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Money, Banking and the Economy
rfenst Online
#1 Posted:
Joined: 06-23-2007
Posts: 35,007
Carry on...
rfenst Online
#2 Posted:
Joined: 06-23-2007
Posts: 35,007
Federal Reserve speaks, and inflation panic dies

By Paul Krugman The New York Times

Remember when everyone was panicking about inflation, warning ominously about 1970s-type stagflation? OK, many people are still saying such things, some because that’s what they always say, some because that’s what they say when there’s a Democratic president, some because they’re extrapolating from the big price increases that took place in the first five months of this year.

But for those paying closer attention to the flow of new information, inflation panic is, you know, so last week.

Seriously, both recent data and recent statements from the Federal Reserve have, well, deflated the case for a sustained outbreak of inflation. For that case has always depended on asserting that the Fed is either intellectually or morally deficient (or both). That is, to panic over inflation, you had to believe either that the Fed’s model of how inflation works is all wrong or that the Fed would lack the political courage to cool off the economy if it were to become dangerously overheated.

Both beliefs have now lost most of whatever credibility they may have had.

Let’s start with the theory of inflation.

Since the 1970s, and especially since a seminal 1975 paper by Robert Gordon, many economists have tried to distinguish between transitory fluctuations in the inflation rate driven by temporary factors and an underlying “core” inflation rate that is much more stable — but also hard to bring down if it gets uncomfortably high. The idea is that policy should largely ignore transitory inflation, which is easy come, easy go, and only worry if core inflation looks as if it’s getting too high (or too low).

Since 2004, the Fed has routinely published an estimate of core inflation that it derives by excluding changes in food and energy prices, which are notoriously volatile, and has used that measure to fend off demands that it tighten monetary policy in the face of inflation it considers temporary — notably in 2010-11, when prices of oil and other commodities were rising and Republicans were accusing the Fed of risking “currency debasement.”

The Fed was, of course, right: Inflation subsided. And the distinction between transitory and underlying inflation — a distinction that, judging from my inbox, generates an extraordinary amount of hatred from some Wall Street types — has, in fact, been a huge practical success, helping the Fed to keep calm and carry on in the face of both inflation and deflation scares.

The Fed has been arguing that recent price rises are similarly transitory. True, they’re not coming from food and energy so much as from pandemic-related disruptions that caused surging prices of used cars, lumber and other nontraditional sources of inflation. But the Fed’s view has been that this episode, like the inflation blip of 2010-11, will soon be over.

And it’s now looking as if the Fed was right. Lumber prices have plunged in recent weeks. Prices of industrial metals such as copper are coming down. Prices of used cars are still very high, but their surge has stalled and they may have peaked. Core inflation wins again.

What about the alternative inflation story? It goes like this: The Biden administration’s American Rescue Plan has pumped a huge amount of purchasing power into the economy, while affluent households, who built up large savings during the pandemic, are now ready to go on a spending spree. As a result, critics warn, there will be a classic case of too much money chasing too few goods, leading to a big rise not just in volatile prices but in underlying inflation.

To buy into this story, however, you have to claim not just that the coming boom will be truly huge but also that the Fed, which is fully capable of reining in a runaway boom, will stand idly by while inflation gets out of hand.

Last week, however, statements from the Fed’s open-market committee made such claims less plausible. Fed watchers considered the new releases hawkish, signaling increased willingness to step on the brakes if the economy really is exceeding its speed limit. By suggesting that it will act if necessary, the Fed has largely undercut whatever case there was for worrying about a return to the 1970s.

The vehemence of the inflation rhetoric has been wildly disproportionate to the actual risks — and those risks now seem even smaller than they did a few weeks ago.

