Business

(NEW YORK) — When Katie Quinonez, the executive director of an abortion clinic in West Virginia, saw the Supreme Court decision that overturned the federal guarantee of the right to an abortion, the first word she uttered was an obscenity.

The nonprofit Women’s Health Center of West Virginia, located in Charleston, faced the immediate risk of prosecution under a state abortion ban from 1882, so Quinonez and a coworker made 60 calls to patients canceling procedures scheduled for the ensuing three weeks, said Quinonez.

“That was definitely one of the worst days of my entire life so far,” she said. “Some of the staff were so upset that they couldn’t stop crying.”

Not only did the Supreme Court decision stop the clinic from providing abortions, but it delivered a crushing blow to the nonprofit health center’s financial stability, Quinonez said. This is a financial reality many abortion clinics — which often provide key care in communities and already face tight finances — are now contending with as they decide how, or if, they can move forward.

Abortions accounted for 40% of the Women’s Health Center of West Virginia revenue, Quinonez said, adding that there would be no easy way to replace such a large a chunk of the clinic’s $1.6 million annual budget. (At least for now, the clinic can again provide abortions, since a lawsuit brought by the clinic days after the Dobbs decision has paused enforcement of the ban.)

“Being unable to provide abortion care absolutely puts us in a precarious financial position,” Quinonez said. “Our ability to keep our doors open very much depends on revenue from the services we provide, as well as grants and donations.”

The loss of a community clinic dramatically curtails reproductive health care access for women, especially low-income women, according to research. One in three low-income women depend on clinics — such as a health center, Planned Parenthood or a publicly funded clinic — to get contraception, according to a Kaiser Family Foundation study released in 2019. Another study, published in the Journal of Women’s Health in 2019, found that greater travel distance for an abortion is associated with higher out-of-pocket costs, delayed care and negative mental health effects.

Many abortion clinics now must choose between two costly options: stay open but stop providing abortions, or move to an abortion-friendly state, clinic officials and reproductive health organizations told ABC News.

Remaining open but stopping the service altogether denies many clinics a key source of revenue from insurers or patients paying for the procedure, clinic staff said. Meanwhile, the choice to close and move means losing revenue from patients while facing front-end moving costs such as buying or leasing a building, relocating employees and transporting equipment, among other expenses, the clinic staff added.

Within a month of the Dobbs decision, 43 clinics across 11 states in the Midwest and South had stopped providing abortions, either because they had closed or stayed open but no longer offered the procedure, according to a study released last month by the Guttmacher Institute, a nonprofit research organization that supports abortion rights.

Even before the onset of state-level abortion bans, clinics struggled to financially sustain themselves, Caitlin Myers, a professor of economics at Middlebury College who specializes in the financial dynamics behind abortion care, told ABC News.

The budgets at many clinics strain under the weight of compliance with onerous regulations, dependence on low-income patients who often lack insurance, and the absence of federal funding and in many cases Medicaid coverage for abortions, she said.

“A lot of abortion providers, from what we can see on the outside, are operating on fairly thin margins,” Myers said. “There are already a tremendous number of challenges facing the U.S. health-care industry, and for abortion providers, those challenges are generally even greater.”

Clinics also face significant legal costs navigating a maze of measures at the federal, state and local level, which became even more complicated after the court overturned Roe, said Erin Grant, the deputy director at the Abortion Care Network, a membership organization made up of more than 200 independent clinics nationwide.

“The legal and litigation costs are one of the No. 1 barriers,” Grant said. “That doesn’t just have to do with the abortion ban itself. This is about building regulations, Department of Health inspections and dealing with insurance companies.”

For clinics that have chosen to move since the Dobbs decision, a new set of costs has arisen.

Whole Woman’s Health, a health care company that manages nine clinics across five states, announced last month that it plans to close four Texas-based clinics after an abortion ban went into effect in the state. To continue to meet the needs of patients in Texas, the company hopes to open one or more locations in nearby abortion-friendly states, said Amy Hagstrom Miller, the founder and CEO of Whole Woman’s Health.

The typical annual budget for one of the for-profit clinics run by Whole Woman’s Health is $1.5 million, the company said.

The cost of closing clinics and reopening elsewhere is immense, Hagstrom Miller said. Due to the planned closures, Whole Woman’s Health has laid off roughly half its staff in Texas. Meanwhile, the company has sought to get out from under leases on two of its Texas facilities at the same time it has pursued a lease on a facility in New Mexico. On top of that, the company has looked for temporary storage for medical equipment and planned the relocation of remaining staff.

