Latest economic data shows Fed 'not making any progress' on inflation: 'It's a real mess,' expert warns

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<p>Latest economic data shows Fed 'not making any progress' on inflation: 'It's a real mess,' expert warns</p><p></p><p>Euro Pacific Asset Management chief economist Peter Schiff shares his reaction to the latest PCE index and jobs report.</p><p>Fed not expected to 'loosen' rates until mid-2024: Mark Avallone Potomac Wealth Advisors founder and President Mark Avallone previews the August PCE report and discusses how he believes the Federal Reserve will handle rates over the coming months. Schiff predicted the August jobs number will be the "eighth consecutive time" the Labor Department readjusts its data. "This is stagflation," he said. "The economy is weakening, the labor market is weakening, but consumer prices are strengthening." Fed policymakers have indicated that they are closely watching the report for evidence the labor market is softening after more than a year of interest rate hikes. CLICK HERE TO READ MORE ON FOX BUSINESS The slowdown in hiring, coupled with the spike in unemployment and cooling wage growth, likely provides the U.S. central bank fodder to hit pause on its rate-hike campaign in September, and possibly November. Schiff, however, argued the "proper response" from the Fed would be to continue with rate hikes, but pointed out that "significant spending cuts" are also needed. In addition, Schiff believes the economy has "bottomed out" in headline CPI which is now rising again despite the Fed's aggressive rate hike campaign.   "The Fed's at 5.5%. They're no closer to getting 2% inflation than when they had rates at zero. Meanwhile, the budget deficits are higher now than they were when rates were at zero. So the government is spending more instead of less. So nothing has worked, and the markets are completely wrong on their benign outlook for future inflation." Euro Pacific Asset Management chief economist Peter Schiff reacts to the latest PCE index and August jobs report, warning the data shows the Fed is not making progress in its inflation battle. (FOX Business/Fox News Digital) Ultimately, Schiff says the Fed will likely announce another quarter or half point hike, but again emphasized the move will not "make a difference."  "They already went from zero to 5.5%, and it hasn't done anything. So what's an extra quarter point or a half point? It's nothing," he said.  "We actually need much higher interest rates. The problem is we can't afford them. So any interest rate high enough to fight inflation is too high for the markets. And in fact, not only does the Fed create a recession. But it creates a financial crisis, and that financial crisis will be considerably worse than the one we had in 2008," he concluded.  FOX Business' Megan Henney contributed to this report.  U.S. Stock Market Quotes</p>

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