Fed hawks are 'out of sync with the data': Jared Bernstein
Today marks the first FOMC meeting and press conference under new Fed Chair Janet Yellen. While no drastic changes are expected, many Fed hawks fear that Yellen is tightening too slowly.
Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former chief economic adviser to Vice President Joe Biden, wishes they wouldn’t.
Related: What markets want to hear from Fed Chair Yellen this week
While we have had nearly five years of growth in both GDP and employment, most of that growth hasn’t reached middle- and lower-income Americans, Bernstein says.
Many Americans "still think we’re still in a recession,” says Bernstein. “Over the course of the expansion that began in the second half of 2009, median household income is down 5% in real terms. Meanwhile the S&P 500 is up 70% and corporate profits are up 50%.”
Bernstein believes that Yellen should ignore the hawks worried about inflation because “the wage pressure that’s out there is very minimal and if you look at wages relative to inflation it’s not up much at all.”
Related: Fed tapering will lead to LOWER, not higher, rates: Dan Alpert
“What we really want to be concerned about from the Federal Reserve’s perspective is stamping out any wage gains way too soon,” says Bernstein. “These voices I hear saying ‘quick get the fire hose because things are heating up too much,’ are very out of sync with the data, with the needs of the American people, with the actual goals of the Federal Reserve and with inflation statistics.”
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