“All of that requires capital resources that we don’t have now because we’re not able to see patients, which of course is the major source of income in any medical practice, not just abortion clinics,” Hagstrom Miller said. “You don’t have income if you don’t have patients.”

“It is a big financial burden,” she added.

Melissa Fowler, the chief program officer at the National Abortion Federation, an umbrella organization that counts roughly 500 member clinics in the U.S. and abroad, put it bluntly: “It’s incredibly difficult to open a clinic, especially in a new state.”

It is unclear how many clinics have sought to move since the Dobbs decision, and the number may be relatively small. The financial impact of state-level abortion bans may also be less significant for clinics at which the procedure makes up a smaller proportion of its services.

For instance, Planned Parenthood told ABC News that none of its affiliates had closed or moved since the Dobbs decision. Further, abortion makes up about 3% of services delivered at its affiliates, according to the organization’s 2020 annual report, the most recent available.

Needing additional revenue, many abortion clinics have received a surge in donations since the Supreme Court overturned Roe. As of early August, a GoFundMe launched by Whole Woman’s Health had raised more than $285,000, though the figure falls short of its $750,000 goal.

Quinonez, the executive director of Women’s Health Center of West Virginia, said the organization has raised $225,000 from donations since the Dobbs decision. That makes up more than a third of the nearly $600,000 the organization raised from donations over the entirety of its most recent fiscal year, Quinonez said.

Still, in light of a strict abortion ban passed by the West Virginia Senate during a special session late last month, the organization has cut its anticipated revenue for the coming fiscal year, ending in June 2023, to just a little over half of what the organization brought in over the previous fiscal year.

Quinonez declined to comment on whether the clinic is considering moving to an abortion-friendly state. When asked whether the clinic could remain open if West Virginia imposed a full ban on abortion, Quinonez said, “It remains to be seen.”

“Right now, we’ve received a lot of support from our community,” she added. “We certainly aren’t going anywhere in the near future and we’re working to add more services regardless of what happens to our ability to provide abortion care.”

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(NEW YORK) — Ever wondered what cereal would taste like if it was spicy?

Thanks to Cinnamon Toast Crunch you don’t have to wonder any more.

The classic cereal brand is giving their sweet cinnamon taste a spicy twist and a new name: CinnaFuego Toast Crunch.

According to the brand, the new cereal looks the same as the original with “the added hot sensation of a spicy pepper.” You heard that right.

“CTC is always looking to give our fans the most absurd and exciting experiences,” Mindy Murray, General Mills’ senior marketing communications manager, said in a press release.

CinnaFuego Toast Crunch is sold in a new resealable pouch so consumers can enjoy the new spicy cereal as a snack.

“We can’t wait for CTC lovers to try CinnaFuego, and if they dare, eat it with some milk for breakfast,” Murray added.

Shop the new spicy cereal for $5.48 while supplies last.

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(NEW YORK) — What’s better than The Always Pan? A Mini Always Pan!

After much demand from consumers, Our Place has introduced a smaller version of their Always Pan and Perfect Pot.

“We got hundreds of requests for a smaller Always Pan and Perfect Pot for studio apartments, dorm rooms, travel, and also just for something to use when you’re cooking for one,” Shiza Shahid, co-founder of Our Place, said in a press release.

The minis have the same features as the full-size versions like nontoxic and nonstick ceramic coating.

“The minis are everything you’ve come to love about Our Place cookware, but now in a smaller size designed for versatility and convenience,” Shahid added.

You can shop the mini versions as a set or on their own.

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(NEW YORK) — The national average price for a gallon of gas fell below $4 on Thursday for the first time since early March, according to AAA data. The milestone was reached after more than 55 consecutive days of declining prices at the pump.

The national average price for a gallon of gas, which stands at $3.99, has fallen more than 20% since it reached a peak of $5.01 in mid-June, according to data AAA provided to ABC News.

In California, the state with the highest average price, a gallon of gas costs $5.38, though that price has fallen more than 11% over the past month. In Texas, the state with the lowest average gas price, a gallon costs $3.49, AAA data showed.

Despite the recent price dip, the cost of gas remains elevated, standing roughly 25% above a $3.18 national average one year ago, according to AAA data.

Sky-high prices in the summer stemmed from a travel boom that brought more people to the pump, experts told ABC News in late May.

That spike in demand coincided with a shortage of crude oil supply amid the Russian invasion of Ukraine, which prompted a widespread industry exit from Russia that pushed millions of barrels of oil off the market, the experts said.

