Another Republican President, Another Recession.

[cannabineer]

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https://apnews.com/article/biden-kevin-mccarthy-impeachments-alejandro-mayorkas-border-security-5b2a8fa00a8cc724922b89c328fe6609
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for a happy second I thought MosCarthy was quitting some border committee … but nooo

 

[hanimmal]

https://apnews.com/article/inflation-economy-consumer-spending-prices-economic-growth-d637f03aa80efb2cbb05cadf56ed8223

WASHINGTON (AP) — Despite high interest rates and chronic inflation, the U.S. economy grew at a 2.9% annual rate from July through September, the government said Wednesday in a healthy upgrade from its initial estimate.

Last quarter’s rise in the U.S. gross domestic product — the economy’s total output of goods and services — followed two straight quarters of contraction. That decline in output had raised fears that the economy might have slipped into a recession in the first half of the year despite a still-robust job market and steady consumer spending.

Since then, though, most signs have pointed to a resilient if slow-moving economy, led by steady hiring, plentiful job openings and low unemployment. Wednesday’s government report showed that the restoration of growth in the July-September period was led by solid gains in exports and consumer spending that was stronger than originally reported.

“Despite higher borrowing costs and prices, household spending – the driver of the economy – appears to be holding, which is a positive development for the near-term outlook,″ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

It marked the second of three estimates the Commerce Department will provide of economic expansion in the third quarter. In its initial estimate, the department had estimated that the economy grew at a 2.6% annual rate last quarter.

Economists expect the economy to eke out modest 1% annualized growth from October through December, according to a survey of forecasters conducted by the Federal Reserve Bank of Philadelphia. The nation’s manufacturing sector is slowing despite an easing of supply chains that had been backlogged since the economy began rebounding from the pandemic recession two years ago. And inflation is threatening to weaken the crucial holiday shopping period. Retailers say inflation-weary shoppers are shopping cautiously, with many holding out for the most attractive bargains.

But a recession, if likely a mild one, is widely expected in 2023, a consequence of the Federal Reserve’s drive to tame the worst bout of inflation in four decades by aggressively raising interest rates. The Fed has raised its benchmark short-term rate six times this year — including four straight hefty hikes of three-quarters of a percentage point. The central bank is expected to announce an additional half-point hike in its key rate when it next meets in mid-December.

Because the Fed’s benchmark rate influences many consumer and business loans, its series of hikes have made most loans throughout the economy sharply more expensive. That has been particularly true of mortgage rates, which have proved devastating to the U.S. housing market. With mortgage rates having doubled over the past year, housing investment shrank in the July-September period at a 26.8% annual pace, according to Wednesday’s GDP report.

Chair Jerome Powell has stressed that the Fed will do all that it takes to curb the spikes in consumer prices, which shot up 7.7% in October from a year earlier — a slowdown from a year-over-year peak of 9.1% in June but still significantly above the Fed’s 2% target.

Economists had shrugged off the contraction in GDP in the first half of the year because it didn’t reflect any major fundamental weakness in the economy. Instead, it was caused mainly by an influx of imports and by a reduction in companies’ inventories.

In the meantime, the job market has remained surprisingly durable. Employers have added a healthy average of 407,000 jobs a month so far in 2022. And according to a survey by the data firm FactSet, economists predict that the nation gained an additional 200,000 jobs this month. The government will issue the November jobs report on Friday.

 

[hanimmal]

https://apnews.com/article/inflation-economy-amazoncom-inc-business-jerome-powell-a42435c199d221ecdb8680d39d093b6b?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_01

WASHINGTON (AP) — The nation’s employers kept hiring briskly in November despite high inflation and a slow-growing economy — a sign of resilience in the face of the Federal Reserve’s aggressive interest rate hikes.

The economy added 263,000 jobs, while the unemployment rate stayed 3.7%, still near a 53-year low, the Labor Department said Friday. November’s job growth dipped only slightly from October’s 284,000 gain.

Last month’s hiring amounted to a substantial increase. All year, as inflation has surged and the Fed has imposed ever-higher borrowing rates, America’s labor market has defied skeptics, adding hundreds of thousands of jobs, month after month.

With not enough people available to fill jobs, businesses are having to offer higher pay to attract and keep workers. In November, average hourly pay jumped 5.1% compared with a year ago — a robust increase that is welcome news for workers but one that complicates the Fed’s efforts to curb inflation.

The strength of the hiring and pay gains raised immediate concerns that the Fed may now have to keep rates high even longer than many had assumed. The stock market reacted with alarm, with Dow Jones Industrial Average sinking more than 400 points as trading opened Friday.

“This will be a reminder to the Fed and to the markets that the job on inflation is not done,” said Blerina Uruci, chief U.S. economist at brokerage T. Rowe Price. “They really need wage pressures to be on a more sustained downward path. So that certainly calls for interest rates to remain higher for longer.”

The report painted a picture of a job market in which the supply of available workers is falling even though many companies are still desperate to hire to meet customer demand. The proportion of Americans who either have a job or are looking for one declined for a second straight month, to just under 60%.

This week, Fed Chair Jerome Powell stressed in a speech that jobs and wages were growing too fast for the central bank to quickly slow inflation. The Fed has jacked up its benchmark rate, from near zero in March to nearly 4%, to try to wrestle inflation back toward its 2% annual target.

More than half the job growth last month — 170,000 — came in two large industries: Education and health care, and a category made up mostly of restaurants, hotels, and entertainment firms. Both sectors are still replacing workers who were lost during the pandemic. Most other industries have surpassed their pre-pandemic levels of employment.

There were some signs of weakness in Friday’s figures: Retailers, transportation and warehousing companies all cut jobs. So did temporary staffing agencies. Temp employment, often seen as a leading indicator of hiring, has declined for three straight months.

Yet a category that includes technology workers actually added jobs, despite many recent high-profile layoff announcements from such tech companies as Amazon, Meta, Twitter and the real estate broker Redfin.

Some signs of modest cooling in the job market have emerged recently. They include a small decline in job postings and a drop in the number of people who are quitting jobs — trends that suggest some rising caution among workers.

Even so, steady hiring and rising paychecks in many industries have helped U.S. households drive the economy. In October, consumer spending rose at a healthy pace even after adjusting for inflation. Americans stepped up their purchases of cars, restaurant meals and other services.

