With the economy slowing down, prices of goods and services are beginning to look normal, without entering a recession, according to Northeastern experts. “The economy’s more resilient than most economists expected, including myself,” says Robert Triest, the chair and professor of economics at Northeastern. “It’s becoming extraordinary times where the inflation rate has come down, despite the resilience of the job market, and I’m hopeful that we’ll continue that.” Given the inflation rate is falling and unemployment remains low at 3.7%, it is unlikely that the Federal Reserve will push to slow economic activity, Triest says.
The next big question is, will the Fed decide to raise interest rates again at its next meeting?
The Fed interest rate, which sets the range that banks will lend or borrow to each other overnight, is 5% to 5.25%. The rates are higher than the near-zero rates seen during the height of the pandemic. In June, the Federal Reserve chose to leave the rate unchanged. Over the last year, inflation rose 4%, the lowest in two years, according to the consumer price index in May. The Consumer Price Index measures the change in prices consumers pay for goods and services and includes spending patterns for urban areas, which include 90% of the U.S. population. CPI comprises prices of food, clothing, shelter, fuels, transportation, healthcare and goods and services people buy for day-to-day living.