SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
U.S. Federal Reserve Board Chairman Jerome Powell speaks at a news conference following a meeting of the Federal Open Market Committee (FOMC) at the headquarters of the Federal Reserve on September 21, 2022 in Washington, D.C. (Photo: Drew Angerer/Getty Images)
AFL-CIO Economist Warns Fed Is Using 'Flat Wrong' Analysis to Inflict Pain on Workers
"The Federal Reserve is doing the greatest harm I could ever imagine" by continuing to raise interest rates, said economist William Spriggs.
Oct 26, 2022
The top economist for the largest labor organization in the United States on Wednesday said the Federal Reserve's decision to continue raising interest rates is a "political" one based on a flawed analysis of the causes of inflation.
"The Federal Reserve is doing the greatest harm I could ever imagine," William Spriggs, chief economist of the AFL-CIO, told The Hill. "I consider what they're doing right now politics, and they are making a political statement about the economy, and they are wrong. Their analysis is flat wrong."
The Federal Reserve has claimed a labor shortage, increased wages, and struggles within global supply chains are to blame for inflation, which currently stands at 8.2%. In response, the central bank has increased interest rates several times this year, most recently by three-quarters of a percentage point last month.
Spriggs denounced the bank for ignoring external factors that are driving inflation, including the effects of the climate crisis on global agricultural production.
As The Hill reported, Spriggs "pointed to a major drought affecting rice-growing regions in China, a heat wave in Europe that destroyed much of the corn crop, and massive flooding in Pakistan that wiped out huge swaths of different crops, including 20% of the cotton harvest."
Those crises have pushed global commodity prices up by more than 55% this year, with food commodities up nearly 24%, according to the U.N. Conference on Trade and Development. For U.S. consumers, grocery prices are up more than 13%.
"It's dangerous to the moment to tell the American people that the source of inflation is endogenous to the system, that it is related to excess demand," Spriggs told The Hill. "Nothing could be further from the truth. Diverting us from the actual conversation that we need to be having--we, meaning human beings--is so dire."
In addition to the impact of extreme weather--as well as Russia's invasion of Ukraine--on global crops and the price of food and fuel, multiple economists have pointed to corporate profiteering and price gouging as key factors that are driving inflation.
As Sen. Sherrod Brown (D-Ohio) said Tuesday in a letter to Federal Reserve Chair Jerome Powell, such corporate behavior is not impacted by interest rate hikes, and the central bank must take action to "promote stable prices and maximum employment" for working Americans.
Progressives have called for policies to provide relief for working families, including legislation that would crack down on corporations that price-gouge, and the reinstatement of the expanded child tax credit.
The Federal Reserve is expected to continue raising interest rates in the coming months, with a 4.6% rate anticipated next year--up from the current 3.08% effective rate.
In his comments to The Hill Wednesday, Spriggs reiterated an analysis he shared on social media in June after the Federal Reserve hiked interest rates by 75 basis points.
\u201cThe @federalreserve missed a key opportunity yesterday to give reasonable forward guidance. Chair Powell chose to emphasis a narrative that our inflation troubles are driven by excess demand. This is a very dangerous narrative. It will prevent policies that are solutions. 1/8\u201d— William E. Spriggs (@William E. Spriggs) 1655387575
"The Federal Reserve characterizing American inflation as unique, and caused by excess demand, prevents discussing policies to ameliorate higher prices for stressed American households navigating these novel supply shocks and policies to address them," Spriggs said. "It is a political statement."
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, The U.S. is on a fast track to authoritarianism like nothing I've ever seen. Meanwhile, corporate news outlets are utterly capitulating to Trump, twisting their coverage to avoid drawing his ire while lining up to stuff cash in his pockets. That's why I believe that Common Dreams is doing the best and most consequential reporting that we've ever done. Our small but mighty team is a progressive reporting powerhouse, covering the news every day that the corporate media never will. Our mission has always been simple: To inform. To inspire. And to ignite change for the common good. Now here's the key piece that I want all our readers to understand: None of this would be possible without your financial support. That's not just some fundraising cliche. It's the absolute and literal truth. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. Will you donate now to help power the nonprofit, independent reporting of Common Dreams? Thank you for being a vital member of our community. Together, we can keep independent journalism alive when it’s needed most. - Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
The top economist for the largest labor organization in the United States on Wednesday said the Federal Reserve's decision to continue raising interest rates is a "political" one based on a flawed analysis of the causes of inflation.
"The Federal Reserve is doing the greatest harm I could ever imagine," William Spriggs, chief economist of the AFL-CIO, told The Hill. "I consider what they're doing right now politics, and they are making a political statement about the economy, and they are wrong. Their analysis is flat wrong."
The Federal Reserve has claimed a labor shortage, increased wages, and struggles within global supply chains are to blame for inflation, which currently stands at 8.2%. In response, the central bank has increased interest rates several times this year, most recently by three-quarters of a percentage point last month.
Spriggs denounced the bank for ignoring external factors that are driving inflation, including the effects of the climate crisis on global agricultural production.
