Employment Cooling, Housing Slipping as Fed Continues to Combat Inflation

The nation’s red hot labor market cooled a bit in August, indicating that the Federal Reserve’s inflation-fighting efforts may be having the desired effect. But Fed officials aren’t declaring victory yet. Far from it.

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The housing slowdown some analysts have been predicting for more than a year has arrived – perhaps.  That’s not a unanimous view, but it does reflect what appears to be a growing consensus, supported by an array of negative indicators that are becoming harder to dismiss or to ignore.

In a move telegraphed clearly and undeterred by the Crimea turmoil, the Federal Reserve increased  interest rates for the first time in four years, raising its benchmark rate by one-quarter- of percentage  point, from zero to a range of 0.25 percent to 0.5 percent, and indicating that additional rate hikes are coming. 

Imagine a high-wire act performed without a net.  That describes the Federal Reserve’s effort to curb inflation without crashing the economy.  Success will bring applause and relief; failure, a brief downturn, at best, with a prolonged recession the worst case outcome. 

Russia’s invasion of Ukraine has unleashed an immigration tsunami, as millions of Ukrainian refugees have sought safety in Poland and other neighboring countries.