After having contracted in the first six months of the year, the U.S. economy expanded at a brisk 2.9% annual rate last quarter. In addition to strength from consumer spending, a spike in exports helped boost growth.

Though steady hiring and rising wages have fueled their spending, Americans are also turning increasingly to credit cards to keep up with higher prices. Many are also digging into savings, a trend that cannot continue indefinitely.

Some signs of weakness have sparked concerns about a likely recession next year, in part because many fear that the Fed’s surging rate hikes will end up derailing the economy. Particularly in the technology, media and retail industries, a rising number of companies have made high-profile layoff announcements.

In addition to job cuts from tech behemoths like Amazon, Meta and Twitter, smaller companies — including DoorDash, the real estate firm Redfin and the retailers Best Buy and the Gap — have said they will lay off workers.

And in November, a measure of factory activity dropped to a level that suggested that the manufacturing sector is contracting for the first time since May 2020.

 

[Herb & Suds]

 

[hanimmal]

https://apnews.com/article/inflation-health-china-business-united-states-8d5fffd96a46d0690d843f5e1de410fe

Back in January, 109 container ships waited off the California coast to unload cargo in Los Angeles and Long Beach, the nation’s two largest ports. Consumers, stuck at home amid the pandemic, had unleashed an avalanche of orders for goods that overwhelmed factories and ports.

Importers were paying $20,000 to send a single container from China to the United States — sometimes more than the goods inside were worth. Businesses had to backorder everything from bedroom furniture to kitchen fryers, if they could get them at all.

These days? No freighters are lingering off the Southern California coast. Containers from China go for just $2,000. Restaurants can order fryers and have them delivered in a couple of weeks.

The supply backlogs of the past two years — and the delays, shortages and outrageous prices that came with them — have improved dramatically since summer. The web of factories, railroads, ports, warehouses and freight yards that link goods to customers have nearly regained their pre-pandemic levels.

“We are in a very different place than we were,” said Phil Levy, chief economist at the supply chain consultancy Flexport. “If you ask, how long does it take to move stuff, there has been notable improvement. If you measure it by how long would it take to get a cargo from Asia to a destination port, dramatically better.”

The easing of supply bottlenecks has begun to provide some relief from the inflation that this year reached a four-decade peak, pummeling consumers and businesses. The progress has been modest and so far short-lived. Yet it’s still provided a glimmer of good news in the holiday shopping season: Gift items are much likelier to be in stock, perhaps at lower prices. The government’s latest inflation report showed that prices of toys, jewelry and girls’ apparel all fell in October.

“Overall, the shelves are full,” said Zvi Schreiber, CEO of Freightos Group, a digital platform that books international shipping. “We’re not seeing significant shortages of items.”

“Supply chains are really not the problem anymore,” agreed Timothy Fiore, who leads the Institute for Supply Management’s manufacturing survey and is chief procurement officer at the transportation firm Ryder System. “We’ve had four or five months of supplies looking better. Prices have dropped, too.’’

The main factor behind the improvement has been diminished demand for manufactured goods. Spending on goods has fallen for three straight quarters, according to the Commerce Department. Higher borrowing rates, engineered by the Federal Reserve to try to tame inflation, have reduced Americans’ willingness to buy more physical things. Inflation itself has sapped their spending power.

And having splurged on everything from lawn furniture and sporting goods to appliances and electronic gear during the COVID shutdowns, consumers have increasingly shown a desire to venture out and spend on experiences rather than goods. Demand has shifted toward services — restaurant dinners and plane tickets, hotel rooms and entertainment. As orders for manufactured goods have slowed, so have the price pressures surrounding them.

At the sprawling Southern California ports, the shipping backup has eased, in part because companies have sent cargo to Gulf Coast and Atlantic ports to avoid delays. Port Houston says its cargo volume is up 18% from this time last year.

An index that measures demand for freight shipments had hit a high of 115 earlier this year; now, it’s below the five-year average of 53.

“We’re returning to the mean and the trend lines that existed pre-COVID,” said Chris Adderton, senior vice president for the Council of Supply Chain Management Professionals.

In addition to the reduced demand that has lightened the strain on supply chains, ports have become more efficient. Additional ships have increased the transportation options.

And in some industries, new producers stepped in once established manufacturers became too overwhelmed to deliver. The enhanced competition reduced shortages and helped moderate prices.

In the market for kitchen equipment, for instance, “new manufacturers were able to break into the business — unheard-of manufacturers,” said Kirby Mallon, president of Philadelphia-based Elmer Schultz Services, which maintains kitchen equipment for restaurants and cafeterias.

When inflation first began surging last year, economists had mostly blamed the snarled supply chains. Fed Chair Jerome Powell, echoing the views of many analysts, predicted that soaring prices would prove “transitory” and would ease once it became easier and cheaper to ship products.

Things didn’t prove so simple — especially after Russia invaded Ukraine in February, disrupting trade in energy and grains and sending oil, gas and food prices soaring around the world.

Other problems remain, too. A chronic shortage of computer chips, for example, will likely hamper auto production into 2024, Kristin Dziczek, an auto policy adviser at the Federal Reserve Bank of Chicago, wrote in a recent paper. Though the shortage has eased slightly, factories remain slowed by a lack of chips.

The average price of a new vehicle is still near a record high, nearly $46,000, and isn’t expected to fall much, if at all, anytime soon. Used-vehicle prices, by contrast, have dropped since late summer. Analysts expect them to fall further, though not to pre-pandemic lows

Automakers are still struggling to acquire enough chips, largely because the number of semiconductors required per vehicle has multiplied. That is a consequence of more sophisticated auto equipment, from automated safety systems and internet connections to infotainment, Dziczek wrote.

What’s more, computer chips used for vehicle production are harder to manufacture than chips for consumer electronics because they must be built to withstand heat, cold and vibration.

The coronavirus lockdowns in China, along with the scattered public protests against them, may still disrupt global production and shipping. The consultancy Resilinc has identified 13,800 Chinese sites — from factories to warehouses to testing facilities — that are at risk from protests, rising COVID cases and lockdowns. Potential problem spots exist in such key cities as Beijing, Chengdu, Nanjing and Shanghai.

