Current Economic Climate

Topics: Inflation, Unemployment, Great Depression Pages: 3 (1304 words) Published: October 28, 2008
Current Economic Climate
One of the anxiety filled words resonating in the back of some peoples’ minds at one time was stagflation. Several months ago, this was strewn all over the news but lately it has been on the back burner. I think the stagflation of the 70’s should really be more on the forefront of peoples’ minds still. Stagflation being a period of slow growth, somewhat high unemployment, and a rise in inflation should be more of a concern than just a few weeks of press and then forgotten about. According to the Department of Labor, consumer prices are up over four percent over the past year. This figure does not include the price of food or energy which is also up significant levels. While current inflation is not the inflation that occurred in the 1970’s, it is still cause for concern especially when they are predicting commodities such as gas prices to go up to over $4 a gallon this summer. Other commodities have been on the rise too. For instance the prices of wheat and corn have seen a recent increase which in turn causes other products made from these resources to go up. In February of this year our inflation rate was 4.03% which is still relatively low but we need to be careful. My opinion is that the Federal Reserve is not focusing enough attention on the possibility of a rapid increase in inflation, which is supposed to be there first priority above all others. By lowering interest rates to stimulate the economy, the Federal Reserve is, in my opinion, losing credibility because they are straying from what their main focus should be on. Typically, they should be raising interest rates to gain control of inflation. We can see that month after month the lowering of the interest rates has really not made any impact on the economy. People are still losing their homes, falling behind on their debt payments, and some are even locked out of being able to refinance at the lower interest rates. Normally, cutting the rates would be a great...
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