Host Jack Otter and Barron’s Roundtable senior writer Nicholas Jasinski discuss why interest rate cuts are unlikely in 2024.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, has said one thing we’ve learned over the past few years is that consumers would rather the economy fall into recession than continue to suffer the pain of rising prices.
“The American public, and probably the European public as well, really hates high inflation,” Kashkari said on a Financial Times podcast. “Soumaya Keynes’ Economic Show” “I really, instinctively hate high inflation,” he said in an interview last week.
Neel Kashkari is president of the Federal Reserve Bank of Minneapolis. (Victor J. Blue/Bloomberg/File/Getty Images)
Kashkari, who has led the Minneapolis Fed since 2016, said he has participated in several roundtable discussions with unions and workers in his region over the past few years, but was most impressed by the comments made by union leaders representing low-income service workers.
The Minneapolis Fed president said union leaders represent grocery store and hotel workers, not higher-paid workers like autoworkers and welders.
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“She said to me, ‘Inflation is worse than a recession,'” Kashkari recalled. “That goes against conventional economic thinking. I said, ‘I don’t get it. How is inflation worse than a recession? In a recession, you lose jobs. Inflation causes prices to go up. [but] You still have a job.”
EJ Antoni, a public finance economist at the Heritage Foundation, told “The Big Money Show” that U.S. inflation data has been “astronomical” since Biden took office.
Kashkari said union leaders told her members are used to dealing with recessions and that the only way to weather them is to rely on friends and family — for example, if you lose your job, you can turn to siblings, parents or friends for help.
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But high inflation affects everyone, she told the Fed president, meaning her members have no one in their network to turn to for help because everyone they know is going through the same thing.
Federal Reserve Bank of Minneapolis President Neel Kashkari visits “Wall Street with Maria Bartiromo” at the Fox Business Network studios on October 11, 2019 in New York City. (Roy Rochlin/Getty Images)
“To me, that was a significant comment,” Kashkari told the podcast hosts, who said the comments sparked extensive discussions with economists at the Minneapolis Fed because union leaders were “on to something.”
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“Right now, the U.S. economy is doing really well, the labor market is doing well, inflation is down, and so many people are deeply unhappy with the state of the economy,” Kashkair said. “I think it’s because of the high inflation that people have experienced.”