“Parts from these regions make their way into just about every product our lives rely on day to day,” said Bindiya Vakil, CEO of Resilinc.

On Wednesday, in a move that offered potential relief from its draconian zero-COVID policies, China rolled back restrictions on isolating people with the virus. The move will boost hopes that Beijing is scrapping its “zero COVID” strategy, which could give a lift to manufacturing and global trade.

Julian di Giovanni, an economist at the Federal Reserve Bank of New York, has estimated that supply problems accounted for about 40% of U.S. inflation from 2019 through 2021.

“In the absence of any new energy or other shock,” he said in August, “it is therefore possible that the ongoing easing of supply chain bottlenecks will cause a substantial drop in inflation in the near term.”

Inflation has eased from the dizzy heights it reached earlier this year. As measured by the Labor Department, consumer prices rose 7.7% in October from 12 months earlier. Though painfully high, that was the lowest year-over-year inflation since January and well below the recent peak of 9.1% in June.

A separate government inflation gauge that is favored by the Federal Reserve rose 6% in October from a year earlier. That was the mildest increase since November 2021.

The Fed wants to see annual inflation at 2%. There’s still a long way to go. And Flexport’s Levy cautions that inflation has spread from goods, which the Fed can partly control through its influence over loan rates, to services, which are more resistant to borrowing rates.

There’s also the risk that Americans expect future high inflation and will behave in ways that can make their worries self-fulfilling: They could spend more now to avoid what they expect will be higher prices later and demand bigger wage gains to compensate for a higher cost of living. All of that tends to fuel inflation pressures.

“Once you get this stuff built in, once it sticks around for a while and everybody starts thinking about inflation as a 5 to 6% kind of thing, getting that back to 2 is tough,” Levy said.

For now, though, businesses find themselves facing a new problem, a consequence of reduced demand for goods: Rather than lacking enough products in stock to give customers what they want, they now often have too many.

“The inventory has arrived, warehouses are full and we’re scrambling to move the merchandise,” said Thomas Goldsby, logistics chairman in the Supply Chain Management Department at the University of Tennessee.

Some retailers, like Target, ordered too much, too fast and had to cut prices to draw consumers who were tightening their budgets in response to inflation. Target’s third-quarter profit fell 52%. CEO Brian Cornell told analysts that consumers were “shopping very carefully on a budget. I think they are looking at discretionary categories and saying ‘All right, if I’m going to buy, I’m looking for a great deal.’ ”

“We’re not in a position where suppliers have a ton of power and the buyers just have to accept whatever they get,” said Fiore of ISM. “That’s definitely been shifting since September. Is this a good time for buyers? Absolutely. Is it a good time for companies overall? Not so clear.’’

 

[hanimmal]

https://apnews.com/article/inflation-business-economy-united-states-government-f403e59307792e63d43a5f33acf99be2

WASHINGTON (AP) — Wholesale prices in the United States rose 7.4% in November from a year earlier, a fifth straight slowdown and a hopeful sign that inflation pressures across the economy are continuing to cool.

The latest year-over-year figure was down from 8% in October and from a recent peak of 11.7% in March. On a monthly basis, the government said Friday that its producer price index, which measures costs before they reach consumers, rose 0.3% from October to November for the third straight month.

Rising prices are still straining Americans’ finances, particularly for food, rent and services such as haircuts, medical care and restaurant meals. Yet several emerging trends have combined to slow inflation from the four-decade peak it reached during the summer. Gas prices have tumbled after topping out at $5 a gallon in June. Nationally, they averaged $3.33 a gallon Thursday, according to AAA, just below their average a year ago.

And the supply chain snarls that caused chronic transportation delays and shortages of many goods, from patio furniture to curtains, are unraveling. U.S. ports have cleared the backlog of ships that earlier this year took weeks to unload. And the cost of shipping a cargo container from Asia has fallen sharply back to pre-pandemic levels.

As a result, the prices of long-lasting goods, from used cars and furniture to appliances and certain electronics, are easing.

Friday’s producer price data captures inflation at an early stage of production and can often signal where consumer prices are headed. Next week, the government will report its highest-profile inflation figure, the consumer price index. The most recent CPI report, for October, showed a moderation in inflation, with prices up 7.7% from a year earlier. Though still high, that was lowest year-over-year figure since January.

Federal Reserve Chair Jerome Powell, in a speech last week, pointed to the decline in goods prices as an encouraging sign. Powell suggested that housing costs, including rent, which have been a major driver of inflation, should also start to slow next year.

The Fed chair also signaled that the central bank will likely raise its benchmark interest rate by a smaller increment when it meets next week. Investors foresee a half-point Fed hike, after four straight three-quarter-point increases.

Yet Powell noted that services prices, which reflect the largest sector of the U.S. economy, are still increasing at a historically fast pace. Rapidly rising wages are a key driver of services inflation, he noted. That’s because as wages rise, many businesses pass on their higher labor costs to their customers through higher prices, which drives up inflation.

Pay is still rising quickly and could continue to fuel higher inflation through most of next year. In last week’s jobs report for November, the government reported that average hourly pay jumped 5.1% from a year earlier, far above the pre-pandemic pace. Powell said wage gains closer to 3.5% would be needed to bring inflation down toward the Fed’s 2% annual target.

 

[Roger A. Shrubber]

https://apnews.com/article/inflation-business-economy-united-states-government-f403e59307792e63d43a5f33acf99be2
View attachment 5235675

things try to correct themselves, once the major snarls are worked out.
the system works if allowed to, but we do need to make some major changes to avoid being this vulnerable again. retail chains need to invest in a few more warehouses, instead of relying on manufacturers to be able to deliver in a timely manner 100% of the time, and some critical parts need to start being manufactured domestically, whether it makes the EU pissy or not...they couldn't deliver what we needed when we needed it...so it's up to us to make sure that doesn't happen again, even if it means they will lose out on some trade.

 

[hanimmal]

things try to correct themselves, once the major snarls are worked out.

Exactly, unwinding one of the worst economic collapses in American history is sure to do that.

things try to correct themselves, once the major snarls are worked out.
the system works if allowed to, but we do need to make some major changes to avoid being this vulnerable again. retail chains need to invest in a few more warehouses, instead of relying on manufacturers to be able to deliver in a timely manner 100% of the time, and some critical parts need to start being manufactured domestically, whether it makes the EU pissy or not...they couldn't deliver what we needed when we needed it...so it's up to us to make sure that doesn't happen again, even if it means they will lose out on some trade.