The effort to reduce gas prices has made up a key policy priority of President Joe Biden. During a visit to Saudi Arabia last month, Biden urged the major oil producer to increase output as a means of relieving the global supply shortage.

The Organization of the Petroleum Exporting Countries, or OPEC, a Saudi-led group of oil-producing countries, announced along with allies last week that it would modestly increase output next month. But the move fell short of the major increase that the Biden administration had sought.

In March, the U.S. and its allies announced the collective release of 60 million barrels of oil from their strategic reserves over the following months, which sought to alleviate some of the supply shortage and blunt price increases.

The fall in gas prices marks good news for federal policymakers, who have sought to dial back prices across the economy while averting a recession.

The milestone for falling gas prices coincides with a slowdown in price increases for goods overall.

The consumer price index, or CPI, rose 8.5% over the past year as of July, a marked slowdown from 9.1% in June, according to the Bureau of Labor Statistics.

A slowdown in the inflation rate emerged in part because of the decline in the national average price of gasoline, which makes up a key portion of the consumer price index.

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(NEW YORK) — Price hikes have battered the U.S. economy for months, straining household budgets and prompting an aggressive series of rate hikes from the Federal Reserve.

Inflation has sent prices sky high for just about everything: groceries, gas and rent, among other essentials. But some goods are getting hit harder by cost increases than others, and the cost increases are impacting some groups of people more than others.

In fact, Black and Latino people have been disproportionately affected by the set of goods hit hardest by inflation, in light of which goods those groups consume compared with their counterparts, according to a study released in June by the New York Federal Reserve.

Here’s a breakdown of which goods are getting hammered by inflation, and which purchases are escaping the worst of it:

Which products are getting hit hardest by inflation?

Those who have gone grocery shopping lately know that the prices for store-bought foods have jumped in recent months. The latest government data shows that food prices have outpaced the overall inflation rate, rising nearly 11% year-over-year in July. Costs have risen even faster for food meant to be consumed at home, which has seen a roughly 13% hike.

Bakers, beware. As of July, the price of flour and prepared flour mixes — when purchased in a U.S. city — has risen 22% over the last year, according to data from the Bureau of Labor Statistics. The cost of breakfast cereal has also gone up dramatically, rising 16.4% year-over-year. But those price hikes are preferable to what’s transpired with a common breakfast alternative, eggs, which have undergone a 38% price increase over the past year.

To get to the grocery store, many Americans hop in the car. If they bought a new car last month, it cost them over 10% more than it would have a year ago, outpacing overall inflation, government data showed.

Meanwhile, it takes one cruise past a roadside sign to know that gas prices have jumped significantly over the past year. While prices at the pump have fallen for nearly two months, they remain highly elevated. Gas prices have risen 26% over the past year, according to AAA data.

Which products are avoiding the worst of inflation?

As mentioned, overall food prices have increased sharply. But one silver lining has emerged in that category: food eaten away from home. As of July, when dining out, Americans encountered prices 7.6% higher than a year ago — a slower pace of inflation than the 8.5% year-over-year rate for goods as a whole.

Health care, meanwhile, has managed to escape nearly all of the steep price hikes. The medical care commodities index, a measure of the price of goods and services in health care, rose 3.7% year-over-year in July — that’s well below overall inflation and relatively close to the Federal Reserve’s target inflation rate of 2%.

Insurers and providers often negotiate health care prices well in advance, leaving them less sensitive to short-term pricing pressures.

Taken together, the overall price of goods has shown signs of moderating. In July, the consumer price index rose 8.5% compared with the same month a year prior. While still high, the year-over-year inflation rate eased from its breakneck pace in June, according to data from the Bureau of Labor Statistics.

On a monthly basis, the consumer price index rose 1.3% in July, remaining flat from the rise seen in June, according to the bureau.

The data offers hope to policymakers and consumers that inflation has peaked. But, as with rising inflation, a cooling off of price hikes will likely play out in uneven ways across the host of products that Americans buy each day.

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(NEW YORK) — As the Federal Aviation Administration (FAA) continues to deal with staffing issues on a nearly daily basis, the agency says it has received 57,956 applications for this year’s 1,500 open air traffic controller positions.

The median annual salary for air traffic controllers (ATCs) was $138,556 in 2021. All applicants must be under 30 years of age.

In a speech last week in Washington, D.C., the head of the ATC union says the FAA is not hiring fast enough.

