Islam, an assistant professor of economics, offered insight into how increases in wage rates could impact other areas of the economy.
Assistant Professor of Economics Tonmoy Islam recently discussed some of the factors that could impact whether the country enters a recession as the Federal Reserve considers actions to counter inflation.
The Fed last week raised short-term interest rates for the first time since 2018, sparking speculation about whether the potential for a recession is increasing. Islam told reporter Lauren Ohnesorge that a lot of variables are at play, pointing in particular to fears of a “wage price spiral,” with employers increasing their payroll costs.
“As wages go up, prices go up again,” Islam said. “As costs go up, their workers need more wages.”
An increase in interest rates could help deter overspending, Islam said. “We want to dampen the demand slowly,” he said.
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