Tuesday, October 26News That Matters

Tag: Inflation (Economics)

Persistent Inflation Threatens Biden’s Agenda

Persistent Inflation Threatens Biden’s Agenda

Business
WASHINGTON — At least once a week, a team of President Biden’s top advisers meet on Zoom to address the nation’s supply chain crisis. They discuss ways to relieve backlogs at America’s ports, ramp up semiconductor production for struggling automakers and swell the ranks of America’s truck drivers.The conversations are aimed at one goal: taming accelerating price increases that are hurting the economic recovery, unsettling American consumers and denting Mr. Biden’s popularity.An inflation surge is presenting a fresh challenge for Mr. Biden, who for months insisted that rising prices were a temporary hangover from the pandemic recession and would quickly recede. Instead, the president and his aides are now bracing for high inflation to persist into next year, with Americans continuing to see...
Biden’s Plans Raise Questions About What U.S. Can Afford Not to Do

Biden’s Plans Raise Questions About What U.S. Can Afford Not to Do

Business
WASHINGTON — As lawmakers debate how much to spend on President Biden’s sprawling domestic agenda, they are really arguing about a seemingly simple issue: affordability.Can a country already running huge deficits afford the scope of spending that the president envisions? Or, conversely, can it afford to wait to address large social, environmental and economic problems that will accrue costs for years to come?It is a stealth battle over the fiscal future at a time when few lawmakers in either party have prioritized addressing debt and deficits. Each side believes its approach would put the nation’s finances on a more sustainable path by generating the strongest, most durable economic growth possible.The debate has shaped a discussion among lawmakers about what to prioritize as they scale ba...
Rising Rents Stoke Inflation Data, a Concern for Washington

Rising Rents Stoke Inflation Data, a Concern for Washington

Business
The recovery in the New York area as a whole has been uneven as some families have moved to the city, bidding up prices, while others are struggling to pay, said Jay Martin, executive director of the Community Housing Improvement Program, which represents landlords of mostly rent-stabilized housing.“You have bidding wars for one unit, and then a renter who can’t pay,” he said. “A tale of two cities is happening within the same building.”Drew Hamrick, the senior vice president of the Colorado Apartment Association, a landlord group, said the rise in rents is not driven by landlords but by market factors.“Landlords don’t really set the price, consumers set the price,” he said. “It’s musical chairs.”Even if there is a pullback in rents next year, today’s suddenly higher housing costs could ma...
September Consumer Price Index: Inflation Rises

September Consumer Price Index: Inflation Rises

Business
Consumer prices jumped more than expected last month, with rent, food and furniture costs surging as a limited supply of housing and a shortage of goods stemming from supply chain troubles combined to fuel rapid inflation.The Consumer Price Index climbed 5.4 percent in September from a year earlier, faster than its 5.3 percent increase through August and above economists’ forecasts. Monthly price gains also exceeded predictions, with the index rising 0.4 percent from August to September.The figures raise the stakes for both the Federal Reserve and the White House, which are facing a longer period of rapid inflation than they had expected and may soon come under pressure to act to ensure the price gains don’t become a permanent fixture.On Wednesday, President Biden said his administration w...
A Stock Market Malaise With the Shadow of ’70s-Style Stagflation

A Stock Market Malaise With the Shadow of ’70s-Style Stagflation

Business
Vaccine mandates seem to be working, younger children may be approved for shots by Halloween, and the coronavirus appears to be in retreat. But those hopeful signs herald a messy new phase for the country’s economic recovery — and that’s putting Wall Street more on edge than it’s been in months.The Federal Reserve has signaled it could begin dialing back programs that have helped prop up the markets for the past 18 months as soon as next month, while the breakneck pace of economic growth seems to be slowing, a fact underscored by a disappointing September jobs report.And price increases that grew out of pandemic-related shutdowns and supply chain disruptions have been stubbornly persistent. A key measure of inflation released Wednesday, the Consumer Price Index, climbed 5.4 percent in Sept...
World’s Growth Cools and the Rich-Poor Divide Widens

