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🇺🇸 Powell Pessimistic

🇺🇸 Powell Pessimistic

Plus, 5 global flashpoints which could explode next year.

December 16, 2022

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Good morning, and happy Friday! An American flag was saved from a burning home by a firefighter in New Hampshire, who then found out why it meant so much to the family…

Plus, five global flashpoints which could absolutely explode during the early stages of 2023…

Also, you’re just a few clicks away from starting to learn a new language…

FLAG POLLS

📉 President Biden Job Approval: Approve 47, Disapprove 51 (Rasmussen Reports)

📉 President Biden Job Approval: Approve 44, Disapprove 56 (Fox News)

📉 Congressional Job Approval: Approve 27, Disapprove 67 (Fox News)

🐎 General Election: Trump vs. Biden: Biden 45, Trump 43 (Wall Street Journal)

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QUICK CLICKS

JFK Documents Dump, DJT NFTs, Arctic Blast + Blackouts

US: National Archives releases thousands of files about JFK assassination (Fox News)

US: Men convicted of supporting Gretchen Whitmer kidnapping plot given lengthy prison sentences (CBS News)

Economy: Home flipping profits drop at the fastest pace in over a decade (CNBC) + US rents drop at the fastest rate in 7 years, per Zillow (Axios)

US: El Paso braces for 5,000 migrants per day post-Title 42 as feds promise $6M (NY Post)

US: Police officer Aaron Dean found guilty of manslaughter in killing of Atatiana Jefferson (ABC News)

Weather: Arctic Blast Will Hit These Areas Hardest as Texas Braces for Blackouts (Newsweek)

World: Russia says US air defense systems could be targets in Ukraine (AP)

ECONOMY

Powell Pessimistic

Earlier this week November’s inflation data showed prices are still rising at a historic pace – albeit not as rapidly as earlier this year.

On Wednesday, the Federal Reserve enacted its seventh rate hike of 2022, upping its target rate by 0.50%.

Reporting from the Right: Economist Mohamed El-Erian: Inflation Will Be ‘Sticky’ Around Double Target Rate, ‘Parts of Manufacturing Are Already in Recession’ (Breitbart)

Reporting from the Left: Bill Ackman: Fed won't meet inflation goal without 'deep, job-destroying recession' (Yahoo! Finance)

From The Flag: Rate hikes are intended to fight inflation by raising borrowing costs and cooling the broader economy. Fed Chair Jerome Powell has hinted the central bank will remain aggressive (hawkish) toward price increases in 2023. Here’s more from both sides.

LEFT-LEANING SENTIMENT

The Fed Is Behind the Times, But Risks Do Exist Amid Tight Job Market

The Fed’s commitment to 2% inflation is outdated and fails to understand how the global economy has evolved.
Many have drawn comparisons between current inflation and the 1980s, but the Fed had a much more difficult task back then.
US inflation could remain stubbornly high as tight labor markets and elevated living costs fuel persistent, rapid wage growth.

“The Two Percent Obsession” Robert Kuttner, The American Prospect : “It is preposterous to imagine that higher interest rates would reduce spot shortages in specialized chips, or would cause more oil to flow, or more shipping containers to materialize, or end a war. But the Fed’s theory of demand-driven inflation causes it to ignore what is really at work. In addition to supply shocks, the economy paid the price for decades of bad policy that deregulated key domestic transportation sectors. The conditions of work were allowed to deteriorate for truckers, leading to shortages of qualified drivers. … hyper-concentrated railroad companies tore up freight yards, reduced rail capacity, and put workers on punishing schedules in order to increase capacity. When the recovery from the pandemic required more rail shipping capacity, it wasn’t there. … (Neither) has anything to do with excess aggregate demand, and higher interest rates will not cause more rail lines or more truck drivers to materialize.”

