'Recession? What recession?As bad as the housing and credit markets are, many CNNMoney.com readers seem to be a lot more worried about inflation than an economic slowdown. By Paul R. La Monica, CNNMoney.com editor at large Last Updated: March 11, 2008: 10:54 AM EDT
NEW YORK (CNNMoney.com) -- When I wrote yesterday that the Fed should worry more about inflation than the possible recession, I was expecting to get lambasted for being out of touch with what's going on in the economy.
But to my surprise, many of you also think that the rising cost of gas, milk and other products tied to surging commodity prices is more worrisome than the impact of slowing economic growth.
If you take a look at the TalkBack feature we set up for yesterday's column, many readers wrote in to complain about high energy and food costs.
"Inflation is the real danger here. Millions are on fixed income. Those who were wise enough to have some savings are now being punished for the irresponsible who borrowed as if there is no tomorrow," wrote reader Emad Asfour from Sparta, NJ on our TalkBack blog.
Tom L. from Illinois agreed that rate cuts may be just bailing out people who shouldn't have received big home loans in the first place. He went on to note "that panicky rate cuts ARE doing a bang-up job of trashing the dollar and stoking inflation, which hurts all of us."
Of course, there is no denying that the housing market is in a horrific slump and that the job market is weakening. For many, those problems are the bigger concern than paying more to fuel up their SUV or being forced to buy fewer venti mocha Frappucinos.
"Inflation is meaningless if I don't have an income to pay the prices with," wrote Richard from Houston.
But a lot of you seem to think that the problems in housing and on Wall Street are more isolated.
In a poll that we ran on our home page, half of the more than 13,500 respondents (as of Tuesday morning) suggested that rising food and energy prices were their biggest worry while 21% said they were more worried about the weak housing and job markets. Nearly a quarter of the respondents indicated they were worried about inflation and the slowdown equally, i.e. stagflation.
And according to the most recent quarterly Anderson Forecast by the University of California at Los Angeles, released Tuesday morning, economists there are predicting slower growth but not a recession. That jibes with what the Federal Reserve is expecting as well.
This is not to say that there are no problems - although curiously, 5% of you in our admittedly unscientific poll indicated they were not worried about the economy.
The unemployment rate is likely to rise. And many banks are reluctant to lend to even qualified borrowers. Whether we're technically in a recession misses the point. Even if we manage to skirt one, that's little consolation for those who are struggling to pay their bills or have already faced foreclosure.
But the Fed is addressing the credit crunch as well and it is doing so with more than just interest rate cuts. The central bank has established a series of auctions to lend money to cash-strapped banks with short-term funding issues. And this morning, the Fed announced it would lend up to $200 billion in Treasury securities to primary dealers.'
NEW YORK (CNNMoney.com) -- When I wrote yesterday that the Fed should worry more about inflation than the possible recession, I was expecting to get lambasted for being out of touch with what's going on in the economy.
But to my surprise, many of you also think that the rising cost of gas, milk and other products tied to surging commodity prices is more worrisome than the impact of slowing economic growth.
If you take a look at the TalkBack feature we set up for yesterday's column, many readers wrote in to complain about high energy and food costs.
"Inflation is the real danger here. Millions are on fixed income. Those who were wise enough to have some savings are now being punished for the irresponsible who borrowed as if there is no tomorrow," wrote reader Emad Asfour from Sparta, NJ on our TalkBack blog.
Tom L. from Illinois agreed that rate cuts may be just bailing out people who shouldn't have received big home loans in the first place. He went on to note "that panicky rate cuts ARE doing a bang-up job of trashing the dollar and stoking inflation, which hurts all of us."
Of course, there is no denying that the housing market is in a horrific slump and that the job market is weakening. For many, those problems are the bigger concern than paying more to fuel up their SUV or being forced to buy fewer venti mocha Frappucinos.
"Inflation is meaningless if I don't have an income to pay the prices with," wrote Richard from Houston.
But a lot of you seem to think that the problems in housing and on Wall Street are more isolated.
In a poll that we ran on our home page, half of the more than 13,500 respondents (as of Tuesday morning) suggested that rising food and energy prices were their biggest worry while 21% said they were more worried about the weak housing and job markets. Nearly a quarter of the respondents indicated they were worried about inflation and the slowdown equally, i.e. stagflation.
And according to the most recent quarterly Anderson Forecast by the University of California at Los Angeles, released Tuesday morning, economists there are predicting slower growth but not a recession. That jibes with what the Federal Reserve is expecting as well.
This is not to say that there are no problems - although curiously, 5% of you in our admittedly unscientific poll indicated they were not worried about the economy.
The unemployment rate is likely to rise. And many banks are reluctant to lend to even qualified borrowers. Whether we're technically in a recession misses the point. Even if we manage to skirt one, that's little consolation for those who are struggling to pay their bills or have already faced foreclosure.
But the Fed is addressing the credit crunch as well and it is doing so with more than just interest rate cuts. The central bank has established a series of auctions to lend money to cash-strapped banks with short-term funding issues. And this morning, the Fed announced it would lend up to $200 billion in Treasury securities to primary dealers.'
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