World’s Growth Cools and the Rich-Poor Divide Widens

Business
As the world economy struggles to find its footing, the resurgence of the coronavirus and supply chain chokeholds threaten to hold back the global recovery’s momentum, a closely watched report warned on Tuesday.The overall growth rate will remain near 6 percent this year, a historically high level after a recession, but the expansion reflects a vast divergence in the fortunes of rich and poor countries, the International Monetary Fund said in its latest World Economic Outlook report.Worldwide poverty, hunger and unmanageable debt are all on the upswing. Employment has fallen, especially for women, reversing many of the gains they made in recent years.Uneven access to vaccines and health care is at the heart of the economic disparities. While booster shots are becoming available in some wea...
Inflation Climbs at Fastest Pace in 30 Years as Supply Chain Snarls Linger

Inflation Climbs at Fastest Pace in 30 Years as Supply Chain Snarls Linger

Business
The White House argues that stimulus from Mr. Biden’s infrastructure and social spending legislation would trickle out over time and could improve economic capacity, relieving supply chain pressures over the longer run. But the administration and Fed alike are watching closely to make sure that consumers do not come to expect ever-higher prices amid today’s burst in inflation.“The real question is, when your boss says, ‘Hey, I’m giving you a 4 percent raise this year,’ are you happy or upset?” Mr. Levy, the Flexport economist, said. “Once that stuff gets built in, it can be very painful to change.”Encouragingly, consumer and financial market expectations of where inflation will settle over the longer term — typically five years — seem to have leveled off after climbing slightly earlier in ...
Used Car Prices Catch Wall Street’s Eye as a Predictor of Inflation

Used Car Prices Catch Wall Street’s Eye as a Predictor of Inflation

Business
The hottest ride on Wall Street right now is the humble used car.The cost of clunkers and dealership trade-ins has suddenly become market-moving information, with analysts, economists and traders fixating on an obscure indicator called the Manheim Used Vehicle Value Index.“I’ve never spent so much time looking at it,” said Robert Rosener, a senior U.S. economist at Morgan Stanley. “I don’t think I’ve ever spent so much time talking about used car prices in my life, either.”The Manheim index provides a monthly update on the prices of used cars sold in wholesale auctions. And with the used car market booming partly because of a chip shortage for new vehicles, the index offers crucial information for investors trying to answer an important question: What’s happening with inflation?Over the la...
Federal Reserve Signals It May Soon Slow Bond Purchases

Federal Reserve Signals It May Soon Slow Bond Purchases

Business
Federal Reserve officials indicated on Wednesday that they expect to soon slow the asset purchases they have been using to support the economy and predicted they may raise interest rates next year, sending a clear signal that policymakers are preparing to pivot away from full-blast monetary help as the business environment snaps back from the pandemic shock.“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the policy-setting Federal Open Market Committee said in its September statement. The new phrasing eliminated wording that had promised to assess progress over “coming meetings,” suggesting that a formal announcement of the slowdown could come as early as the central bank’s next gathering in November....
August 2021 CPI Report Shows Cooling Inflation

August 2021 CPI Report Shows Cooling Inflation

Business
A recent run-up in consumer prices cooled slightly in August, signaling that although inflation is higher than normal, the White House and Federal Reserve may be beginning to see the slowdown in price gains they have been hoping for.Policymakers have consistently argued that a surprisingly strong burst of inflation this year has been tied to pandemic-related quirks and should prove temporary, and most economists agree that prices will climb more slowly as businesses adjust and supply chains return to normal. The major question hanging over the economy’s future has been how much and how quickly the jump will fade.Data released by the Labor Department on Tuesday suggested that a surge in Delta-variant coronavirus cases was weighing on airfares and hotel rates, but it also showed that price i...