Inflation is the lesser evil

A RECORD-BUSTING stock market has done little for the prospects of most middle and working-class Americans, who are falling behind as the labour market stalls and prices rise for the essentials. The way out of the hiring rut is significantly lower borrowing costs for businesses and consumers, but these have the potential to stoke painful inflation once again.

“We have a situation where we have two-sided risks, and that means there’s no risk-free path,” chair Jerome Powell conceded after the Federal Reserve lowered its benchmark interest rate last week.

As hard as higher prices would be to swallow for many households, rising unemployment would be worse. This difficult reality threatens to widen the gap between families already struggling to make ends meet, and wealthy Americans who benefit most from buoyant stocks.