Dear Federal Reserve Chair Powell,
You're being interviewed today at 1:40pm ET...
Here are 5 things that are top of mind for all Americans:
- 66% feel they are “living paycheck to paycheck”
- 49% consider themselves to be “broke”
- "Food scarcity" is rising dramatically
- "Food at home" inflation is +25% since the Pandemic hit
- Credit card balances rose by $24 billion in 3Q, 8.1% higher than a year ago.
BOTTOM LINE: The most vulnerable Americans are still hurting from the painful impact of inflation (and using credit cards to purchase necessities).
The inflation Americans are living with today is the same inflation you called "transitory" for 2 years before it hit more than 9%.
Sure, the rate of inflation is down from 9% but its still above the Fed's 2% target and it's rising!
It's not time to declare "Mission Accomplished" and continue cutting rates. Hedgeye is currently predicting inflation will rise to north of 3% in 2025.
Markets currently expect a 74% chance of a Fed rate cut in December.
QUESTION: Why should the Fed cut rates in December?
Your answer to this question is important.
Americans are still feeling the ravages of inflation. And if inflation rises, as we predict, you risk a repeat of 1970s-style stagflation.
The "ghost of Fed Chair Arthur Burns" looms large over your legacy. Arthur Burns was reluctant to act decisively on inflation blaming external factors and prolonging 1970s stagflation.
Sound familiar?
Burns cut rates too soon. Under political pressure, particularly from President Nixon, Burns prioritized short-term economic growth and re-election goals over fighting inflation.
Sound familiar?
These premature rate cuts in the early 1970s exacerbated inflationary pressures and contributed to the persistence of stagflation throughout the decade.
The American people are counting on you. Don't be Arthur Burns.
-Hedgeye
