Last week Senator Elizabeth Warren grilled Federal Reserve Chair Jerome Powell about US job losses being casualties of the Fed's battle against high inflation.
Photo Insert: Powell argued that all Americans, not just two million, are suffering under high inflation.
Warren, a Powell critic, noted that an additional 2 million people would have to lose their jobs if the unemployment rate rises from its current 3.6% rate to reach the Fed's projections of 4.6% by the end of the year, Nicole Goodkind reported for CNN Business.
"If you could speak directly to the two million hardworking people who have decent jobs today, who you're planning to get fired over the next year, what would you say to them?" Warren asked.
Powell argued that all Americans, not just two million, are suffering under high inflation.
"Will working people be better off if we just walk away from our jobs and inflation remains 5% or 6%?" Powell replied. Warren cautioned Powell that he was "gambling with people's lives."
Roosevelt Institute director Michael Konczal scoffs at Powell’s theory. “The thing that raised my eyebrow was Powell saying that if he walked away from his job inflation would remain at 5 or 6%.
Inflation over the last three months has not been 6%, and depending on what you're looking at it hasn't really been 5% either,” Konczal explained.
“Inflation comes at a high cost when it's at 5% or 6%, but when it does comes down to 2.5% or 3%, I'd want to know how urgent he thinks it is to get that last mile to 2% inflation if it meant two million plus people were out of work. I think the dirty secret is that economists can't really tell you what the negative is on inflation being at 2.5% instead of 2% — there are some winners and there are some losers, but the net economic costs are less clear.”
He argued the 2% inflation target is “essentially a made-up number.”