Krugman is a columnist for The New York Times.
RayR Offline
#3 Posted:
Joined: 07-20-2020
Posts: 3,591
Holy Chit! Paul Krugman!
Has any economist been more discredited? And they still give me a perch at the New York Times to squawk.🦜

This article needs updating...
Meet the World’s Worst Economist
https://investmentu.com/paul-krugman-meet-worlds-worst-economist/

Paul Krugman Is Selling Snake Oil
https://www.forbes.com/sites/johngoodman/2020/03/02/paul-krugman-is-selling-snake-oil/

And my personal favorite, the infamous Contra Krugman podcasts
https://contrakrugman.com/
bgz Offline
#4 Posted:
Joined: 07-29-2014
Posts: 10,988
Buy high sell low.
RayR Offline
#5 Posted:
Joined: 07-20-2020
Posts: 3,591
bgz wrote:
Buy high sell low.


Confused
Crypto took a dump again?
bgz Offline
#6 Posted:
Joined: 07-29-2014
Posts: 10,988
It did actually lol
MACS Offline
#7 Posted:
Joined: 02-26-2004
Posts: 72,698
Wapo and NYT are not worth using as toilet paper. I wouldn't wipe my ass with either of those publications.
RayR Offline
#8 Posted:
Joined: 07-20-2020
Posts: 3,591
bgz wrote:
It did actually lol


It's all your fault, you've been saying BUY! BUY!
Irrational exuberance drives the speculative boom and bust.

It's just like that crackpot Krugman, he never saw an inflated bubble that he didn't say, "Inflate it More!"
bgz Offline
#9 Posted:
Joined: 07-29-2014
Posts: 10,988
I've said once... I'll say it again.

I'm not a financial adviser, I'm just some retard with a buy button...

I mean... if everyone would have listenned to me it wouldn't have crashed right?
MACS Offline
#10 Posted:
Joined: 02-26-2004
Posts: 72,698
bgz wrote:
I've said once... I'll say it again.

I'm not a financial adviser, I'm just some retard with a buy button...

I mean... if everyone would have listenned to me it wouldn't have crashed right?


I'm just gonna highlight that part...
Brewha Offline
#11 Posted:
Joined: 01-25-2010
Posts: 10,075
rfenst wrote:
Carry on...

In an unbridled free market economy, wealth naturally concentrates at the top. Until there small groups with unreasonable wealth and a nation of abject poverty.

This is how Rome and many other nations fell.

And it is the path we are on now.
HockeyDad Offline
#12 Posted:
Joined: 09-20-2000
Posts: 41,618
In a bridled free market economy like California which is long term run by a Democrat supermajority, wealth naturally concentrates at the top. Until there small groups with unreasonable wealth and a nation of abject poverty.

MACS Offline
#13 Posted:
Joined: 02-26-2004
Posts: 72,698
HockeyDad wrote:
In a bridled free market economy like California which is long term run by a Democrat supermajority, wealth naturally concentrates at the top. Until there small groups with unreasonable wealth and a nation of abject poverty.


Exactly right... they tax the middle class into poverty... and use that money to pay the poverty stricken for more votes.
RayR Offline
#14 Posted:
Joined: 07-20-2020
Posts: 3,591
Brewha, I didn't know Rome had an unbridled free-market economy.
I always thought they had a tax and spend gubment to maintain their bloated empire and the emperors had to continually debase their currency until they finally destroyed the economy and went bust. The only thing that was surprising is they lasted as long as they did.
Da things you learn here on CBID.
I need a Beer
rfenst Online
#15 Posted:
Joined: 06-23-2007
Posts: 35,007
HockeyDad wrote:
In a bridled free market economy like California which is long term run by a Democrat supermajority, wealth naturally concentrates at the top. Until there small groups with unreasonable wealth and a nation of abject poverty.

It didn't require Democrats to occur. It's the natural evolution of the system. It's got a long, long way to go, but I believe it to be inevitable (not in a bad way). There has been a rise and fall to every single society and there will be to ours too.
Brewha Offline
#16 Posted:
Joined: 01-25-2010
Posts: 10,075
RayR wrote:
Brewha, I didn't know Rome had an unbridled free-market economy.
I always thought they had a tax and spend gubment to maintain their bloated empire and the emperors had to continually debase their currency until they finally destroyed the economy and went bust. The only thing that was surprising is they lasted as long as they did.
Da things you learn here on CBID.
I need a Beer

Good idea, stick with you talents…
Brewha Offline
#17 Posted:
Joined: 01-25-2010
Posts: 10,075
rfenst wrote:
It didn't require Democrats to occur. It's the natural evolution of the system. It's got a long, long way to go, but I believe it to be inevitable (not in a bad way). There has been a rise and fall to every single society and there will be to ours too.

