In November 1932, Franklin D. Roosevelt crushed Herbert Hoover to win his first presidential term. The Great Depression provided a powerful motivation for voters.
FDR acted swiftly to end the nation’s suffering. With his first “hundred days” initiative, Roosevelt proposed, and got Congress to enact, a sweeping program of reform and economic relief.
The New Deal, at least the parts of it that survived an initially hostile Supreme Court, improved matters somewhat during the first few years. But by 1936, the Great Depression was far from over.
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Franklin Roosevelt was reelected in 1936 in a landslide. He went on to decisively end the Great Depression, usher the United States through World War II, and go down in history as one of America’s finest presidents. Americans used to understand that big things take time.
Today’s fight again inflation is no Great Depression. Hell, it’s not even a dot-com bubble. Twenty years from now, despite its current ubiquity in the public discourse, the Fed’s ongoing struggle against inflation won’t have its own name in popular culture and won’t be remembered outside of a small circle of economists and policy wonks.
That doesn’t make it unimportant. There are definitely people who have struggled more to make ends meet due to rising prices. Even so, the fact that Republican members of Congress bring up higher than usual inflation publicly, on average, about 77 times every single day is perhaps more remarkable for what it reveals about their lack of something bigger to complain about than it is for anything having to do with monetary policy.
The Federal Reserve has one item in its toolkit for fighting inflation — rate hikes. When inflation higher than the Fed’s 2% target became a problem, it got out the proper tool for the job and raised interest rates.
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Although the Fed had to thread the needle carefully by not hiking rates too high or too quickly (and thereby throwing the economy into a damaging recession), all the data so far demonstrates that the Fed’s campaign is working. Sure, inflation has persisted for longer than would be ideal. Yet, when viewed in a historical context, with the knowledge that the U.S. economy does not turn on a dime, the Fed has accomplished a lot in a relatively short amount of time.
The latest Consumer Price Index, released on November 14, showed that prices were flat month-over-month — a better result than even the modest 0.1% increase predicted by economists. The stock market soared as Wall Street bet on the end of rate hikes. The S&P 500 had its best day since April.
Fed Chair Jerome Powell has remained characteristically circumspect about the possibility of future rate hikes. The markets have spoken though, and they’re saying this is it.
Interest rates are likely to remain high for some time to push inflation all the way down to the Fed 2% target. Yet, with things consistently trending in the right direction, I don’t think very many people are going to be talking about inflation next November (or even next September or August).
Some Republican lawmakers are themselves realizing that reminding voters about inflation and trying to blame it on Joe Biden might not be the best strategy. It didn’t work well in the midterms. Moreover, by next year’s presidential election it looks like bringing up inflation will be more akin to pointing out an achievement than it will be to leveling a criticism.
There is little doubt that Americans today lack the patience of Americans in the 1930s. On inflation, at least, it’s looking like we’re not going to have to be convinced to stay the course this time. FDR made the case for letting him finish the job on the Great Depressive. This job is going to be done and already forgotten by the next election.
Meanwhile, the Fed will quietly, competently continue its work. The agency won’t be widely celebrated. There will be no parade. But when inflation is finally squashed, the good people of the Federal Reserve will know what they have done, and will have truly earned the right to be called “public servants.”
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].