a former Federal Reserve economist. Thank you so much.

SAHM: Yes. Thank you.