HomeUS News updateMost people have jobs, but many are unhappy about their money

Most people have jobs, but many are unhappy about their money

Federal Reserve Chairman Jay Powell said on Tuesday that growth in the economy is actually still very strong.

“The latest economic data have been stronger than expected, suggesting that the final level of interest rates is more likely than previously thought,” Powell said in remarks prepared for his two appearances on Capitol Hill this week.

“We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt,” Powell said of the Fed’s program of raising interest rates to slow investment and borrowing. “Still, we have more work to do.

“There are very few signs of deflation,” he said, referring to the substantial reversal of higher prices.

Many economists now believe that interest rates are going to climb so high — as the key federal funds rate approaches 6% for big banks to borrow from the Federal Reserve overnight — that a recession is likely by the end of the year.

“We still haven’t seen the full impact of Fed tightening,” said Sarah House, a senior economist at Wells Fargo. “As financing becomes more expensive, demand for big-ticket consumer goods tends to weaken. And as we see overall spending weaken, profits continue to shrink.

“Companies will then start to look at their investment and hiring practices, and that’s where the slowdown is likely to come from, that hard [monetary] policy environment,” House said.

On Friday, the Bureau of Labor Statistics will release its jobs report for February. Economists expect new jobs added at 225,000 – about half of January’s reading. And next Tuesday, the bureau will release the latest inflation data for the US economy. If either figure comes in stronger than expected, it will confirm that the economy is still running hot, and is likely to make the central bank’s efforts to combat inflation even tougher.

And that will mean more – and higher – interest rates will be in the offing, driving up costs on everything from housing to car loans to credit cards.

Bottom line: If you were one of the lucky few who didn’t yet feel that their personal finances were under pressure over the past year, you likely won’t feel that way much longer.



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