<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1655131011063,"cms.content.publishUser":{"_ref":"0000017d-8cce-d87c-af7f-ddce9ca80000","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1655131011063,"cms.content.updateUser":{"_ref":"0000017d-8cce-d87c-af7f-ddce9ca80000","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_54882912", "obj": {"id":"27789","width":"16","height":"9","video":"1030046"} }); ","_id":"00000181-5d7e-d405-a3e7-ddfef1e90000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedAmid a new four-decade inflation record, the Federal Reserve is being criticized for not taking action soon enough to curtail rising prices, and some are pointing the finger at stimulus checks.
The Labor Department announced Friday that the consumer price index rose 8.6% in May from a year ago, indicating prices for everyday goods increased 1% in a one-month period.
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Allianz economist Mohamed El-Erian noted that the Federal Reserve “mischaracterized what inflation is, and it fell behind.”
<mediadc-iframe data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1655131248812,"cms.content.publishUser":{"_ref":"0000017d-8cce-d87c-af7f-ddce9ca80000","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1655131248812,"cms.content.updateUser":{"_ref":"0000017d-8cce-d87c-af7f-ddce9ca80000","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"title":"Face the Nation (clip) – Mohamed El-Erian","iFrameEmbedCode":"
","_id":"00000181-5d82-d1f1-a1c3-7fc3746f0000","_type":"00000161-b425-d761-a563-f7e77e270000"}”>Face the Nation (clip) – Mohamed El-Erian
“What makes this very frustrating is it was partially avoidable,” El-Erian said while appearing on CBS’s Face the Nation on Sunday. “This is going to have enormous economic, social — it hits the poor particularly hard — institutional, and political consequences. And most of it could have been avoided, had early actions been taken.”
Former Fed chairman Ben Bernanke has also criticized the central bank’s delayed action, saying, “It was a mistake.”
In 2020, as the United States began to shut down amid COVID-19, Congress passed legislation giving people stimulus checks.
To date, the federal government has issued three rounds of stimulus payments, with the first valued at $1,200, the second at $600, and the third at $1,400, for eligible people, with the last checks authorized by President Joe Biden in March 2021 — just as the economy was showing signs of improvement.
“With the benefit of hindsight, you could say it was probably unnecessary,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center. “But I think, at the time, [the third round] was a reasonable call.”
Erica York, a senior economist with the Tax Foundation, also noted there was a drop in people actually putting their second and third stimulus checks back into the economy, noting that most people used the checks to pay down debt or put toward savings.
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“There’s inflation across the board, and the U.S. is experiencing kind of a uniquely higher inflation,” York said. “I think it’s driven by not just the stimulus payments themselves but the size of the relief overall.”
Former Treasury Secretary Lawrence Summers said on Sunday that a recession is likely within the next two years. The statement, however, stands in contrast to Treasury Secretary Janet Yellen’s claim last week that a recession is not “in the works.”