And the path will be hurried along by the poor and angry that are dooped into backing the interests of the wealthy at every turn.

“Trickle down works”

“Don’t tax businesses and we all win”

“Remove the rights of the individuals to sue a business to protect us all”




May the Lord have mercy on our soles….
rfenst Online
#18 Posted:
Joined: 06-23-2007
Posts: 35,007
Inflation is on the menu as restaurants pass on rising costs

Bloomberg News

U.S. restaurants, faced with higher food and labor costs, are raising menu prices at a much faster pace than historical rates, insistent on preserving profits after an arduous year.

From local restaurants to national chains like Chipotle Mexican Grill Inc., owners have boosted prices by as much as 5% in the past few weeks alone. Even at fast-food companies that were locked in price wars just a couple of years ago to win over cost-conscious consumers, increases aren’t taboo anymore.

“We are going to be paying higher prices in restaurants,” said David Henkes, senior principal at industry researcher Technomic. “Part of the calculus right now is there’s probably some appetite of consumers to pay whatever because they haven’t been out for a while.”

Across the nation, prices for food away from home rose 4% in May from a year earlier, the biggest jump since May 2009. It’s one example of a surge in overall inflation that’s left policy makers at the Federal Reserve debating how long the cost pressures will last as the economy bounces back from the COVID-19 pandemic.


In the Tampa, Florida, area, restaurateur Andrew Koumi bumped up his menu items by 2% to 4%.

Koumi, founder of a six-location chain called Green Market Cafe, tries to keep food and paper costs below 35% of his menu prices, but lately his computers keep flagging items that go above that parameter. He’s paying twice as much to buy chicken as he was in January, and other meats and paper products have gotten more expensive too.

Koumi isn’t too worried about standing out with his price increases, because “everyone’s doing it. Some people are doing it really drastically,” he said. “Could it go up more? It’s scary. I’m hoping that it levels.”
For now, there’s no sign of abating.

Chipotle recently raised menu prices by as much as 4%, after increasing average pay to $15 an hour and hiring thousands of workers to keep up with demand. American homestyle chain Cracker Barrel Old Country Store Inc., which earlier this year raised menu prices by 2.8%, is bumping up that increase to about 3% amid continued pressure from wage and commodity expenses, including pork for sausage and bacon.

McDonald’s Corp., which raised its hourly wage by about 10% in May, hasn’t announced any jump in prices yet but said early this year that franchisees could handle labor inflation “between judicious pricing on the menu as well as just thinking about productivity savings.”

Historically, restaurant operators tend to raise menu prices a few times a year. Between 2015 and 2019, that amounted to increases of about 2.5%, according to BTIG LLC analyst Peter Saleh. This year, the rate may reach about 4%, Saleh wrote in a note to investors.

Although food costs will likely moderate once supply bottlenecks are resolved, higher wages and labor shortages will persist even after pandemic relief has dried out, because people are yearning for greater work-life balance and flexibility in a post-COVID-19 world, Saleh wrote. That will create “inflation that in our view is not transitory,” Saleh said.

Whether higher prices are here to stay or just a temporary blip amid a fast reopening of the economy is at the center of a hot debate in the U.S. Federal Reserve Chair Jerome Powell said at a Congress hearing Tuesday that price increases recently are larger than expected but reiterated that they will eventually wane.

While commodity prices such as lumber have come down, food costs have continued to surge. U.S. producer prices for processed poultry jumped to an all-time high in May.


Some chains are coming up with creative solutions to avoid raising prices.

Wingstop Inc., for one, is only planning its typical 1% to 2% menu price increase this year. To save costs, the company is now buying whole birds instead of cut-up legs and breasts, selling less-used thigh pieces from a new delivery and takeout brand.