Yeah Just-in-time inventory is a high speed mess waiting to happen in the best of times.

 

[hanimmal]

https://apnews.com/article/inflation-november-report-c3764250d475b1149d344462adff53d6?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_08

WASHINGTON (AP) — Inflation in the United States slowed again last month in the latest sign that price increases are cooling despite the pressures they continue to inflict on American households.

Consumer prices rose 7.1% in November from a year ago, the government said Tuesday. That was down sharply from 7.7% in October and a recent peak of 9.1% in June. It was the fifth straight slowdown.

Measured from month to month, which gives a more up-to-date snapshot, the consumer price index inched up just 0.1%. And so-called core inflation, which excludes volatile food and energy costs and which the Federal Reserve tracks closely, slowed to 6% compared with a year earlier. From October to November, core prices rose 0.2% — the mildest increase since August 2021.

All told, the latest figures provided the strongest evidence to date that inflation in the United States is steadily slowing from the price acceleration that first struck about 18 months ago and reached a four-decade high earlier this year.

Gas prices have tumbled from their summer peak. The costs of used cars, health care, airline fares and hotel rooms also dropped in November. So did furniture and electricity prices.

Grocery prices, though, remained a trouble spot last month, rising 0.5% from October to November and 12% compared with a year ago. Housing costs also jumped, though much of that data doesn’t yet reflect real-time measures that show declines in home prices and apartment rents.

Wall Street immediately welcomed Tuesday’s better-than-expected inflation data as providing further support for the Federal Reserve to slow and potentially pause its rate hikes by early next year. Dow Jones Industrial Average futures pointed to a jump of more than 700 points when trading begins.

Even with last month’s further easing of inflation, the Fed plans to keep raising interest rates. On Wednesday, the central bank is set to boost its benchmark rate for a seventh time this year, a move that will further raise borrowing costs for consumers and businesses. Economists have warned that in continuing to tighten credit to fight inflation, the Fed is likely to cause a recession next year.

Several trends have started to reduce price pressures, though they won’t likely be enough to bring overall inflation back down to levels that Americans were used to anytime soon.

The national average for a gallon of regular gas has sunk from $5 a gallon in June to $3.26 as of Monday. Many supply chains have also unsnarled, helping reduce the costs of imported goods and parts. Prices for lumber, copper, wheat and other commodities have fallen steadily, which tends to lead to lower construction and food costs.

To some economists and Fed officials, such figures are a sign of improvement, even though inflation remains far above the central bank’s annual 2% target and might not reach it until 2024.

Fed Chair Jerome Powell has said he is tracking price trends in three different categories to best understand the likely path of inflation: Goods, excluding volatile food and energy costs; housing, which includes rents and the cost of homeownership; and services excluding housing, such as auto insurance, pet services and education.

In a speech two weeks ago in Washington, Powell noted that there had been some progress in easing inflation in goods and housing but not so in most services. Physical goods like used cars, furniture, clothing and appliances have become steadily less expensive since the summer.

Used car prices, which had skyrocketed 45% in June 2021 compared with a year earlier, have fallen for most of this year.

Housing costs, which make up nearly a third of the consumer price index, are still rising. But real-time measures of apartment rents and home prices are starting to drop after having posted sizzling price acceleration at the height of the pandemic. Powell said those declines will likely emerge in government data next year and should help reduce overall inflation.

Still, services costs are likely to stay persistently high, Powell suggested. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at a brisk 5%-6% a year, price pressures keep building in that sector of the economy.

Services businesses tend to pass on some of their higher labor costs to their customers by charging more, thereby perpetuating inflation. Higher pay also fuels more consumer spending, which allows companies to raise prices.

“We want wages to go up strongly,” Powell said, “but they’ve got to go up at a level that is consistent with 2% inflation over time.”

On Wednesday, the Fed is expected to raise its key short-term rate by a half-point, after four straight three-quarter-point increases. That would leave its benchmark rate in a range of 3.75% to 4%, its highest level in 15 years.

Economists expect the Fed to further slow its rate hikes next year, with quarter-point increases in February and March if inflation remains relatively subdued.

 

[hanimmal]

https://apnews.com/article/inflation-business-jerome-powell-government-and-politics-81b03a1a55ae8a934e2df45120912133?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_01

WASHINGTON (AP) — The Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But the Fed announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing.

The Fed boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. Though smaller than its previous three-quarter-point hikes, the latest move will further heighten the costs of many consumer and business loans and the risk of a recession.

The policymakers also forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is prepared to raise its benchmark rate by an additional three-quarters of a point and leave it there until the end of next year. Some economists had expected that they would project only an additional half-point increase.

The central bank’s latest rate hike was announced one day after an encouraging report showed that inflation in the United States slowed in November for a fifth straight month. The year-over-year increase of 7.1%, though still high, was sharply below a recent peak of 9.1% in June.

Fed officials have indicated that they see some evidence of progress in their drive to defeat the worst inflation bout in four decades and to bring inflation back down to their 2% annual target. The national average for a gallon of regular gas, for example, has tumbled from $5 in June to $3.21.

Many supply chains have unraveled, helping reduce goods prices. The better-than-expected November inflation data showed that the prices of used cars, furniture and toys all declined last month.

So did the costs of services from hotels to airfares to car rentals. Rental and home prices are falling, too, though those declines have yet to feed into the government’s data.

And one measure the Fed tracks closely — “core” prices, which exclude volatile food and energy costs for a clearer snapshot of underlying inflation — rose only slightly for a second straight month.

Inflation has also eased slightly in Europe and the United Kingdom, leading analysts to expect the European Central Bank and the Bank of England to slow their pace of rate hikes at their meetings Thursday. Both are expected to raise rates by half a point to target still painfully high prices spikes after big three-quarter-point increases.

Inflation in the 19 countries using the euro currency fell to 10% from 10.6% in October, the first decline since June 2021. The rate is so far above the bank’s 2% goal that rate hikes are expected to continue into next year. Britain’s inflation also eased from a 41-year record of 11.1% in October to a still-high 10.7% in November.

