Energy Shock May Impact Consumer Spending, George Says

• Rising energy prices (gasoline, diesel) add to existing consumer stress from pandemic and tariffs, creating heightened risk for consumer spending and growth.
• The Fed faces a difficult challenge in balancing its dual mandate, as inflation risk is increasing while the labor market shows signs of underlying weakness.
• The Fed's inflation target must remain credible, even as its tools are in conflict due to persistent inflation and a 'tentative' labor market.

Former Kansas City Fed President Esther George discusses the impact of rising energy prices on consumer spending and economic growth. She highlights the cumulative stress on consumers from past shocks and the new burden of higher gasoline and diesel prices, creating heightened risk. George also notes the Fed's difficult position in balancing its dual mandate amidst persistent inflation and a tentative labor market.