America's economic condition isn't as bad and concerning as the media is portraying it to be. Recently the government reported the GNP fell 1.4 percent over the same period last year. If you remember, last year's numbers were supercharged after the pandemic lockdowns. It would have been destructive to have had a higher percentage since it would have contributed to real inflation and not the supposed inflation the Federal Reserve is worried about.
The Fed thinks it can reduce inflation by raising interest rates but the reasons for today's inflation is not like previous reasons. Today's is mainly caused by outside conditions. The Fed's computer programs are based on internal causes. One of their criteria is gasoline prices which the price of crude oil has caused to skyrocket. The main reason for the recent third to half increase is the cutting off of Russian oil.
The principles of supply and demand mean prices rise when an item is in short supply. The post-pandemic supply disruptions reduced supply causing prices to rise. A chip shortage means cars and other items are in short supply raising prices and eliminating rebates and sales. New cars are often selling for more than the elevated list price. The prices for used cars have gone up to the point some are higher than when purchased new.
New house prices are up because materials are higher and in short supply. Less new homes puts pressure on new house prices and the Fed's rate increase will mean many renters can't afford to buy so apartments will be in greater demand. This has been raising rental prices - another Fed criteria.
Not only can the Federal Reserve not ease inflation with their action, they may be causing greater damage by preventing the on-shoring of manufacturing plants.
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