“In 2011, there were over 11,750 Certified Professional Controllers and additional trainees yielding over 15,000 total controllers on board at the FAA,” Rich Santa said at an industry conference last week. “By the beginning of 2022, there were more than 1,000 fewer fully certified controllers, and 1,500 fewer total controllers on board, a number that has declined for at least the past 11 years.”

However, the FAA said that its hiring goals are in line with targets.

“The FAA annually hires new air traffic controllers, is on target to meet our hiring goal this year, and is reducing the backlog of training caused by COVID-19,” the FAA said in a statement to ABC News.

Air traffic controllers manage plane traffic at airports across the country, and they are vital to the safety of plane passengers and the ability of airlines to maintain a timely schedule.

“Unfortunately, FAA staffing is not keeping up with attrition,” Santa said. “With the introduction of new technology and new entrants into the [National Airspace System], we should have 1,000 more controllers, not 1,000 fewer than we had a decade ago.”

The applications come after the FAA’s annual hiring push, which is now closed for the year.

During a summer plagued by delays and cancellations, many airlines pointed to air traffic control staffing levels as a reason for travel meltdowns. Airlines for America (A4A), an industry group representing major U.S. airlines, sent a letter to Congress in early June pointing the finger at the staffing of air traffic controllers.

“Specifically, air carriers are taking great care to reduce their summer flight schedules while also accelerating efforts to hire and train new employees to meet the strong resurgence in travel demand,” the letter said. “The FAA must also work to ensure that the air traffic control system is capable of meeting demand.”

However, the FAA pushed back on that narrative, saying that data points to delays and cancellations for other reasons.

“Airline data show that the vast majority of delays are not due to air traffic controller staffing,” the FAA told ABC News. “Where demand has increased, the FAA is adding additional controllers.”

Transportation Secretary Pete Buttigieg has said that it is a priority for his agency to ensure that there is enough staffing to meet demand.

“We’re also working to make sure that FAA personnel, the air traffic control side, is ready to support these flights,” Buttigieg told ABC News in early July. “So when we have an area where there’s a staffing issue, it’s been happening in Florida where you’ve had huge demand and a lot of weather and other issues like military and even commercial space launches affecting the airspace.”

Selected candidates from the 2022 hiring window will join the 14,000 air traffic controllers across the country. Successful candidates will then attend a training academy in Oklahoma City before being deployed to an air traffic control tower anywhere in the country.

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(NEW YORK) — Labor Day may be summer’s last “hoorah” — it’s also a great time to score some blowout deals.

Historically, Labor Day is known for deals on clearance summer apparel and outdoor furniture. It is also a time to think about bigger investment purchases you may have been waiting to score a deal on like mattresses, furniture or small appliances.

Whether you are extremely ahead of holiday shopping or just striking while the iron is hot, ABC News’ Good Morning America rounded up some Labor Day sales to watch.

Scroll on to mark your calendars and check them out:

Bed Bath & Beyond

Bed Bath & Beyond will be offering an extra 20% off Dyson products through the holiday weekend.

Bear Mattresses

Use code LD30 for 30% off sitewide plus receive free accessories with the purchase of a mattress.

Charles Tyrwhitt

Shop for four shirts or polos for $179 plus 25% off everything else at Charles Tyrwhitt from Aug. 31 to Sept, 5. Use code CELEBRATE.

Cupshe

From Aug. 19-26, Cupshe is offering up to 70% off and an extra 12% off on free shipping for new subscribers.

From Aug. 26-29, Cupshe is offering up to 75% off and an extra 12% off on free shipping for new subscribers.

From Aug. 29-Sept. 5, Cupshe is offering up to 80% off, an extra 10% off orders $59 or more, an extra 15% off orders $79 or more, and 10% off the next order.

Florence by mills

Try out Millie Bobbie Brown’s line of skin care, makeup and hair products with 25% off from Sept. 2-5.

Kohl’s

Take 30% off Levi’s clothing for men and women through Sept. 5 at Kohl’s.

Lindye Galloway

From Aug. 30 to Sept. 13, shop 20% off sitewide on orders of $100 or more with the code Fall20.

Rugs.com

From Aug. 24-30, shop up to 80% off Rugs.com during its Labor Day preview sale. Continue shopping Labor Day offers from Aug. 31 through Sept. 6.

Sips By

Sips By is running a Labor Day sale from Sept. 2-5, offering $5 off a first box with code LABOR22 and 15% off your entire order with code LABOR15.