At the Fed, Chair Jerome Powell has made clear that the central bank isn’t close to declaring victory over high inflation. Fed officials will likely want to see further moderate inflation readings before they would be comfortable suspending their rate hikes.

One reason for caution is that inflation gauges can sometimes reignite after initially slowing. In 2021, for example, core price increases slowed for a couple of months in the summer before accelerating again and reaching new heights.

Cumulatively, the Fed’s hikes have led to much costlier borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans. The hikes have sent home sales plummeting and are starting to reduce rents on new apartments, a leading source of high inflation.

The officials have said they want rates to reach “restrictive” levels that slow growth and hiring and bring inflation down to their annual target of 2%. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.

The policymakers have stressed that more important than how fast they raise rates is how long they keep them at or near their peak. Wall Street investors are betting that the Fed will reverse course and start cutting rates before the end of next year.

Housing costs, which make up nearly a third of the consumer price index, are still rising. But real-time measures of apartment rents and home prices are starting to drop after having posted sizzling price acceleration at the height of the pandemic. Powell said those declines will likely emerge in government data next year and should help reduce overall inflation.

Powell’s biggest focus has been on services, which he said are likely to stay persistently high. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at a brisk 5%-6% a year, price pressures keep building in that sector of the economy.

How the Fed will slow a robust labor market to help tame inflation could prove perilous. Powell and other Fed officials have said they hope their rate hikes will slow both consumer spending and job growth. Businesses would then remove many of their job openings, reducing the demand for labor. With less competition for workers, wages could begin to grow more slowly.

 

[hanimmal]

I have no idea who these people that were scamming as financial influencers are.

 

[hanimmal]

https://apnews.com/article/inflation-business-17ad879a8b8d93aca98c4b8ca3b80d41

WASHINGTON (AP) — A measure of inflation closely watched by the Federal Reserve slowed last month, another sign that a long surge in consumer prices seems to be easing.

Friday’s report from the Commerce Department showed that prices rose 5.5% in November from a year earlier, down from a revised 6.1% increase in October and the smallest gain since October 2021. Excluding volatile food and energy prices, so-called core inflation was up 4.7% over the previous year. That was also the smallest increase since October 2021.

On a month-to-month basis, prices rose 0.1% from October to November after rising 0.4% the previous month. Core prices rose 0.2%.

Inflation, which began surging a year and a half ago as the economy bounced back from 2020′s coronavirus recession, still remains well above the 2% year-over-year growth the Fed wants to see.

The central bank has raised its benchmark interest rate seven times since March in an attempt to bring consumer prices under control.

Higher prices and borrowing costs may be taking a toll on American consumers. Their spending rose just 0.1% from October to November and didn’t rise at all after adjusting for higher prices.

“We expect a deceleration in household spending as the Fed hikes rates further in 2023,″ Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.

Americans’ after-tax income, however, rose 0.3% in November even after accounting for inflation.

The Fed is believed to monitor the Commerce Department’s inflation gauge that was issued Friday, called the personal consumption expenditures price index, even more closely than it does the Labor Department’s better-known consumer price index. CPI rose 7.1% in November from 12 months earlier, down from June’s 9.1% year-over-year increase, which had been the biggest such jump in four decades.

The PCE index tends to show a lower inflation rate than CPI. In part, that is because rents, which have soared, carry double the weight in the CPI that they do in the PCE.

The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture, for example, when consumers switch from pricey national brands to cheaper store brands.

 

[hanimmal]

https://apnews.com/article/business-economy-f0ff47ba21bbf4580cf9366d67a213d2

WASHINGTON (AP) — Shrugging off rampant inflation and rising interest rates, the U.S. economy grew at an unexpectedly strong 3.2% annual pace from July through September, the government reported Thursday in a healthy upgrade from its earlier estimate of third-quarter growth.

The rise in gross domestic product — the economy’s output in goods and services — marked a return to growth after consecutive drops in the January-March and April-June periods.

Still, many economists expect the economy to slow and probably slip into recession next year under the pressure of higher interest rates being engineered by the Federal Reserve to combat inflation that earlier this year reached heights not seen since the early 1980s.

Driving the third-quarter growth were strong exports and healthy consumer spending.

Investment in housing plunged at an annual rate of 27.1%, hammered by higher mortgage rates arising from the Fed’s decision to raise its own benchmark rate seven times this year.

Thursday’s GDP report was the Commerce Department’s third and final look at the July-September quarter. The first look at the fourth quarter comes out Jan. 26. Forecasters surveyed by the Federal Reserve Bank of Philadelphia expect the economy to grow again the last three months of the year — but at a slower, 1% annual rate.

In its previous estimate of third-quarter growth, issued Nov. 30, the Commerce Department had pegged July-September growth at an annual rate of 2.9%. Behind the upgrade to Thursday’s 3.2% was stronger growth in consumer spending, revised up to a 2.3% annual rate from 1.7% in the November estimate.

“Despite a rapid increase in interest rates, the economy is growing and importantly, households are still spending,″ Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note. “However, looking ahead, in 2023, we expect a slower growth trajectory.″

Inflation, which had not been a serious problem for four decades, returned in the spring of 2021. It was set off by an unexpectedly strong recovery from the coronavirus recession of 2020, fueled by massive government stimulus. The Fed was slow to recognize the severity of the inflation problem and only began raising rates aggressively in March.

The job market has stayed resilient throughout, putting upward pressure on wages and prices. Employers have added 392,000 jobs a month so far this year, and the unemployment rate is at 3.7%, just off a half-century low.

 

[hanimmal]

https://www.washingtonpost.com/business/2022/12/15/immigration-reform-congress-worker-shortage/

Alonzo Arteaga’s title is general manager of a small hotel in Topeka, Kan. But these days, he doubles as a housekeeper, making beds, vacuuming floors and laundering towels to fill an ever-worsening worker shortage.

Like other businesses around the country, Senate Luxury Suites is struggling to keep going without critical employees. The hotel is down to three housekeepers, half the number it had before the pandemic, and Arteaga blames a years-long immigration slowdown, which he says has made an already tough situation worse.

“It’s been three years of trying absolutely everything,” said Arteaga, who has raised pay by about $3 an hour and offers discounted monthly rates to employees. “It feels like the workers really aren’t there.”