“The big price increases — the 4% price increases you’re seeing other chains do, that won’t be us,” Chief Executive Officer Charlie Morrison said in an interview. “Large price increases that are promoted and then passed on to the consumer tend to have a negative reaction.”

For smaller businesses, there is often little choice.

In Atlanta, restaurateur Bill Goudey raised prices by as much as 5% on some items a few weeks ago, steeper than the 1% increase he’s more comfortable with. The last few months have been chaotic at his two Copeland’s of New Orleans franchises. Workers have been so scarce that customers have had to wait for a table for up to two hours some weekends.
“While we’re hopeful some of these are short term and supply chain related, many are longer term cost concerns that could take months to resolve,” Goudey said in an email.
teedubbya Offline
#19 Posted:
Joined: 08-14-2003
Posts: 95,637
I have a belly button
rfenst Online
#20 Posted:
Joined: 06-23-2007
Posts: 35,007
teedubbya wrote:
I have a belly button

You just figured this out?
tonygraz Offline
#21 Posted:
Joined: 08-11-2008
Posts: 17,309
No. he just found it (it was hiding).
MACS Offline
#22 Posted:
Joined: 02-26-2004
Posts: 72,698
rfenst wrote:
You just figured this out?


He's dumber than Brewha... cut him a break
BuckyB93 Offline
#23 Posted:
Joined: 07-16-2004
Posts: 10,976
rfenst wrote:
You just figured this out?


He lost 20 lbs and can see it now. Another 30 lbs to go and he'll be able to see his deek without putting a mirror on the floor.
bgz Offline
#24 Posted:
Joined: 07-29-2014
Posts: 10,988
BuckyB93 wrote:
He lost 20 lbs and can see it now. Another 30 lbs to go and he'll be able to see his deek without putting a mirror on the floor.


That's only true if it's one of those magnification mirrors... and he'll probably need to get his eyes checked.
rfenst Online
#25 Posted:
Joined: 06-23-2007
Posts: 35,007
Inflation now wears away at pandemic-weary businesses

Associated Press

NEW YORK — Small businesses that endured shutdowns and lower revenue during the COVID-19 outbreak now must contend with another crisis: spiking prices for goods and services that squeeze profits and force many owners to pass the increases along to customers.

Mickey Luongo’s company, Total Home Supply, is paying as much as 15% more than it paid pre-pandemic for the air conditioning and heating equipment it sells to other businesses and consumers. His suppliers have raised their prices because they’re paying more for raw materials, components and shipping. Luongo says some of his customers have pushed back on higher prices.

“We had one contractor who totally understood the price increase and was OK with it while other consumers get mad at us and think the increases are our fault,” says Luongo, co-owner of the Fairfield, New Jersey-based company.

Surging demand from consumers for a wide range of products during the pandemic has driven up prices for finished goods as well as raw materials, supplies and equipment. Product shortages and bottlenecks in supply chains have added to the costs.

Prices for materials and components used in construction spiked 4% in May from April and were up over 17% from a year earlier, according to the Labor Department. Manufacturers paid 2% more last month for materials than they did in April and 21% more than in May 2020. Also in the mix: intense competition for workers that has some companies paying more to attract new hires and retain current staffers.

While inflation affects all companies, small businesses struggle more than their larger counterparts. Big corporations have greater negotiating power because they buy goods and services in bulk and have much larger revenue streams to absorb higher costs. These factors make it easier for big companies to avoid passing increases along to their customers.

Service providers are equally pinched by higher inflation.
With more homeowners remodeling since the start of the pandemic, supplies of paint, lumber and other materials have fallen and their prices have soared, forcing general contractor Victoria Staten to change her pricing policies.

“We’ve gone from guaranteeing estimates for 30 days to just five days,” says Staten, owner of The Upside Chicago. Staten is also pricing labor and materials separately, rather than providing an all-inclusive estimate as she did pre-pandemic.

