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Statement on Federal Reserve and Interest Rates
WASHINGTON
Dean Baker, economist and a co-director of the Center for Economic and Policy Research (CEPR) issued the following statement in response to the Federal Reserve's decision regarding interest rates:
"The Fed's decision to raise interest rates today is an unfortunate move in the wrong direction. In setting interest rate policy the Fed must decide whether the economy is at risk of having too few or too many jobs, with the latter being determined by the extent to which its current rate of job creation may lead to inflation. It is difficult to see how the evidence would lead the Fed to conclude that the greater risk at the moment is too many jobs.
"While at 5.0 percent, the unemployment rate is not extraordinarily high, most other measures of the labor market are near recession levels. The percentage of the workforce that is involuntarily working part-time is near the highs reached following the 2001 recession. The average and median duration of unemployment spells are also near recession highs. And the percentage of workers who feel confident enough to quit their jobs without another job lined up remains near the low points reached in 2002.
"If we look at employment rates rather than unemployment, the percentage of prime-age workers (ages 25-54) with jobs is still down by almost three full percentage points from the pre-recession peak and by more than four full percentage points from the peak hit in 2000. This does not look like a strong labor market.
"On the other side, there is virtually no basis for concerns about the risk of inflation in the current data. The most recent data show that the core personal consumption expenditure deflator targeted by the Fed increased at just a 1.2 percent annual rate over the last three months, down slightly from the 1.3 percent rate over the last year. This means that the Fed should be concerned about being below its inflation target, not above it.
"While wage growth has edged up somewhat in recent months by some measures, it is still well below a rate that is consistent with the Fed's inflation target. Hourly wages have risen at a 2.7 percent rate over the last year. If there is just 1.5 percent productivity growth, this would be consistent with a rate of inflation of 1.2 percent.
"Furthermore, it is important to recognize that workers took a large hit to their wages in the downturn, with a shift of more than four percentage points of national income from wages to profits. In principle, workers can restore their share of national income (the equivalent of an 8 percent wage gain), but the Fed would have to be prepared to allow wage growth to substantially outpace prices for a period of time. If the Fed acts to prevent workers from getting this bargaining power, it will effectively lock in place this upward redistribution. Needless to say, workers at the middle and bottom of the wage distribution can expect to see the biggest hit in this scenario.
"One positive point in today's action is the Fed's commitment in its statement to allow future rate hikes to be guided by the data, rather than locking in a path towards "normalization" as was effectively done in 2004. If it is the case that the economy is not strong enough to justify rate hikes, then the hike today may be the last one for some period of time. It will be important for the Fed to carefully assess the data as it makes its decision on interest rates at future meetings.
"Recent economic data suggest that today's move was a mistake. Hopefully the Fed will not compound this mistake with more unwarranted rate hikes in the future."
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
(202) 293-5380LATEST NEWS
'Stinks of Rotting Meat': Critics Warn Trump DOJ Settlement Would Legalize Price-Fixing
"Get ready for even higher prices for chicken, turkey, and pork," said one antitrust attorney.
May 08, 2026
US President Donald Trump's Justice Department moved Thursday to settle a Biden-era antitrust lawsuit against the analytics firm Agri Stats, proposing an agreement that critics say would effectively give the stamp of federal approval to meat industry price-fixing schemes.
The Justice Department—now headed by Acting Attorney General Todd Blanche, formerly Trump's personal lawyer—hailed the proposed settlement as a "historic" win over a company whose "business model directly raised the price of chicken, turkey, and pork in local grocery stores across our nation." But critics said the agreement, which must undergo review by a federal judge, would do nothing substantial to rein in price-fixing in the meat industry.
Lee Hepner, senior legal counsel for the American Economic Liberties Project, said the deal "stinks of rotting meat," noting that the settlement was proposed just days before the case was set to go to trial.
"No way does it address the harms," Hepner said of the 79-page settlement. "Agri Stats spent decades hiking prices on over 90% of processed meat in the country. Now they're being told to exercise some discretion going forward."
"It's a gut punch to those who worked on this case for four years thinking it might actually deter these price fixing services from cropping up in every other industry," Hepner added.
The Biden administration brought the antitrust lawsuit against Agri Stats in September 2023, accusing the company and its subsidiary EMI of "collecting, integrating, and distributing competitively sensitive information related to price, cost, and output among competing meat processors."