As The Hill reported, Spriggs "pointed to a major drought affecting rice-growing regions in China, a heat wave in Europe that destroyed much of the corn crop, and massive flooding in Pakistan that wiped out huge swaths of different crops, including 20% of the cotton harvest."
Those crises have pushed global commodity prices up by more than 55% this year, with food commodities up nearly 24%, according to the U.N. Conference on Trade and Development. For U.S. consumers, grocery prices are up more than 13%.
"It's dangerous to the moment to tell the American people that the source of inflation is endogenous to the system, that it is related to excess demand," Spriggs told The Hill. "Nothing could be further from the truth. Diverting us from the actual conversation that we need to be having--we, meaning human beings--is so dire."
In addition to the impact of extreme weather--as well as Russia's invasion of Ukraine--on global crops and the price of food and fuel, multiple economists have pointed to corporate profiteering and price gouging as key factors that are driving inflation.
As Sen. Sherrod Brown (D-Ohio) said Tuesday in a letter to Federal Reserve Chair Jerome Powell, such corporate behavior is not impacted by interest rate hikes, and the central bank must take action to "promote stable prices and maximum employment" for working Americans.
Progressives have called for policies to provide relief for working families, including legislation that would crack down on corporations that price-gouge, and the reinstatement of the expanded child tax credit.
The Federal Reserve is expected to continue raising interest rates in the coming months, with a 4.6% rate anticipated next year--up from the current 3.08% effective rate.
In his comments to The Hill Wednesday, Spriggs reiterated an analysis he shared on social media in June after the Federal Reserve hiked interest rates by 75 basis points.
\u201cThe @federalreserve missed a key opportunity yesterday to give reasonable forward guidance. Chair Powell chose to emphasis a narrative that our inflation troubles are driven by excess demand. This is a very dangerous narrative. It will prevent policies that are solutions. 1/8\u201d— William E. Spriggs (@William E. Spriggs) 1655387575
"The Federal Reserve characterizing American inflation as unique, and caused by excess demand, prevents discussing policies to ameliorate higher prices for stressed American households navigating these novel supply shocks and policies to address them," Spriggs said. "It is a political statement."
The top economist for the largest labor organization in the United States on Wednesday said the Federal Reserve's decision to continue raising interest rates is a "political" one based on a flawed analysis of the causes of inflation.
"The Federal Reserve is doing the greatest harm I could ever imagine," William Spriggs, chief economist of the AFL-CIO, told The Hill. "I consider what they're doing right now politics, and they are making a political statement about the economy, and they are wrong. Their analysis is flat wrong."
The Federal Reserve has claimed a labor shortage, increased wages, and struggles within global supply chains are to blame for inflation, which currently stands at 8.2%. In response, the central bank has increased interest rates several times this year, most recently by three-quarters of a percentage point last month.
Spriggs denounced the bank for ignoring external factors that are driving inflation, including the effects of the climate crisis on global agricultural production.
As The Hill reported, Spriggs "pointed to a major drought affecting rice-growing regions in China, a heat wave in Europe that destroyed much of the corn crop, and massive flooding in Pakistan that wiped out huge swaths of different crops, including 20% of the cotton harvest."
Those crises have pushed global commodity prices up by more than 55% this year, with food commodities up nearly 24%, according to the U.N. Conference on Trade and Development. For U.S. consumers, grocery prices are up more than 13%.
"It's dangerous to the moment to tell the American people that the source of inflation is endogenous to the system, that it is related to excess demand," Spriggs told The Hill. "Nothing could be further from the truth. Diverting us from the actual conversation that we need to be having--we, meaning human beings--is so dire."
In addition to the impact of extreme weather--as well as Russia's invasion of Ukraine--on global crops and the price of food and fuel, multiple economists have pointed to corporate profiteering and price gouging as key factors that are driving inflation.
As Sen. Sherrod Brown (D-Ohio) said Tuesday in a letter to Federal Reserve Chair Jerome Powell, such corporate behavior is not impacted by interest rate hikes, and the central bank must take action to "promote stable prices and maximum employment" for working Americans.
Progressives have called for policies to provide relief for working families, including legislation that would crack down on corporations that price-gouge, and the reinstatement of the expanded child tax credit.
The Federal Reserve is expected to continue raising interest rates in the coming months, with a 4.6% rate anticipated next year--up from the current 3.08% effective rate.
In his comments to The Hill Wednesday, Spriggs reiterated an analysis he shared on social media in June after the Federal Reserve hiked interest rates by 75 basis points.
\u201cThe @federalreserve missed a key opportunity yesterday to give reasonable forward guidance. Chair Powell chose to emphasis a narrative that our inflation troubles are driven by excess demand. This is a very dangerous narrative. It will prevent policies that are solutions. 1/8\u201d— William E. Spriggs (@William E. Spriggs) 1655387575
"The Federal Reserve characterizing American inflation as unique, and caused by excess demand, prevents discussing policies to ameliorate higher prices for stressed American households navigating these novel supply shocks and policies to address them," Spriggs said. "It is a political statement."
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.