The scarcity of materials is also adding to Staten’s costs — it can take several days to find items like moldings that used to be found easily. She’s been absorbing the labor costs involved in these shopping trips but is considering adding staffers’ extra time to her invoices.

Some price increases may roll back, economist Ray Keating says.

“The best case scenario on the recent move up in inflation is that it is temporary, as the recovering economy struggles to get production, operations, supply chains and employees back to something close to normal,” says Keating, chief economist with the advocacy group Small Business & Entrepreneurship Council.

Costs that are most likely to come down are energy-related, as the price of gasoline and other fuels tends to fluctuate. And if supply chain bottlenecks ease, shippers are likely to lower their rates.

But, Keating says, “the second scenario is that inflation takes hold, and as the old saying goes, once the inflation genie is let out of the bottle, it’s not easy to get back in.”

rfenst Online
#26 Posted:
Joined: 06-23-2007
Posts: 35,007
Fed minutes show growing debate over when to pull stimulus

Federal Reserve officials debated last month how quickly they would need to begin pulling back support for the U.S. economy as both the pace of recovery and inflation exceed their expectations.

Minutes from the June meeting of the Federal Open Market Committee (FOMC), the Fed’s monetary policymaking arm, released Wednesday showed increasing concern among some officials that the bank would be forced to hike rates or pare back bond purchases sooner than they had projected.

After the meeting, the Fed officials voted unanimously to keep the baseline interest range at 0 to 0.25 percent and said it would continue to purchase $120 billion combined in Treasury bonds and mortgage-backed securities until the economy showed “substantial further progress” toward a full recovery.

But minutes from that meeting showed a debate heating up among some Fed officials over how soon they would have to begin easing that support or whether the economy would continue to keep up its current pace.

“A substantial majority of participants judged that the risks to their inflation projections were tilted to the upside,” the minutes read. Those officials cited concerns about supply chain disruptions, which have pushed prices for many goods higher, and hiring troubles among many industries hit hard by the pandemic, including leisure, hospitality and manufacturing.

Other officials countered that the supply shortages and short-term factors pushing inflation higher could phase out even sooner than expected, making it too soon to accelerate tapering.

“Several of these participants emphasized that the Committee should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases,” the minutes read.

Following the June meeting, Fed officials also upgraded their forecasts for economic growth and inflation from their projections in March. No Fed official expected the bank to hike interest rates until 2022 at the earliest but several anticipated a quicker, sooner series of rate increases.

The Fed has faced rising pressure to pull back on support for the recovery as inflation rises above levels expected by many bank officials. While Republicans have pinned most of the blame on President Biden and Democrats, GOP officials have also pushed the Fed to be more aggressive in response to rising inflation.

Inflation was largely expected to rise in 2021 after the onset of the coronavirus pandemic caused prices to plunge along with economic activity. Even though inflation was expected to rise based on prices correcting toward normal levels, severe supply chain disruptions has put much greater pressure on prices than had been anticipated.

The median projection of annual inflation among Fed officials rose from 2.4 percent in March to 3.4 percent, but both Fed leaders and staff economists expect inflation to fall back toward 2 percent in the following years. The White House also expressed confidence that inflation was settle down as short-term pandemic-related factors dissipate.
RayR Offline
#27 Posted:
Joined: 07-20-2020
Posts: 3,591
OK, if the Fed leaders, their staff Keynesian economists, and the buttheads in the White House say they expect inflation to fall back toward 2 percent in the following years, bet on it going higher due to Bidenomic pandemic factors.
Speyside Offline
#28 Posted:
Joined: 03-16-2015
Posts: 13,106
Ah, I'm not worried. We have plenty of money, own some banks and some politicians.
Speyside Offline
#29 Posted:
Joined: 03-16-2015
Posts: 13,106
Anybody else own some politicians?
Speyside Offline
#30 Posted:
Joined: 03-16-2015
Posts: 13,106
I guess not.
rfenst Online
#31 Posted:
Joined: 06-23-2007
Posts: 35,007
Speyside wrote:
Anybody else own some politicians?

