An economist who served in the Obama administration warned Friday the economy is “overheated” and said the current administration has barely made progress on inflation.
Former chairman of the Council of Economic Advisers Jason Furman released a Twitter thread indicating that things aren’t as good as they may seem when it comes to the economy.
“The economy is very overheated,” Furman tweeted. “We have made little if any progress on inflation. There is little, if any, reason to expect a large slowdown going forward.”
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
“Supply chains unfreezing were supposed to bring down inflation,” he continued. “They didn’t. The economy looked like it was turning last summer/fall but that never materialized.” (RELATED: POLL: Highest Number of Americans In Four Decades Say They’re Financially Worse Off Under Biden’s Presidency)
“But there are still forces going in the direction of high inflation. In recent months goods prices have fallen, that likely won’t continue. And the extremely tight labor market has lagged effects on inflation. 6% inflation is much more likely than 2% inflation.”
The Consumer Price Index (CPI) rose 6.4% in January year-over-year, though inflation peaked in June when it hit 9.1%, marking a near four decade high. While inflation did fall, it still remains more than three times above the Federal Reserve’s target rate of 2%.
The price of food rose yet again in January, up 10.1% on an annual basis. Energy costs have outpaced inflation, up 8.7% overall while the cost of electricity is up 11.9% year-over-year.