This is a serious challenge for the Federal Reserve: the more resilient the economy, the harder it will have to push to rein in inflation
after the latest interest-rate rise, the seven governors of the Federal Reserve met with some businessfolk. Any misgivings about the effects of tighter monetary policy would have been quickly dispelled. Cara Walton of Harbour Results, a consultancy, spoke of a plastics processor who hired 14 new employees, only for a mere three to show up on their first day . Cheetie Kumar, a restaurateur, said her peers were struggling to make rent as food and labour bills mounted.
Formally, this stimulus ended some time ago. The last big short-term fiscal package was President Joe Biden’s American Rescue Plan in March last year. But in reality, stimulus is still working its way through the system. Hefty dollops ofcash are only just hitting the economy. States were granted about $200bn in direct emergency funding. In August, they had yet to draw on a fifth of that. And they are still doling out the funding they have claimed.
American consumers have been rather less enthusiastic about higher prices at the pump. If they compared themselves with their peers in Europe, they might be more sanguine. Natural-gas prices have historically been a smidgen higher in Europe than America. These days they are about five times higher. Europe has been gradually cut off from Russia, its main gas supplier; America is awash with its own energy.
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