"While distributing troves of competitively sensitive information among participating processors, Agri Stats withholds its reports from meat purchasers, workers and American consumers, resulting in an information asymmetry that further exacerbates the competitive harm of Agri Stats’ information exchanges," the Biden DOJ said.
"This settlement legalizes meat price-fixing—it just says you have to bring the giant retailers and distributors in on the game."
The Trump Justice Department's settlement would require Agri Stats to "make the vast majority of information" it distributes "available to all interested domestic purchasers on reasonable and non-discriminatory terms," along with several other conditions.
But the settlement states that EMI is not otherwise "prohibited... from continuing to provide EMI Price Reports in substantially the same manner as it did as of April 24, 2026."
Agri Stats noted in a statement Thursday that it "denied all allegations" of illegal conduct and "has admitted no wrongdoing" as part of the settlement. Agri Stats' lead counsel in the case called the deal "a win" for both the company and consumers—a claim that antitrust advocates rejected, calling the agreement blatantly one-sided in the corporation's favor.
"This settlement legalizes meat price-fixing—it just says you have to bring the giant retailers and distributors in on the game," wrote Basel Musharbash, managing attorney at Antimonopoly Counsel. "Get ready for even higher prices for chicken, turkey, and pork."
The proposed Agri Stats settlement is the latest favorable deal that Trump's Justice Department—which is in the grip of lobbyists with ties to the president—has cut with a major corporation accused of illegal price-fixing.
Last November, as Common Dreams reported, the Justice Department agreed to settle a Biden-era lawsuit filed against the real estate software company RealPage, which was accused of an "unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software."
RealPage welcomed the settlement, noting that the agreement included "no financial penalties, damages, or findings or admissions of wrongdoing."
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Trump Tariffs Ruled Illegal—Again—as Data Shows Promised Manufacturing Boom Is Nonexistent
"The average household has already had nearly $2,000 stolen from them by this administration, and they should not have to pay a penny more," said one House Democrat.
May 08, 2026
A panel of federal judges ruled Thursday that US President Donald Trump's sweeping 10% tariffs on most imports are unlawful, another major legal blow to the centerpiece of the Republican president's economic agenda—which has failed to produce the manufacturing boom he repeatedly promised on the campaign trail.
The Court of International Trade (CIT) found in a 2-to-1 ruling that Trump violated the law when he unilaterally enacted the 10% import taxes following a February decision by the US Supreme Court, which struck down tariffs the president imposed using emergency powers. But the CIT's ruling, which the Trump administration is expected to appeal, only barred collection of the tariffs from some of the plaintiffs in the case—including a pair of businesses and Washington state—limiting the ruling's immediate impact.
Rep. John Larson (D-Conn.), a member of the House Trade Subcommittee, applauded the new ruling in a statement, saying that "Trump must comply with the law by ending his illegal tax on the American people and getting families and small businesses the refunds they are owed."
"The Supreme Court already rebuked the president's costly tariffs, but Donald Trump sees our Constitution as a mere suggestion to follow, and not the law of the land,” said Larson. “As families are squeezed by sky-high grocery bills and gas prices, his latest round of tariffs is only pouring salt in the wound. The average household has already had nearly $2,000 stolen from them by this administration, and they should not have to pay a penny more."
The decision came as a new analysis of trade and manufacturing data from the first quarter of 2026 found that the president's "actions on trade have not delivered on his promises to quickly balance trade and revitalize US manufacturing." Since Trump's return to the White House last year, US manufacturing employment has declined by 82,000 jobs, according to the Rethink Trade program at the American Economic Liberties Project.
Additionally, the nation's trade deficit was higher during the first three months of this year compared to the same period in 2024, Rethink Trade found.
“The first-quarter 2026 data show President Trump’s promises to prioritize speedily cutting the trade deficit and create more American manufacturing jobs are getting undermined by his chaotic and often mistargeted use of tariffs and squandering of leverage to demand other countries gut their Big Tech anti-monopoly and other policies instead of mercantilist abuses fueling the trade deficit,” said Lori Wallach, Rethink Trade's director.
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Leaked CIA Analysis Shows Trump and Hegseth 'Lied Through Their Teeth' About Iran War, Says Murphy
White House officials "just straight up fabricated shit," said the Democratic senator from Connecticut.
