Inflation is continuing to eat away at Americans’ paychecks, with statistics released by the Labor Department last month showing that September saw an unexpected rise in prices.
The Federal Reserve responded this week by announcing that it is hiking interest rates. As the Washington Examiner noted, that could spell economic trouble for the Biden administration.
Economists: Rate hikes likely to bring recession
Federal Reserve Chairman Jerome Powell explained the decision at a press conference in Washington on Wednesday following a meeting by the Federal Open Market Committee.
“We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%,” the Examiner quoted Powell as saying.
“In addition, we’re continuing the process of significantly reducing the size of our balance sheet. Restoring price stability will likely require maintaining a restrictive stance of policy for some time.”
The Examiner noted that although congressional Democrats had urged Powell to hike rates as inflation concerns mount, doing so will likely lead to lost jobs as the economy slows.
That was the expectation put forward last month by Bloomberg economists Anna Wong and Eliza Winger, both of whom said the chance that the United States will enter into a recession over the next year stands at 100%.
Poll shows voters trust Republicans over Democrats on economy
Such an outcome could further cement the perception among voters that Republicans are better suited to handle the economy than Democrats are.
A poll published by the Wall Street Journal on Tuesday showed that almost half of voters trust Republicans to address inflation, compared with just 27% who said the same of Democrats.
Conducted between October 22 to October 26, the same survey found 71% believe America’s economy is on the wrong track whereas only 19% thought it is headed in the right direction.
Fox News noted last week that although the Commerce Department reported a 2.6% gross domestic product gain over the last three months, many experts say this is unlikely to sway voters.
“Telling a single mother or retiree who sees prices going up every month that some macroeconomic indicator says everything is OK will not get you very far,” said Democratic strategist Colin Strother.