There were some real serious actions taken back there by then Fed Chairman Paul Volcker. PAYNE: Susan, this takes us back to 1982. POLCARI: Because then workers are going to go in and demand even bigger wage hikes, which is going to cause bigger price hikes, and then you're stuck in that circular argument, right, wage-price spiral.
And I think that's what people are going to have to get used to.Īnd the fact that today's number actually showed that wages went down, but yet prices are still going up, is even more of a problem. We're seeing exactly that wage price spiral. Some people thought I was out of my mind.
And that's exactly - I have been talking about it. POLCARI: It's exactly the wage price spiral that we saw in the early '80s, right, at that late '70s, early '80s. This is sort of a death spiral, isn't it, Kenny? So, here, people are thinking they're getting more money, but they can't - it won't go as far. We learned today that real wages went down 2.4 percent. When they raise their wages, they have to raise prices. And so the companies have to raise their wages. You have got a workers strike 4.5 million people quit the labor force in November, and for a variety of reasons. And I think it's that one part that, that sort of flexible part, particularly wages. PAYNE: Yes, Kenny, there's two parts of the story.Īnd, Susan, I will bring you in on this as well, right? They call part of a sticky. And I don't think we see any relief until early 2023. So I think it's here - you know, I think it's here all through 2022. And as much as the momentum goes, it's going to take a while before they can slow it down, and then get it to go in reverse. Now, interest rates aren't that high yet.īut I think people have to get ready for this continued surge in inflation, because it's not going to come down right away. We have been talking about this, and I have been talking about this in my note, that it brings us right back to the late '70s, early '80s. I think it's going to get more difficult. I think prices are going to continue to surge. KENNY POLCARI, SLATESTONE WEALTH: Listen, I think people have to be prepared, the way Susan said. I want to bring in market watcher Kenny Polcari.Īnd, Kenny, just tell us, how much worse is it going to get from here? So, as you see, Charles, it's really a tough balancing act for Jerome Powell and the Central Bank right now. Also, inflation is forcing the Federal Reserve to take action, Wall Street now forecasting three interest rate increases this year, but the latest data also from the Central Bank showed that economic growth moderated, slowed down in the final three months of last year. Government spending, income inequality and supply chain issues came way behind in this list. In fact, it's the overwhelming top issue for respondents, who say it's the number one issue affecting the economy right now. Now, despite the inflation report, the White House is sticking to their promises of easing prices this year, the president saying in the statement that this report really underscores that we still have more work to do, with price increases still too high and squeezing family budgets.Īnd despite the White House trying to calm household concerns, our latest FOX Business poll shows that more than a third of Americans are worried about higher prices.
And used cars are still fetching premium pricing. Filling up your gas tanks costs a lot more than it did a year ago. So there's still sticker shock when you go to the grocery stores. And that is the highest year-over-year increase since the summer of 1982, with prices rising almost twice as much as wages were last month. You're paying the highest price jumps in 40 years in December, so consumer prices, as you mentioned, rising 7 percent last month. Get used to these higher prices, because they're going to be here for a while. SUSAN LI, FOX NEWS CORRESPONDENT: Charles, that's right. To FOX Business' Susan Li with more on what's driving this inflation surge - Susan. Inflation expected to be a big topic when the White House holds its briefing this hour. President Biden says the administration is - quote - "making progress" on slowing the rate of price increases, but Americans, at least for now, may not be feeling it. Prices jumping 7 percent in December to the highest level in nearly 40 years, everything from bacon and eggs to beef and gasoline seeing huge price spikes. CHARLES PAYNE, FOX NEWS ANCHOR: FOX on top of prices over the top and shoppers under siege.
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