A shortfall of immigrants is worsening widespread labor shortages and hobbling the U.S. economy at a time when more than 10 million jobs remain unfilled, particularly in low-paying and physically demanding industries such as hospitality, agriculture, construction and health care.

While the slowdown in legal immigration began well before the pandemic, the covid-19 crisis intensified the process as the Trump administration effectively halted the flow of foreign-born workers into the United States. Although immigration has rebounded somewhat since then, particularly in the last six months, major shortages remain, rippling through the economy at a time when the labor force is also missing workers from early retirements, ongoing health problems and caregiving challenges. Labor force shortages are also contributing to higher prices for some goods and services, as companies raise wages to compete for a smaller pool of workers and to keep existing staff.



The crisis had prompted senators on both sides of the aisle to try to strike a deal that allowed more legal immigration in the weeks before Republicans take control of the House. But those proposals never got off the ground, making an immigration overhaul far less politically feasible.

“Immigration is something almost everyone agrees needs to be fixed, but it’s become a political wedge issue,” said Tara Watson, an economics professor at Williams College and fellow at the Brookings Institution. “There have been huge bureaucratic delays since the Trump administration. And of course covid really put a wrench in the gears. But this is a long-term structural problem that has not been addressed.”

Economists say it’s difficult to quantify exactly how many foreign-born workers are missing from the labor force, particularly when it comes to undocumented immigrants. By one estimate, the United States is shy of about 1.7 million legal immigrants based on pre-pandemic migration trends, according to Giovanni Peri, director of the Global Migration Center at the University of California at Davis.

Even though immigration rates have picked up in recent months, Peri says it could be another four years before the country makes up for current shortfalls. Even then, it won’t be enough to catch up to the rapidly aging workforce that is projected to leave millions more positions unfilled.







Early in the pandemic, Mariama Lowe lost nearly three-quarters of the employees at her home health-care business in Alexandria, Va., to covid illnesses, career changes and early retirements. She’s since gone from 100 nurses and personal care aides — almost all of them immigrants — to 27.



Business lobbying groups are pushing for a number of changes, including increasing the annual allotment of employment visas, creating more ways for international students who attend U.S. colleges to stay longer and asking the State Department to make it easier for immigrants to renew their work visas.



Also high on their list: getting more farmworkers into the United States to pick, process and package a range of crops, meat and poultry.

In Napa Valley, Calif., grape growers can’t find the immigrant workers they once relied on to cultivate the region’s hallowed vineyards. Many farmworkers have retired to their native villages in central Mexico, vineyard managers said, and millennial and Gen Z workers never arrived to fill their shoes.

“A younger generation from Mexico never came,” said Michael Wolf, a vineyard manager for nearly 50 years in Napa Valley. “A lot of [vineyards] are struggling. People are using local farm labor contractors to transport workers to Napa from Stockton a couple hours a day in each direction. But that’s not sustainable.”

Declines in immigration to the region have been exacerbated by devastating wildfires, the pandemic and inflation that has contributed to the region’s soaring cost of living. Forty-four percent of vineyard businesses in Napa reported a labor shortage in 2021, according to a joint study by UC Davis and a wine industry nonprofit in Napa. Meanwhile, the region lost 7 percent of its adult immigrant population between 2015 and 2020 compared with the previous five years.

Wolf has managed to fill open roles by hiring workers from Mexico on H-2A visas, a seasonal program for guest workers in agriculture.



Labor shortages are not new to agriculture but have worsened in recent years, according to farmers and industry experts in California. The reasons for the declining availability of farmworkers are complex and debated, ranging from improved educational opportunities in Mexico to heightened border security.

“We have long known that Americans do not want to do these jobs,” said Brett Erickson, senior vice president at Little Bear Produce, which grows 5,000 acres of greens, onions, cabbages and melons on the Mexico border, in Edinburg, Tex. “We’ve been struggling with labor shortages for decades, but now it’s come to a crisis point. The labor force has completely dried up.”



He would’ve liked to have planted 15 percent more crops this year but says labor constraints made that impossible. Little Bear has begun using temporary workers from Mexico to fill in employment gaps, though it’s so costly that it’s become difficult for the company to keep turning a profit. The family-run business is also doubling down on automation and investing in machines that can wash, cut and bag vegetables. Crops still have to be picked by hand, which is becoming more expensive as labor shortages persist.

“This is a plea to Congress that they stop kicking this can down the road. It’s not just farmers who are being affected,” he said. “Consumers are ultimately paying the price — and we’re all consumers; we all have to eat.”

 

[hanimmal]

https://www.washingtonpost.com/business/2022/12/29/economy-2023-outlook-inflation-prices/

The 2022 economy was a jumble of flip-flopping growth, decades-high inflation and fears that a steep slowdown could plunge the country into recession. (It didn’t.)

But big questions remain, and economists say we’re in for an even more fraught guessing game in 2023.

The Federal Reserve has been aggressively trying to slow the economy enough to cool inflation. That appears to be working so far, but there are concerns that the economy — and especially the job market — could slow too quickly in the coming months, setting off a recession.

Major institutions remain divided on whether a downturn is imminent. Banks offer a range of scenarios — from predicting that the economy “just skirts” a recession (Morgan Stanley) to saying one is “very likely” to begin in the first half of 2023 (Bank of America).

“I don’t think anyone knows whether we’re going to have a recession or not — and if we do, whether it’s going to be a deep one or not,” Fed Chair Jerome H. Powell said at a news conference last month. “It’s not knowable.”

Here, in 10 charts, is what we do know about the economy today.



Americans are finally beginning to feel relief after months of rapidly rising prices on basics such as food, fuel and rent. Overall inflation has fallen for five straight months and is expected to continue its descent in 2023.

A number of goods — including bacon, doughnuts and potatoes — have actually gotten cheaper in recent months, as pandemic-related product shortages and transportation tangles have gotten sorted out. Larger expenses such as utilities, health care and airline tickets have also become more affordable.



Meanwhile, average gasoline prices, which peaked at about $5 a gallon nationally this summer, have retreated from record highs, thanks in part to a decline in global demand.



But the easing of inflation is just one part of the picture. In its effort to combat skyrocketing prices, the Fed has raised interest rates seven times in the past year. Although the central bank controls just one interest rate — the federal funds rate, which banks use to lend money to each other overnight — its actions have an almost immediate impact on all types lending, including mortgages, car loans and credit card rates, all of which are getting costlier.