Sterns & Foster

Sterns & Foster is offering up to $600 in savings on mattresses from Aug. 16-Sept. 13.

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(WASHINGTON) — Inflation in July held steady even as the costs of housing and food rose, according to findings by the Bureau of Labor Statistics released Wednesday.

The Bureau of Labor Statistics released the Consumer Price Index (CPI) which serves as an illustration of how inflation changes each month. Despite gasoline prices falling by 7.7%, this deflation was offset by inflation in food and shelter, resulting in no change in the overall CPI of urban consumers through July.

This comes as a welcome sign to consumers who have experienced an inflation gain every month since October 2020. But the report made clear that the main place consumers will feel a big difference is at the gas pump. Rent of primary residences rose by 0.7% since June and food increased by over a percent and is now up 10.9% since this time last year.

The cost of eggs have risen by 38% year over year – the most among all goods in the food category. Margarine, flour, and butter have all followed close behind. These increases have been felt throughout grocery stores and in small businesses like Aya Pastry in Chicago, Illinois.

“Every single ingredient that you could literally think of has changed in price,” Chef and small business owner Aya Fukai told ABC News.

Fukai provided ABC News with the product costs for her pastry business, Aya Pastry, from the past year. Fukai’s butter distributor increased costs by 79% in the past year. Non-food items have also increased substantially. Gloves used to maintain a sanitary kitchen have increased by 128%. Aya Pastry also uses gas for all their deliveries and have felt the skyrocketing energy prices impacting their costs.

Businesses dealing with inflation must choose between a lesser of several evils: reduce margins, increase prices, or cut costs. Many businesses in tech have made headlines by choosing the last option through layoffs. Aya Pastry opted to slim their margins and pass some of the costs on to the consumer with a 22% increase in their biscuits and other goods.

“At first, there were definitely [customers] wondering why everything was so much more expensive,” Fukai said. “It’s only because everything to us is more expensive.”

Despite the continued increases in food and shelter, many experts like senior economist and deputy director of research at W.E. Upjohn Institute for Employment Research Brad Hershbein are “cautiously optimistic.”

“This report was in line—if not slightly better—than expectations,” Hershbein wrote in an email to ABC News.

Assistant vice president and economist at the St. Louis Federal Reserve Fernando Martin reinforced the hope that the reduction in energy costs will be in other areas like food prices in coming CPI reports.

“I think you should expect a delay in seeing the full impact,” Martin told ABC News in reference to the decrease in energy costs. Martin remains concerned about the cost of rent and other services in the coming months.

As The Federal Reserve continues to fight inflation by raising interest rates, the markets, businesses, and consumers can take some comfort from the latest figures.

“There’s a lot that could still go wrong,” Hershbein said. “But it hasn’t gone wrong yet, and that’s better than a lot of people had feared.”

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(NEW YORK) — Inflation data released on Wednesday revealed that price increases slowed in July, easing the strain on household budgets as the Federal Reserve fights inflation with a series of borrowing cost hikes.

While still elevated, price hikes waned from the near-historic pace reached in June, giving hope to policymakers and consumers that inflation has peaked.

The consumer price index, or CPI, rose 8.5% year-over-year in July, a marked slowdown from 9.1% in June, according to the Bureau of Labor Statistics.

On a monthly basis, the consumer price index rose 1.3% in July, remaining unchanged from the rise seen in June, according to the bureau. While food and shelter costs increased over the last month, the gasoline index price fell 7.7% in July to offset those increases.

The inflation data arrives as other indicators have sent mixed signals about the economy in recent weeks.

A slowdown in the inflation rate emerged in part because the national average price of gasoline, which makes up a key portion of the consumer price index, has declined for more than 50 consecutive days, according to AAA.

Meanwhile, a government report on Friday revealed that hiring in July more than doubled economists’ expectations, defying Fed efforts to slow the economy and rebuking fears of a recession.

The significant uptick in hiring last month — an added 528,000 jobs and unemployment rate drop to 3.5% — came alongside elevated wage increases that may put upward pressure on consumer prices.

The heightened wage increases match a pattern that stretches back months. A closely observed measure of U.S. wages, called unit-labor costs, rose 9.5% over the second quarter of this year, the fastest rise of that metric since the first quarter of 1982, according to data released by the federal government on Tuesday.

When facing high inflation, policymakers fear what’s referred to as a price-wage spiral, in which a rise in prices prompts workers to demand raises that help them afford goods, which in turn pushes up prices, leading to a self-perpetuating cycle of runaway inflation.