Before retiring, I used to make contributions to judicial candidates' campaigns. What did it get me.? Better judges. Also, allowing both sides extra time (2-3 minutes) during hearings that would have otherwise been cut short. And, it never hurt to be on a first name basis outside of the courthouse. But, I don't think even a close-call decision has ever gone my way because of this.
rfenst Online
#32 Posted:
Joined: 06-23-2007
Posts: 35,007
The Group of 20 nations agreed on a plan that would overhaul the global tax system.
If enacted, the plan could reshape the global economy by cracking down on tax havens and imposing new levies on big multinational companies. But major details remain to be worked out before an October deadline to complete the agreement, and big businesses and a few countries are resisting. The approach is a reversal of years of economic policies that embraced low taxes as a way for countries to attract investment and fuel growth.

At the same meeting of finance ministers in Venice, the I.M.F. announced a plan to issue $650 billion in reserve funds for poor countries to pay for vaccines, finance health care and reduce debt.
NYT Weekend Summary
frankj1 Offline
#33 Posted:
Joined: 02-08-2007
Posts: 39,461
Speyside wrote:
Anybody else own some politicians?

just a couple in Israel.
Krazeehorse Offline
#34 Posted:
Joined: 04-09-2010
Posts: 1,664
Oi vey
Speyside Offline
#35 Posted:
Joined: 03-16-2015
Posts: 13,106
That's a start. You want I should get you one or two here? Or maybe some bag money? I can make it happen.
tonygraz Offline
#36 Posted:
Joined: 08-11-2008
Posts: 17,309
frankj1 wrote:
just a couple in Israel.


Did you tell your Mrs. you were buying trees ?
frankj1 Offline
#37 Posted:
Joined: 02-08-2007
Posts: 39,461
Speyside wrote:
That's a start. You want I should get you one or two here? Or maybe some bag money? I can make it happen.

maybe a short term lease?
too much volatility around.
frankj1 Offline
#38 Posted:
Joined: 02-08-2007
Posts: 39,461
tonygraz wrote:
Did you tell your Mrs. you were buying trees ?

used to pay "by the leaf" weekly in Hebrew school to plant trees in Israel in the 1960's!
Supposedly it's something that can be looked up when there.
One in honor of Grandma, one in memory of Uncle Lazar...
teedubbya Offline
#39 Posted:
Joined: 08-14-2003
Posts: 95,637
Is it too late? I'd like to buy one for Chief Wahoo.
frankj1 Offline
#40 Posted:
Joined: 02-08-2007
Posts: 39,461
you are a veddy bad man, Jerry Seinfeld
Brewha Offline
#41 Posted:
Joined: 01-25-2010
Posts: 10,075
I remember a German guy telling me the titanic was sunk by a Steinburg….
Speyside Offline
#42 Posted:
Joined: 03-16-2015
Posts: 13,106
Makes sense, a tripod would have gashed a hole.
teedubbya Offline
#43 Posted:
Joined: 08-14-2003
Posts: 95,637
And plugged it
frankj1 Offline
#44 Posted:
Joined: 02-08-2007
Posts: 39,461
Brewha wrote:
I remember a German guy telling me the titanic was sunk by a Steinburg….

Steinberg, Iceberg...





(sorry it took so long, Brew)
tonygraz Offline
#45 Posted:
Joined: 08-11-2008
Posts: 17,309
Laser, Lazar
rfenst Online
#46 Posted:
Joined: 06-23-2007
Posts: 35,007
US consumer prices jump most since 2008, topping all estimates

Bloomberg News

Prices paid by U.S. consumers surged in June by the most since 2008, topping all forecasts and testing the Federal Reserve’s commitment to sticking with ultra-easy monetary support for the economy.

The consumer price index jumped 0.9% in June and 5.4% from the same month last year, according to Labor Department data released Tuesday. Excluding the volatile food and energy components, the so-called core CPI rose 4.5% from June 2020, the largest advance since November 1991.