The run-up in borrowing costs — including a doubling in mortgage rates — has had a chilling effect on the housing market. Home sales have fallen for 11 straight months, and construction of new single-family homes is at its lowest level since May 2020, when much of the country was shut down. There are also signs that rapidly soaring home prices have stabilized in many parts of the country, a trend that economists expect to continue in the coming months.



It isn’t just the housing market that’s in free fall. Americans are spending less on other big-ticket items, too, such as furniture, cars and appliances that were in high demand early in the pandemic. As a result, U.S. manufacturing — considered an early indicator of where the economy is headed — has been on a steadily downward path.



The job market has for months been a bright spot in the economy. The unemployment rate of 3.7 percent remains near historic lows, and many employers say they’re still desperate to find and keep workers. Importantly, there hasn’t been a meaningful rise in layoffs even as hiring has slowed.

However, economists warn that the labor market is likely to get shakier in 2023, as the Fed’s tightening works its way across the economy. Barclays, for example, expects the unemployment rate to rise to about 5 percent next year, which would translate to more than 1 million job losses.

“We believe that’s what would be needed to bring inflation down,” said Marc Giannoni, the bank’s chief U.S. economist. “We have a very resilient economy and a strong labor market, but we expect things will slow.”



It isn’t just personal savings accounts that have taken a hit in the past year. The stock market, which rose to meteoric highs in January, spent the rest of the year on rocky terrain. Highflying tech stocks that soared during the pandemic have seen some of the largest declines in recent months. Shares of Facebook parent company Meta have plunged nearly 70 percent in the past year, while shares of Amazon are down 55 percent. (Amazon founder Jeff Bezos owns The Washington Post.)

Overall, the S&P 500 index has lost 20 percent of its value from a year ago, wiping out trillions in investments.



More broadly, the U.S. economy has rebounded after unexpectedly shrinking in early 2022. An increase in government spending and a narrowing trade gap, with American retailers importing less and exporting more, helped gross domestic product late in the year.

But economists warn that those gains could be short-lived as major chunks of the economy, including housing and consumer spending, continue to moderate.

“The irony is, we’re seeing the strongest growth of the year when things are actually slowing,” Diane Swonk, chief economist at KPMG, said in October, after the third-quarter GDP results. “There are some real cracks in the foundation. Housing is contracting. The consumer is slowing. GDP is growing, but not for all of the right reasons.”




So what’s next for the economy? Economists aren’t quite sure. There’s no question that we’re in for more of a cool-down, though it’s unclear how rapidly or dramatically that might happen. The Fed is hoping to slow the economy in a gradual and controlled way, though many experts agree that things could quickly spiral down, possibly leading to a recession. Current forecasts vary considerably, though several major U.S. banks still say it’s possible — if not expected — that the U.S. economy will contract at some point in the new year.

“Our recession probability models have moved to uncomfortably high levels,” Morgan Stanley economists wrote in a recent report. “Tighter financial conditions and market volatility suggest recession in the next 12 months is a coin toss.”

 

[HGCC]

Most of what I have been reading is of the belief we are going to slip into a recession next year. The upside is that it's a return to normal, interest rates needed to come up, but everyone everywhere had gotten so used to zero rates it will be a painful adjustment back.

I dont think the fed is going to back off until the stock market crashes hard, that shouldn't be the measure, but I think that is going to have to happen. Markets contracted this past year by a good amount, but it was very orderly. There weren't crazy panic sales.

I think they should back off and recognize that consumers have been exhausting their resources keeping up with the price increases. My cynical view was they are pulling out the rug as wages have been growing, not just profits. Now that they have extracted all the wealth, slam shit into the ground so wages don't rise with the increased demand. If you have a glut of unemployed then you don't need to increase pay to attract people, they take what they can get vs knowing the value of their labor.

*ramble ramble ramble, I say the same stuff on the topic all the time.

 

[Roger A. Shrubber]

https://www.washingtonpost.com/business/2022/12/29/economy-2023-outlook-inflation-prices/
View attachment 5242935

i'm honestly relieved that this is happening. i'm not a economist, by any stretch of the imagination, but i can see a sick animal kept up and running by artificial means when i see it. this is a badly needed reset, to slow down a whole stream of artificially inflated bubbles that are starting to blow up.
wages are up (slightly) and unemployment is down, housing prices need to come down, both for buyers and renters.
there needs to be an adjustment to the commercialism applied to the housing market. investment groups and real estate developers shouldn't be allowed to buy up every piece of available property in any area. all that leads to is substandard housing at exorbitant prices for everyone in the area, who in many places can't afford higher rent, so the "housing boom" is actually producing more homeless.

 

[hanimmal]

https://apnews.com/article/us-jobs-report-jan6-2023-78943d9829087d93e9681426ca0c8ae2?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_04

WASHINGTON (AP) — America’s employers added a solid 223,000 jobs in December, evidence that the economy remains healthy even as the Federal Reserve is rapidly raising interest rates to try to slow economic growth and the pace of hiring.

The December job growth, though a decent gain, amounted to the lowest monthly increase in two years. The unemployment rate fell to 3.5%, matching a 53-year low, the Labor Department said Friday.

The monthly employment report offered other signs that the job market has begun to cool. Last month’s gains were less than half the 537,000 that were added in July. And average hourly wage growth slowed sharply: It was up 4.6% in December from 12 months earlier, compared with a 4.8% year-over-year increase in November and a recent peak of 5.6% in March.

Slower paycheck growth will be a relief for Fed officials, who regard wage growth as a driver of future inflation.

Last month’s job growth capped a second straight year of robust hiring during which the nation regained all 22 million jobs it lost to the COVID-19 pandemic. Yet the rapid hiring and the hefty pay raises that accompanied it likely contributed to a spike in prices that catapulted inflation to its highest level in 40 years.

The picture for 2023 is much cloudier. Many economists foresee a recession in the second half of the year, a consequence of the Fed’s succession of sharp rate hikes. The central bank’s officials have projected that those increases will cause the unemployment rate to reach 4.6% by year’s end.

Though the Fed’s higher rates have begun to cool inflation from its summertime peak, they have also made mortgages, auto loans and other consumer and business borrowing more expensive.

