As U.S. Federal Reserve officials gather this week in Jackson Hole, Wyoming to discuss "Inflation Dynamics and Monetary Policy" at their annual policy symposium, they will be met by members of the progressive Fed Up Coalition, who say the central bank "privileges the voices and needs of corporate elites rather than those of America's working families."
Specifically, the coalition is warning against the very real prospect of higher interest rates, saying a rate hike would slow the economy and harm those for whom the so-called "recovery" has been weakest, including poor people, women, and communities of color. Instead, the coalition is calling on the Fed to ditch those plans and give vulnerable communities, including "tens of millions of Black Americans who are still struggling," a say in economic policy.
Fed officials have for months signaled an intent to raise short-term interest rates—which were slashed to zero in 2008 in an effort to spur spending and investment—as soon as this fall or winter. As the Washington Post reported Thursday, reported wage growth "combined with the strong hiring and a rapidly falling unemployment rate, gave the Fed hope that the economy would be able to withstand the first rate hike in nearly a decade by the end of the year."
But recent volatility in stock markets in the U.S. and globally, as well as internal policy disagreements, are leading some economic observers to predict that the Fed may now be less likely to set a rate hike at its September meeting.
Regardless, the Fed Up campaign—anchored at the Center for Popular Democracy and supported by 25 groups including the Economic Policy Institute, Demos, and the AFL-CIO—says raising interest rates would be foolhardy.
And they're in Wyoming to make that view known. According to the Huffington Post, "Fed Up's member organizations brought over 100 primarily low-income grassroots activists from across the country for the gathering. It's a dramatic increase from its inaugural visit to Jackson Hole last year, when the campaign brought a group of 10 activists."
As Sam Ross-Brown wrote at the American Prospect this month, "Fed Up's goal is a more 'pro-worker' Federal Reserve, and their first step is stopping the Fed from hiking interest rates before wages and employment have a chance to catch up with the recovery. Building on a similar action last year, the coalition began circulating a petition this week demanding the Fed keep rates low until wages and employment rise."
"There is no data supporting the Fed's push for higher interest rates," said Ady Barkan, campaign director for Fed Up. "While they toy with halting the recovery, there is a crisis of stagnant wages and a lack of good jobs."
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According to Whose Recovery? A National Convening on Inequality, Race, and the Federal Reserve—the Fed Up Coalition's policy agenda for three days of teach-ins and workshops in Jackson Hole—a rate hike would slow down the economy so that there are fewer new jobs and workers have less power to negotiate raises.
"By raising interest rates, the Federal Reserve will make it more expensive for us to pay our credit card, student loan, car, and mortgage payments," the Fed Up campaign says. "That means we will have less money in our pockets to buy the goods and services we need. And that will have a terrible ripple effect throughout the economy: businesses will earn less revenue, so they will lay off workers (or avoid hiring new workers) and they won’t be able or willing to give workers any raises. With bad job prospects and stagnant wages, working families won’t earn enough to buy the goods and services they need, which starts the whole cycle again."
"If this sounds like a terrible idea," the coalition continues, "that's because it is."
The Fed Up perspective is supported by economist Joseph Stiglitz, who spoke alongside the grassroots activists at an event on Thursday. The same day, Stiglitz wrote in an LA Times op-ed:
It is hard to see why the Fed would choose slower job and wage growth for most Americans just to protect against the theoretical risk of moderately higher inflation. But, then again, it's often hard to understand the Fed's policy choices, which tend to contribute to widening inequality in the United States.
Too often, after the end of one recession, the Fed, fearing inflation, has used monetary policy to dampen the economic expansion. Its maneuvers keep inflation low but unemployment higher than it otherwise would be, negatively affecting all workers, not just those out of a job. Workers in jobs face greater stresses, downward pressure on wages and diminished opportunities for upward career mobility. The costs of higher unemployment are borne disproportionately by people in lower-income jobs, who also tend to be disproportionately people of color and women.
Beyond the particulars of interest rates and inflation, however, the Fed Up Coalition is calling for the central bank to facilitate more robust public engagement and greater transparency, given its position as "arguably the nation's most powerful economic actor."
"For far too long, our communities have been isolated from the Federal Reserve’s policy choices," the coalition writes in Whose Recovery? "Monetary policy has been left up to the bankers and the economists, with the public largely shut out and confounded by its seeming complexity."
Unsurprisingly, the document continues, "[t]he consequences of this disengagement have been profound. For the past 45 years, with only a few exceptions, the Federal Reserve has set policy that benefits banks and harms borrowers, helps employers and hurts workers, and privileges the voices and needs of corporate elites rather than those of America's working families."