May 07, 2026
Just hours before the Trump administration conducted what it claimed were "self-defense strikes" against "Iranian military facilities," The Washington Post reported Thursday that the Central Intelligence Agency concluded that "Iran can survive the US naval blockade for at least three to four months before facing more severe economic hardship."
Citing four unnamed officials familiar with the analysis, the newspaper highlighted that "the CIA analysis might even be underestimating Iran's economic resilience if Tehran is able to smuggle oil via overland routes."
Militarily, "Iran retains about 75% of its prewar inventories of mobile launchers and about 70% of its prewar stockpiles of missiles," the Post added. "There is evidence that the regime has been able to recover and reopen almost all of its underground storage facilities, repair some damaged missiles, and even assemble some new missiles that were nearly complete when the war began."
Drop Site News' Murtaza Hussain responded that if this assessment along with a previous one from the Center for Strategic and International Studies about "remaining US munitions and interceptor capacity are even approximately correct, it goes a long way to explaining why Trump seems so eager to end the war whereas the Iranians have either dug in or escalated their negotiating positions. The missile math of continuing the conflict would be much more favorable to the Iranians, especially if the war continued for a significant time."
"Prior to the war, interceptor capacity compared to the size of the Iranian missile stockpile seemed like the most rationally incontrovertible reason to avoid fighting such a conflict, even for people who found it politically desirable," he added. "This also might explain why the US and Israel pivoted towards the end to threatening countervalue strikes against civilian targets if attempts to destroy the underground missile cities by air were ineffective."
The Post's reporting came one month into a fragile ceasefire and starkly contrasts the recent framing of conditions in Iran from President Donald Trump and others in his administration, including Defense Secretary Pete Hesgeth.
Sen. Chris Murphy (D-Conn.) responded to the Post's reporting by quoting Hegseth, who said in March that "never before has a modern, capable military, which Iran used to have, been so quickly destroyed and made combat ineffective."
Murphy declared: "They lied through their teeth. Just straight up fabricated shit."
Still, White House spokesperson Anna Kelly stuck to the administration's framing in a Thursday statement to the Post.
"During Operation Epic Fury, Iran was crushed militarily," Kelly said. "Now, they are being strangled economically by Operation Economic Fury and losing $500 million per day thanks to the United States military's successful blockade of Iranian ports. The Iranian regime knows full well their current reality is not sustainable, and President Trump holds all the cards as negotiators work to make a deal."
Meanwhile, some experts were unsurprised that the CIA privately delivered a "sober" assessment contradicting the administration's public commentary on the conflict—which it now claims is no longer an active "war," seemingly to dodge a key congressional deadline.
"Nice to know that a confidential CIA analysis is confirming what close observers of the Iranian economy have been saying publicly for weeks! Intelligent policymakers rely on intelligence. But Trump jeopardized diplomacy by instigating a blockade that was never going to work," said Esfandyar Batmanghelidj, an adjunct professor at Johns Hopkins University's School of Advanced International Studies in Europe and founder of the think tank Bourse & Bazaar Foundation.
Sharing the reporting on social media, Jennifer Kavanagh, a senior fellow and director of military analysis at the think tank Defense Priorities, wrote: "As I argued a week into the U.S. blockade, Iran can hold out for months without economic collapse. The costs for the US and the world are increasingly unsustainable, however."
Earlier this week, Stephen Semler, a senior fellow at the Center for International Policy, estimated that the US government spent $71.8 billion on the Iran War during its first 60 days, an average of $1.2 billion daily. The International Monetary Fund warned last month that the conflict could cause a global recession.
Last Friday, Trump responded to the War Powers Act's 60-day deadline by claiming to Congress that his war—which already violated US and international law—had been "terminated." The White House said at the time that no fire had been exchanged since April 7, when a ceasefire deal was reached just hours after the president issued a genocidal threat against the Iranian people.
However, on Thursday evening, United States Central Command announced that Iran "launched multiple missiles, drones, and small boats" at American warships. CENTCOM added that it "eliminated inbound threats and targeted Iranian military facilities responsible for attacking US forces, including missile and drone launch sites; command and control locations; and intelligence, surveillance, and reconnaissance nodes."
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