The Federal Reserve faces a difficult task in fulfilling the two mandates it has been given by Congress: Achieving full employment while keeping inflation in check.
In this month’s issue of The Real Economy, our chief economist, Joe Brusuelas, examines how the Fed, with inflation on the rise, is trying to strike this balance and what that means for middle market businesses.
It’s no easy task. Inflation is the highest it has been in decades. So the Fed has said it intends to substantially unwind the accommodative money policies of the pandemic and look to normalize, or increase, interest rates.
But it needs to be careful not to tip the economy into a recession, especially after the economy endured such a significant shock only two years ago and workers are still feeling the impact.
By any measure, the Fed, along with aggressive fiscal support from Congress, has achieved a remarkable recovery from the dark days of March 2020, Brusuelas writes. Unemployment has declined to 3.9% as of December from a peak of 14.7%, economic growth has snapped back and businesses, flooded with orders, are scrambling to hire workers and retain those that they have.
In fact, as RSM’s U.S. economist, Tuan Nguyen, writes, the wages of American workers are higher than they were before the pandemic, even after accounting for inflation. After decades of stagnation, this turnabout is a stunning development for workers.
Also in this issue of The Real Economy, we look at the rise of environmental, social and corporate governance issues and what those mean for technology companies.
Finally, we examine how insurance companies can be more efficient through an approach called process intelligence.