The Federal Reserve raised interest rates Wednesday for the first time since 2023.
There will be much discussion about what this means for the economy. There should be.
But there is another question, less technical and perhaps more important as we approach the midterms.
What does it mean to the people living in the economy?
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The Fed sees an economy strong enough to withstand higher rates. Growth is solid. Consumers are still spending. Businesses are investing. The labor market is holding up.
These are good things.
And yet there is something strange about the word economists keep using to describe the American consumer.
Resilient.
Americans have certainly been that.
They have absorbed years of higher prices. They have adjusted household budgets. They have postponed purchases. They have watched mortgage rates make houses they once could afford suddenly unaffordable. They have put more on credit cards and paid more interest for the privilege.
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And they have kept going.
But perhaps were asking too much of the word “resilient.”
A family can be resilient because it is thriving.
It can also be resilient because it has no choice.
A consumer can keep spending while putting more on a credit card.
A small business can keep its doors open while canceling the expansion it hoped to finance.
The spreadsheet calls that resilience.
The voter may call it exhaustion.
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There comes a point when people dont want to hear that theyre weathering the storm remarkably well.
They want the storm to end.
That is the part of Wednesdays decision Washington should be thinking about.
The Federal Reserve raised rates because inflation remains too high. Higher interest rates are meant to slow demand. Borrowing becomes more expensive. People spend less. Businesses invest less. The economy cools and, eventually, inflation should cool with it.
This is sound economic theory.
It is also someones life.
A small-business owner who was thinking about expanding now looks again at the cost of the loan.
A young couple thinking about buying their first home runs the mortgage calculation one more time.
A family that hasnt paid off its credit card watches another months interest accumulate.
None of them thinks: Monetary policy is working.
They think:
This is getting harder.
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And there is another complication.
Some of todays inflation pressure isnt simply a story of Americans buying too much. Energy prices have surged amid geopoli