“The use and abuse of inflation history” Alan S. Blinder, Project Syndicate : “Many observers of the Fed’s current policy predicament — which is similar to the predicament facing other central banks around the world — have drawn parallels to the problems that chair Paul Volcker and the Fed faced in the early 1980s. … To be sure, parallels do exist. … But comparing current Fed Chair Jerome Powell’s task to Volcker’s reveals that the differences are greater than the similarities… Let’s start with an obvious but much-ignored fact. Today’s inflation problem in the US is relatively recent, dating only from the spring of 2021. … In contrast, when Volcker took the reins at the Fed in August 1979, the US had already experienced nearly 15 years of high inflation. … Volcker and his colleagues never gave a moment’s thought to engineering a soft landing. … Powell and his colleagues are dreaming about a soft landing every night.”

One more opinion piece from the Left: The Fed could be facing a nightmare scenario Steven Kamin, CNN Opinion

RIGHT-LEANING SENTIMENT

It’s Time for The Fed To Ease Up, and For Government Spending To Stop

After achieving progress by holding prices steady month-over-month, the Fed should shift its concern to the economy as a whole.
Tuesday’s print indicated only moderate progress regarding inflation, but lawmakers are still spending cash irresponsibly.
Inflation is only “better” in comparison to this summer’s 9.0% annual rate, but that’s not stopping President Biden from celebrating.

“The Fed should pause its rate hikes now that inflation has slowed significantly. But it won’t.” Rex Nutting, MarketWatch Opinion: “The Federal Reserve should have declared an immediate cease-fire in its war against inflation… (but) went ahead instead and raised the federal funds rate by a half percentage point to a range of 4.25% to 4.50% ... With (Tuesday’s) relatively benign report on the consumer price index in November… the Fed now has ‘compelling evidence’ that it has achieved its immediate goal of seeing a significant slowing in inflation… with headline inflation rising just 0.1% ... and core inflation up 0.2% ... The US stock market sold off Wednesday after the announcement of the rate hike, propelled by a new forecast that shows the Fed raising interest rates several more times in 2023 even as the unemployment rate rises and growth slows to a crawl. The economy now is now skating very close to a recession.”

“Inflation Cools to 7.1 Percent, but Still Has a Long Way To Fall” Eric Boehm, Reason : “Inflation finally slowed to a near halt in November, possibly signaling a winding down of the prices crisis that has gripped American households… This also marks the fifth consecutive month in which the annualized inflation rate has held steady or fallen, after peaking in July at an astounding 9.0 percent. That trend suggests that the Federal Reserve has finally gotten a collar on rising prices. … Meanwhile, this bout of rising prices and higher interest rates will rebound in ways that make the growing national debt more difficult to manage and put Social Security on even shakier ground. Instead of addressing those issues, however, lawmakers are using this year's lame-duck congressional session to spend and borrow even more. … Even though the inflation trend is pointing in a positive direction… the economy isn't out of the woods yet.”

One more opinion piece from the Right: Quit gaslighting Americans, Joe — inflation is still terrible Editorial Board, New York Post

FLAG THIS

Easing Impact? Plus, Holiday Cash and Your 2023 Forecast

Polling data suggests inflation’s impact on Americans is leveling off, with 55% experiencing financial hardship, which is unchanged from August (Gallup).

A separate survey that was also conducted this month found 27% plan to spend less for the holidays this year, with half blaming inflation (GZERO/Maru Public Opinion).

Looking ahead to 2023, 43% expect inflation will be higher in six months, while 15% said the opposite (Economist/YouGov).

Is inflation impacting any of your holiday purchase decisions?

FLAG FINDS

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WATERCOOLER

Dvorak's 9th, Clean Your Tree, Engineering Drop Outs

On December 16, 1893, the Philharmonic Society of New York gave the world premiere performance of Czech composer Antonin Dvorak’s Symphony No. 9 in E Minor “From the New World” at Carnegie Hall. Above is the autographed title page of the symphony's score.

Life Hacker: Yes, You Need to Clean Your Artificial Christmas Tree

Brad Stulberg: 5 Principles for More Excellence With Less Angst

The Conversation: How to Pick the ‘Right’ Amount to Spend on Holiday Gifts—According to an Economist

Today I Learned engineering students' retention rates are among the lowest of all majors.

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