The Fed has made the decision to surpass the United States' standard inflation target of 2% in hopes to boost the labor market. No specifics were given regarding how high inflation would be let to run, but skepticism regarding whether inflation would far exceed the 2% at all emerged from experts. This decision was made by The Fed after reviewing the experiences of other large economies who have seen inflation drop too low and become extremely difficult to reverse. Essentially, increasing the inflation target was done in a preventative effort.
It is most likely that this shift toward support of a stronger labor market will impact minority groups and low-income workers the most. Jerome Powell, Fed Chairman, does not expect this to completely turn around the United States' unemployment crises, however. It is expected to assist in bringing the unemployment rate down, but not wholly fix the issue.
As we near the presidential election, this makes me curious how it will impact voters. As discussed in class, when inflation and/or unemployment are in poor shape, the party in office tends to get booted. Could this have the same impact?
The Republican Party is focussing right now on things that would help boost their chances of being reelected. With the unemployment rate already being so high, They are trying to do what they can to knock it down as much as possible before the election. Only time will tell if their efforts will be substantial enough to keep them in office, or will they be voted out due to the current economic situation.
ReplyDeleteWhat I find interesting to consider, in terms of if the current party will be booted out or not based on the economy's performance, is who the public better trusts to recover the economy. Currently, according to polling available, Biden leads President Trump in most areas except when it comes to the economy. Obviously there are more factors to consider in terms of who will win the election, but I wonder if the current party in office will remain in office after the election, even though the economy is in poor shape, due to the idea that they are better able to handle and recover the economy.
ReplyDeleteBased on the data studied in class, I would expect Biden to win due to the poor shape of the economy currently. Voters will want a lower unemployment rate. There is not much time left for Trump to turn it around. There still is a possibility of seeing Trump reelected if voters blame the high unemployment on COVID rather than the decisions of the Trump Administration.
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