This week on Facing the Future, Bob discussed interest rates, inflation, the Federal Reserve, and more with Gordon Gray, Executive Director of the recently founded Pinpoint Policy Institute. An experienced political and policy staffer, Gray walked through what the Fed might be thinking about whether it’s time to begin lowering interest rates and the external factors affecting their actions. Later in the show, outgoing Concord Coalition Policy Director Tori Gorman joined Bob for an exit interview and some reflections on her career, including Social Security reform. This month, Gorman moves on to a position at the Congressional Research Service. Concord Coalition Chief Economist Steve Robinson also joined the discussion.
Gray began with the three lenses through which he looks at inflation. “The first is ‘what is the rate of price growth in absolute terms?’ And on that front, we remain unsatisfied as observers. Year over year we’re still at something like three percent. The second way to look at it is ‘what is the trend? What has been the movement relative to past prints?’ There we’ve seen marked progress. The yearly rate is tending to come down, so essentially flat, negative readings in the top line and core in the last print followed on the heels of a relatively good print before. The trend in the near term is pretty good. The third lens through which we look at these, as observers, is relative to expectations. You take the trajectory, the trend, and other inputs in mind and you formulate an outlook. Then you can get upside or downside surprises, I think that can tend to really move minds. Some of the good news we’ve seen was expected, some of which is even better than we thought in terms of the taming of inflation.”
However, Gray cautioned that the good news comes with important caveats. “We have seen some of these false dawns on the tempering of inflation before. I note that for when we talk about how the Feds have got to look at this. We’ve seen some upticks in unemployment. We’ve seen not necessarily signs of weakness per se but weakening in the labor market. The pace of hiring just on a monthly basis has plainly decelerated. I think last month’s jobs report was about 200,000 net payroll growth, about 70,000 of that was in government. Those can be aberrational. It’s not necessarily the best look at the pace of hiring in the private sector. We’ve seen steady increases in unemployment, 10 basis points essentially for 3 months. We’d worry about that if that continued unabated.”
Responding to calls for rate cuts in the near future, Gray said “There’s a real risk that you’re going to fail to control inflation. And then with other elements in the macro economy, you could see ourselves in an inflationary environment while facing a downturn. You want to tame inflation first.”
Tori Gorman joined the second half of the program and provided some reflections on her career thus far and what drives her. “I’m a mom with two children. I’m worried about the burden that older generations are leaving them. What brought me to Capitol Hill was Social Security reform. I remember reading an article, I think it might have been in Time magazine. I’m like, ‘huh!’ This is really interesting. I started researching and got a job on Capitol Hill with Congressman Jim Colby, who had drafted, along with three other members, a bipartisan, bicameral Social Security reform bill.” Gorman said.
“When we’ve got lawmakers running around saying we don’t need to worry about Social Security. I think that’s just the height of irresponsibility. It’s really important that we have bipartisan agreement that there’s a problem. A second lesson learned is that people, voters, were willing to listen. I worked for a Republican member, a moderate from Tucson, Arizona, which, as you can imagine, had a really high population of people who were of Social Security age. To come out with a Social Security reform bill was pretty politically risky for Congressman Colby. But he was very good to sit down, talk to people, explain what was going on in Social Security, explain how his bill worked, and then answer their questions until the cows came home. If you give people that bandwidth, that time, that attention, and you enable that conversation, and you listen to what they’re saying, voters in turn listen to the lawmakers. It’s amazing how much compromise can be achieved. So, it is possible to ‘touch the third rail of politics’ and survive.”
Hear more on Facing the Future. Concord Coalition Executive Director Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