The Fed has sought to avoid a price-wage spiral with a series of borrowing cost increases, Maurice Obstfeld, a professor of economics at the University of California, Berkeley, told ABC News. At meetings in each of the past two months, the central bank has increased its benchmark interest rate 0.75% — dramatic hikes last matched in 1994.

“The data is telling us not that rate hikes have been ineffective but that the Fed will have to go quite a bit further,” Obstfeld said.

However, other data suggests that inflation fears have waned significantly.

A survey released by the New York Federal Reserve on Monday showed that consumers expect inflation to slow down.

Individuals who responded to the July survey said they expect inflation to run at a 6.2% pace over the next year and a 3.2% rate for the next three years, both of which marked significant declines from the inflation expectations expressed by consumers in the month prior.

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(NEW YORK) — Inflation continues to be the top economic concern for most Americans.

In July, the consumer price index rose 8.5% compared with the same month a year prior. While still high, the inflation rate eased from the near-historic pace in June.

Eighty-two percent of Americans are worried about the negative effect of inflation on the purchasing power of their income over the next six months, according to a recent survey from Allianz Life. Further, 71% said their income is not keeping up with rising costs.

Here’s an explainer about why inflation is so high and what happened last time prices rose at such a fast pace:

Why is inflation so high?

Like so many economic problems, inflation comes down to an imbalance between supply and demand.

Hundreds of millions across the globe facing lockdowns replaced restaurant expenditures with couches and exercise bikes. The surge in demand followed a pandemic-induced flood of economic stimulus. Moreover, that stimulus brought about a speedy economic recovery from the March 2020 downturn, triggering a hiring blitz.

But the surge in demand for goods and labor far outpaced supply, as COVID-related bottlenecks slowed delivery times and infection fears kept workers on the sidelines.

In turn, prices and wages skyrocketed, prompting sky-high inflation. Such price increases have bedeviled countries across the globe, some of which have suffered much worse inflation than the U.S. In Argentina, inflation stands at 64%; in Turkey, it’s nearly 80%.

What is the government doing to bring down prices?

The Federal Reserve has embarked on an aggressive series of rate hikes which raise the cost of borrowing. In theory, the rate hikes should cut demand, slow down the economy and lower inflation.

At meetings in each of the past two months, the central bank has increased its benchmark interest rate 0.75% — dramatic hikes last matched in 1994. After a data release last week showed that hiring in July vastly exceeded expectations, the Federal Reserve is widely expected to institute another rate hike at its next meeting in September.

Meanwhile, Congress has taken action that could reduce inflation over the long term.

On Sunday, the Senate passed the Inflation Reduction Act of 2022, which raises $739 billion in new revenue and puts at least $300 billion toward deficit reduction.

If it becomes law, the bill would very slightly raise inflation over the next two years but would reduce inflation by the late 2020s, according to a study by the Wharton School of Business at the University of Pennsylvania that looked at an early version of the bill.

When was the last time inflation reached this level and how did it get resolved?

The last time inflation was this high was 1981. Back then, high prices combined with a weak economy to bring financial misery for many Americans.

The dynamic put central bankers in a difficult position. If they raised interest rates and slowed down the economy, it might push the economy into a recession, causing more pain. But if they cut rates, then it would stimulate the economy and potentially drive inflation even higher.

Paul Volcker, who took over as Fed chair in 1979, vowed to raise rates until inflation got under control — no matter how much it slowed down the economy. The short-term economic pain far outweighed the long-term damage of inflation, Volcker argued.

In 1981, the Fed’s benchmark interest rate rose as high as 20%. By comparison, after multiple rate hikes this year to tackle inflation, the interest rate still stands at a range of 2.25% to 2.50%.

Back in 1981, those high interest rates helped push the U.S. into a recession and drove the unemployment rate above 10%. By comparison, the unemployment rate today matches a 50-year low reached right before the outset of the pandemic in 2020.

But Volcker’s aggressive approach did bring down inflation. When Volcker left the position in August 1987, inflation had fallen to 3.4% from its peak of 9.8% in 1981.

Powell, the current chair of the Fed, has vowed to bring down inflation. He said last month the central bank expects additional rate increases will prove necessary to dial back inflation to its target rate of 2%.

But, as in the early 1980s, an economic slowdown induced by the Fed could bring short-term pain before smoothing out inflation. Or, if the central bank achieves what economists call a “soft landing,” then the central bank could lower inflation while avoiding a recession.

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