As Fed rates increase, is our economy too strong for its own good?
PROVIDENCE, R.I. (WLNE) — With record low unemployment and climbing fed rates, it could be hard to grasp the economic situation we’re in.
For Providence resident Chris Demme, the rate hikes caused a serious hit on his 401K.
“Part of my paycheck goes into that, so it hurts to see that part go when I could use that money as the price for anything in stores continues to increase,” said Demme.
As prices stay high, Providence resident Kelly Ramos and others wonder if the fed’s approach is actually working.
“I haven’t seen the most positive change, It’s getting harder to understand or keep up,” Ramos said.
According to economist Victor Matheson, our economy is too strong for its own good.
“Reason is because unemployment numbers are so good that you need to offer them higher wages and there is till so much demand for products that its raising prices,” Matheson said.
Following yet another rate hike, Matheson said the rate could start to level out, as the fed worries too much tightening could lead to a recession.
“After an increase of about 4% points over a short period of time, I would suggest they’re probably reluctant of that continuing much longer before taking a wait and see approach,” Matheson said.
He points out that housing and gas prices are down from their summer peaks, but it could be a while before everyday prices on everyday goods come back down to normal.
“They’re making decisions now that we’re not going to realize in maybe 3,6 or 9 months,” said Matheson.