Just 110,000 jobs were added in March, not nearly enough even to keep up with population growth. Meanwhile, the wages and benefits of non-supervisory workers -- about 80 percent of the American workforce -- continue to drop, in real terms. This is unusual for this stage of a so-called recovery.

What's going on? Blame higher interest rates. They're becoming a drag on the economy. The Fed continues to raise them in order to prevent an outbreak of inflation. But the Fed is fighting a ghost. Inflation is in no danger of getting out of control.

Alan Greenspan worries that the huge federal budget deficit will bring on inflation. That may be something to worry about over the long term. But right now, the deficit isn't spurring inflation because there's so much excess capacity in the economy.

Oil prices are another potential problem, but not yet. Most sellers are still holding the line on their own prices. They don't want to lose customers, and they know customers have more choices than ever before in this global high-tech marketplace.

So the Fed's war against inflation is a preemptive one. The Fed wants to tackle inflation before inflation becomes a problem to be tackled. That might be okay, except for the fact that this preemptive war is imposing a huge toll -- especially on the nation's poor.

When the Fed makes preemptive war against inflation, poorer Americans are almost always the first to be drafted. That's because when jobs slow, they're hit the hardest. They're at the end of the job line -- the last to be hired, the first to be fired. They have the lowest job skills and the least attachment to the labor force.

On the other hand, a tight labor market, like the one we had in the late 1990s, has the opposite effect. The poor are the biggest beneficiaries. Between 1996 and 2000, the earnings of Americans in the bottom fifth grew faster than anyone else's. That's because employers had so much work for them to do.

But now employers don't have much work for poorer Americans to do because of the Fed's preemptive war against inflation.

Poorer Americans are paying the price at the very time when the White House is cutting low-income housing, cutting Medicaid for the poor, cutting child care, and cutting other programs for poor families. The White House is doing this in order to reduce a budget deficit that Alan Greenspan worries may lead to inflation. That budget deficit, by the way, is due mainly to big tax cuts for the wealthy.

Message to the Fed: Get real. Inflation isn't real. Widening poverty is. Stop this preemptive war.

Robert B. Reich is co-founder of The American Prospect. A version of this column originally appeared on Marketplace.