Jason Furman, the former chairman of the Council of Economic Advisers under the Obama administration, recently warned that the economy is “overheated” and that the current administration has made little progress on inflation. Furman made this statement in a Twitter thread, where he noted that the supply chains unfreezing were supposed to bring down inflation, but that did not occur. He also pointed out that the tight labor market has lagged effects on inflation, and that 6% inflation is much more likely than 2%.
The economy is very overheated. We have made little if any progress on inflation. There is little if any reason to expect a large slowdown going forward.
Core PCE at an annual rate:
1 month: 7.1%
3 months: 4.7%
6 months: 5.1%
12 months: 4.7% pic.twitter.com/aCA1341MQd
— Jason Furman (@jasonfurman) February 24, 2023
The Consumer Price Index (CPI) rose 6.4% in January year-over-year, with inflation peaking in June at 9.1%, a near four decade high. Despite this decrease, inflation still remains more than three times above the Federal Reserve’s target rate of 2%. The price of food rose 10.1% on an annual basis, while energy costs have outpaced inflation, up 8.7%, and the cost of electricity is up 11.9% year-over-year.
The current state of the economy has been a cause for concern for many economists, including Jason Furman. He has warned that the economy is “overheated” and that little progress has been made on inflation. This has been evidenced by the Consumer Price Index, which has risen significantly over the past year. The cost of food and energy have also risen, outpacing inflation.
The current administration has taken steps to address the issue of inflation, such as increasing stimulus payments and providing aid to businesses and individuals. However, these measures have not been enough to bring inflation down to the Federal Reserve’s target rate of 2%. This is why Jason Furman has warned that 6% inflation is much more likely than 2%.
It is clear that the economy is in a precarious position, and that more needs to be done to address the issue of inflation. The current administration must take further steps to ensure that inflation does not continue to rise and that the economy does not become too overheated. Until then, economists like Jason Furman will continue to warn of the dangers of high inflation and its potential effects on the economy.
Source: The Daily Caller