The midterm elections have made one thing clear: Americans are struggling with the cost of living and need relief now. This issue is shifting focus to the Federal Reserve, where Chair Kevin Warsh faces pressure to either tackle inflation or lower interest rates to satisfy the White House. However, the real solutions lie not with the Fed but with Congress, which has two years to address the affordability crisis before the next election.
The economy is not suffering from an inflation problem but from an affordability problem. These are distinct issues because today's high prices stem from insufficient supply, not just rising costs. The Fed's interest-rate tool is too blunt to fix this, making congressional action essential.
The affordability crisis requires targeted policies that boost supply and make essential goods and services more accessible. Without such measures, the economic strain on Americans will persist, regardless of the Fed's actions.