An empty shelf of baby formulas are not a sign of "economy is too hot". It is a sign of supply issue.
The highest rate of inflation since 1981 is a sign of "economy is too hot".
The Fed has two jobs: keep both unemployment and inflation low. Unemployment is near 40 year lows, inflation is near 40 year highs.
You know what is going to happen, and the Fed has said what is going to happen, if you understand Fedspeak. They're going to raise rates, they're going to keep raising rates, they're not going to stop just because inflation slows a little, and there's a good possibility it will cause a recession.
Changing interest rates does not fix supply chain problems. It actually makes them worse because it removes the financial headroom that companies involved in those supply chains have to invest in improvements.
For example, there is a shortage of computer chips. Say that you are Intel or Texas Instruments. You want to invest in producing more chips. Does increasing interest rates and probable recession make the magnitude of that investment go up or down?
The Fed is like a surgeon that has amputated the wrong leg. Not only is the patient missing a perfectly good leg, but the other leg still has gangrene.
Baby formula is a poor example; that was Abbott having regulatory capture and a de facto monopoly [1].
[1] https://mattstoller.substack.com/p/big-bottle-the-baby-formu...
+20% increase in home prices is not “growth”. Its sheer injustice
Can I ask you why you've chosen this particular example? It is not about I agree with you, or I'm going to contradict in a some way, it is completely unrelated question. A complete off-topic.
The cause of this round of inflation can be many things, we've been in low-interest environment for 10+ years with occasional QEs. It hasn't inflated the economy as much as we hoped for that 10+ years. It is lazy thinking to attribute back to QE for this round of inflation.
0: https://www.bloomberg.com/news/articles/2022-05-19/house-pas... (Picked at random from a search for "baby formula bill")
It seems like a very poor example to refer to when talking about the broad economy’s needs and completely unrelated to a tech bubble.
I would tend to agree that one "industry's" quality and policy related failings are not a sign of wider economic failure, although I think another commenter had it right with "covid hangover." There's a lingering supply/demand mismatch in seemingly all consumer markets that seems in large part due to problems that were started or brought to a head during covid.