SBE Council Chief Economist on CPI Inflation Numbers

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), issued the following statement in response to the Consumer Price Index (CPI) inflation numbers released today by the U.S. Bureau of labor Statistics:

“The CPI inflation numbers for June, for the last quarter, and for the last year were all simply ugly, and reinforce the fact that the U.S. economy is in the midst of a battle against stagflation. Unfortunately, policymakers seem to have forgotten how to fight the combination of high inflation, and a slow-growth or recessionary economy. They are not using the right weapons.

“Monetary policy should be focused on repelling high inflation and rising inflation expectations to reclaim price stability. Meanwhile, fiscal policy should be engaged to get the economy moving – not through feeble tax rebates or increases in wasteful government spending, but instead by boosting pro-growth incentives for investing and entrepreneurship. That means substantive, permanent tax and regulatory relief.

“To the contrary, though, the Federal Reserve is trying to do everything, and since it is not properly equipped to do so, it’s losing ground to inflation. And Congress appears clueless, failing to understand what this economic fight is fundamentally about in the end. That’s a policy combination destined for failure.”