“Broad-based and inclusive.” That’s how officials at the Federal Reserve have taken to describing the maximum employment mandate Congress handed the central bank in 1977. The addition of those modifiers is a shift that came about as part of a 20-month review of the Fed’s monetary policy framework that culminated last summer against the backdrop of a national reckoning on race sparked by the killing of George Floyd.
The idea is that economic indicators such as the Black unemployment rate will now be incorporated into assessments of whether or not the U.S. has reached maximum employment. There’s a lot riding on this reconceptualization because Fed Chair Jerome Powell and his colleagues have repeatedly stated that getting there is a prerequisite for higher interest rates.
Now, with inflation dominating the conversation in Washington, those inside and outside the Fed trying to keep broad-based and inclusive employment at the top of the central bank’s agenda for 2022 are facing an uphill battle.
Consumer prices rose 6.8% in the 12 months through November, marking the fastest pace of increase in almost 40 years. Most forecasters expect inflation to moderate in 2022, but Fed officials are still sweating.
After all, they have to balance two mandates: maximum employment and price stability. The latter is becoming an increasingly divisive issue ahead of next year’s midterm elections, with Democrats as well as Republicans pressuring Powell, who just won renomination from President...
This week, standing alongside YouTuber Nick Shirley, whose video alleging fraud at Minnesota child care centers attracted national attention after being amplified by the White House, President Don...