Federal Reserve officials see economic growth and inflation rising higher in 2021 than they expected earlier this year, according to economic projections released Wednesday.
Members of the Fed board and presidents of reserve banks, which together make up the Federal Open Market Committee (FOMC), largely see the pace of the rebound from the coronavirus pandemic accelerating deeper into the year.
The median estimate of 2021 gross domestic product growth from FOMC members rose to 7 percent from a projection of 6.5 percent in March. The median estimate of annual inflation also rose to 3.4 percent from 2.4 percent in March, while the median estimate of unemployment remained unchanged at 4.5 percent. Continue reading.
The following article by Heather Long was posted on the Chicago Tribune website July 13, 2018:
Shoppers pay for their purchases at a Chicago Target store. Credit: Antonio Perez, Chicago Tribune
Prices rose at their highest clip since 2012 over the past year, the Labor Department reported Thursday.
The 2.9 percent inflation for the 12-month period ending in June is a sign of a growing economy, but it’s also a painful development for workers, whose tepid wage gains have failed to keep pace with the rising prices.
The cost of food, shelter and gas have all risen significantly in the past year. Gas skyrocketed more than 24 percent, rent for a primary residence jumped 3.6 percent and meals at restaurants and cafeterias rose 2.8 percent.
The following article by Heather Long was posted on the Washington Post website August 10, 2018:
Applicants chat with potential employers during a jobs fair at Minneapolis International Airport on July 17. Credit: David Zalubowsk, AP.
Rising prices have erased U.S. workers’ meager wage gains, the latest sign strong economic growth has not translated into greater prosperity for the middle and working classes.
Cost of living was up 2.9 percent from July 2017 to July 2018, the Labor Department reported Friday, an inflation rate that outstripped a 2.7 percent increase in wages over the same period. The average U.S. “real wage,” a federal measure of pay that takes inflation into account, fell to $10.76 an hour last month, 2 cents down from where it was a year ago.
The following article by Andrew Schwartz and Galen Hendricks was posted on the Center for American Progress website August 8, 2018:
A street vendor sells replicas of the Wall Street Bull statue outside the New York Stock Exchange, Credit: Drew Angerer, Getty Images
The Trump administration’s most notable legislative passage has been the massive tax plan enacted at the behest of its political donors. The tax cuts, heavily skewed to corporations and the wealthy, will cost nearly $2 trillion over the next decade. Now, the Trump administration is resurrecting an old idea: attempting to use authority that has been repeatedly rejected on legal grounds to bypass Congress and give another tax cut that’s even more skewed to the wealthy, estimated to be worth at least $10 billion annually.
The goal is to adjust the cost basis of an asset using inflation indexing, so that when the asset’s owner sold the asset, it would reduce the gained amount. This is effectively reducing capital gains taxes. This policy would almost exclusively benefit the wealthy, since they own the bulk of capital assets, such as stocks and other securities and interests in businesses. In fact, 63 percent of the benefit would go to the wealthiest 0.1 percent. Very few middle-class Americans would see any benefit whatsoever. Most Americans only own financial assets through pensions and retirement plans that are tax-favored savings vehicles not subject to capital gains taxes, and home sales have large capital gains exemptions. Tax experts have warned that indexing capital gains taxes without indexing other aspects of the tax code—including interest deductions—would create new loopholes and invite the wealthy to game the system.
Even worse, the Trump administration is openly considering the move in violation of the law. During the George H.W. Bush administration, the U.S. Department of the Treasury evaluated implementing capital gains indexing via regulation. However, the Department of Justice’s Office of Legal Counsel determined that the move would have been unlawful, since the law and congressional intent are clear that capital gains taxes should not be indexed for inflation. In the intervening years, the legal case for indexing capital gains by regulation has only grown weaker based several decades of legal doctrine, as scholar Daniel Hemel and David Kamin recently detailed.
Heather Long authored the above article, which was posted on the Washington Post website February 14, 2018:
“The consumer price index, which measures how quickly prices are going up in the U.S. economy, rose at a faster than anticipated 2.1 percent in January, compared with a year ago, triggering fears of another rocky run on Wall Street. The Dow Jones industrial average fell more than 100 points at the open, but traders ultimately dismissed the news and the Dow closed up over 250 points.
Inflation around 2 percent is still very low, but Wall Street traders worry that this could be the beginning of a quick run up in wages and prices. There’s a big reassessment going on about what the future holds for the U.S. markets and economy.”