Used vehicles accounted for more than a third of the gain in the CPI, the agency said. The outsize increase was also driven in large part by the pricing rebound in categories associated with a broader reopening of the economy including hotel stays, car rentals, apparel and airfares.

Expectations that those increases will normalize help explain the Fed’s view that inflation is transitory.

“Inflation surprised substantially to the upside in June but, once again, owing to outsized increases in prices in a few categories,” said Michelle Meyer, head of U.S. economics at Bank of America. “This reinforces the idea of transitory inflation.”

In the bond market, however, some investors saw the data as putting more pressure on the Fed. The Treasury yield curve flattened as the above-forecast reading emboldened traders to bet that the central bank will tighten policy in early 2023.
With inflation, from the Fed “we are told the story is transitory but the increases are going faster and for longer,” John Ryding, chief economic adviser at Brean Capital said on Bloomberg Television. “We just had a monthly increase that was about double what was expected.”

The median forecasts in a Bloomberg survey of economists called for a 0.5% gain in the overall CPI from the prior month and a 4.9% year-over-year increase. The S&P 500 declined after the report.

The report also may add to challenges for the Biden administration in getting Congress to approve trillions of dollars of additional fiscal spending in coming years. Republicans have been highlighting the jump in inflation as a reason to reject such new plans.

A White House official said the report was consistent with the administration’s view that the spike in inflation is related to post-reopening bottlenecks in economy.

The year-over-year figures have shown outsize gains in recent months partly because of so-called base effects -- the CPI retreated from March through May of last year during the pandemic lockdowns. While the annual figures are expected to peak, it’s not yet clear how much moderation will occur over the coming months.

In the three months through June, the core CPI increased at a more than 8% annualized rate, the fastest since the early 1980s.

Household spending on merchandise, fueled in part by government stimulus, has left businesses scrambling to fill orders while facing shortages of materials and labor. That dynamic is contributing to higher costs, which often feed through to consumer prices.

Meanwhile, the lifting of pandemic restrictions is propelling purchases of services like travel and transportation, another contributor to inflationary pressures.

Prices paid for new and used vehicles rose from a month earlier by the most on record., That said, those categories each make up less than 4% of the overall CPI.

The cost of food away from home jumped 0.7% on a month-over-month basis, the largest gain since 1981.

In earnings reports Tuesday, companies including PepsiCo Inc. and Conagra Brands Inc. noted cost pressures in their supply chains. Conagra has already raised prices and said it will continue to do so -- and that those hikes will eventually help the firm’s margin.

Fed Chair Jerome Powell has said that recent price increases are the result of transitory reopening effects, though more recently acknowledged the possibility of longer-term inflationary pressures. Sustained constraints in the production pipeline, along with a pickup in wages, raise the risk of an acceleration in consumer inflation.

Economists have been watching to see whether price pressures broaden out to categories other than those that are just now rebounding after pandemic-related lockdowns.

Shelter costs, which are seen as a more structural component of the CPI and make up a third of the overall index, rose 0.5% last month, the most since October 2005. The gain was driven by a 7.9% jump in hotel stays.

Wage growth rose steadily through the second quarter, but higher consumer prices are taking a toll. Inflation-adjusted average hourly earnings fell 1.7% in June after slumping 2.9% a month earlier, separate data showed Thursday.

Figures out Tuesday from the National Federation of Independent Business showed 47% of small-business owners, the largest share since 1981, reported higher selling prices in June.

Consumers are anticipating higher prices in the near-term. Median inflation expectations for the coming year increased to series high 4.8% in June, according to the New York Fed’s Survey of Consumer Expectations.
teedubbya Offline
#47 Posted:
Joined: 08-14-2003
Posts: 95,637
Thanks Biden!

Angry
HockeyDad Offline
#48 Posted:
Joined: 09-20-2000
Posts: 41,618
…and the poor get poorer!
teedubbya Offline
#49 Posted:
Joined: 08-14-2003
Posts: 95,637
poor poor CROS
HockeyDad Offline
#50 Posted:
Joined: 09-20-2000
Posts: 41,618
$&@k CROS.
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