For now at least, the job market is showing surprising resilience in the face of higher interest rates across the economy. Employers added 4.6 million jobs in 2022, on top of 6.7 million in 2021. All that hiring was part of a powerful rebound from the pandemic recession of 2020.

In June, year-over-year inflation reached 9.1%, the highest level in 40 years, before slowing to 7.1% in November. Last year, in an aggressive drive to reduce inflation back toward its 2% goal, the Fed raised its benchmark rate seven times.

Fed Chair Jerome Powell has emphasized in recent remarks that consistently strong job growth, which can force employers to raise pay to find and keep workers, can perpetuate inflation: Companies often raise prices to pass on their higher labor costs to their customers. And higher pay typically fuels more consumer spending, which can keep inflation elevated.

For that reason, Powell and other Fed officials have signaled their belief that to get inflation under control, unemployment will have to rise from its current low level.

Fed officials have projected that they will raise their benchmark short-term rate to about 5.1% this year, the highest level in more than 15 years. If hiring and inflation remain strong, the Fed’s rate might have to move even higher.

Technology companies have been laying off workers for months, with some, including Amazon, saying that they had hired too many people during the pandemic. Amazon has boosted its layoffs to 18,000 from an earlier announcement of 10,000. Cloud software provider Salesforce says it will cut 10% of its workers. And Facebook’s parent company Meta says it will shed 11,000.

Smaller tech companies are also being hit. Stitch Fix, the fast fashion provider, said Thursday that it’s cutting 20% of its salaried workers. DoorDash has said it will eliminate 1,250 jobs.

Yet outside of high tech, smaller companies, in particular, are still hiring. According to the payroll processor ADP, companies with more than 500 employees cut jobs in December, while businesses below that threshold added many more workers. And an analysis by investment bank Jefferies showed that small companies were posting a historically high proportion of job openings.

The Fed is concerned about the fast pace of wage growth, which it sees as a reason why inflation is likely to remain high. Average hourly pay is rising at about a 5% pace, one of its highest levels in decades.

Economists think growth likely amounted to a solid annual rate of roughly 2.5% in the final three months of last year. But there are signs it is slowing, and most analysts expect weaker growth in the current first quarter of 2023.

Consumers barely increased their spending in November, held down by modest holiday shopping. And manufacturing activity contracted in December for a second straight month, with new orders and production both shrinking.

And the housing market, an important economic bellwether, has taken a severe hit from the Fed’s rate hikes, which have more than doubled mortgage rates in the past year. Home sales have plummeted for the past 10 months.

i'm honestly relieved that this is happening. i'm not a economist, by any stretch of the imagination, but i can see a sick animal kept up and running by artificial means when i see it. this is a badly needed reset, to slow down a whole stream of artificially inflated bubbles that are starting to blow up.
wages are up (slightly) and unemployment is down, housing prices need to come down, both for buyers and renters.
there needs to be an adjustment to the commercialism applied to the housing market. investment groups and real estate developers shouldn't be allowed to buy up every piece of available property in any area. all that leads to is substandard housing at exorbitant prices for everyone in the area, who in many places can't afford higher rent, so the "housing boom" is actually producing more homeless.

I am not a fan of the stories of Chinese companies buying up land/houses. I do think there is a artificial bubble that is being caused by this foreign investment.

I would like to see the actual numbers on homelessness before I start trusting my feels (that have been spammed on all sides of the topic) on it though. Homelessness has always been high, how much of it is now just increased population and the amplification of it by right wing propagandists and other ways that would make it look like bigger problems now than in the past.

Most of what I have been reading is of the belief we are going to slip into a recession next year. The upside is that it's a return to normal, interest rates needed to come up, but everyone everywhere had gotten so used to zero rates it will be a painful adjustment back.

I dont think the fed is going to back off until the stock market crashes hard, that shouldn't be the measure, but I think that is going to have to happen. Markets contracted this past year by a good amount, but it was very orderly. There weren't crazy panic sales.

I think they should back off and recognize that consumers have been exhausting their resources keeping up with the price increases. My cynical view was they are pulling out the rug as wages have been growing, not just profits. Now that they have extracted all the wealth, slam shit into the ground so wages don't rise with the increased demand. If you have a glut of unemployed then you don't need to increase pay to attract people, they take what they can get vs knowing the value of their labor.

*ramble ramble ramble, I say the same stuff on the topic all the time.

I agree about the zero rate being long overdue to end. I am not sure about where the Fed ends up, I never really trusted Powell, but he hasn't done too bad of a job with the horrible position he has been in since Trump fired Yellen for being 'too short'.

 

[hanimmal]

https://apnews.com/article/december-2022-inflation-report-72bb938a443ab0500bd72d23f62214ad?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_02

WASHINGTON (AP) — Rising U.S. consumer prices moderated again last month, bolstering hopes that inflation’s grip on the economy will continue to ease this year and possibly require less drastic action by the Federal Reserve to control it.

Inflation declined to 6.5% in December compared with a year earlier, the government said Thursday. It was the sixth straight year-over-year slowdown, down from 7.1% in November. On a monthly basis, prices actually slipped 0.1% from November to December, the first such drop since May 2020.

The softer readings add to growing signs that the worst inflation bout in four decades is gradually waning. Still, the Fed doesn’t expect inflation to slow enough to get close to its 2% target until well into 2024. The central bank is expected to raise its benchmark rate by at least a quarter-point when it next meets at the end of this month.

Excluding volatile food and energy costs, so-called core prices rose 5.7% in December from a year earlier, slower than the 6% year-over-year increase in November. From November to December, core prices increased just 0.3%, the third straight monthly slowdown, after rising 0.2% in November.

Even as inflation gradually slows, it remains a painful reality for many Americans, especially with such necessities as food, energy and rents having soared over the past 18 months.

Grocery prices rose 0.2% from November to December, the smallest such increase in nearly two years. Still, those prices are up 11.8% from a year ago.

Behind much of the decline in overall inflation are falling gas prices. The national average price of a gallon of gas has tumbled from a $5 in June to $3.27 as of Wednesday, according to AAA.

Also contributing to the slowdown are used car prices, which fell for a sixth straight month in December. New car prices declined, too. The cost of airline tickets and personal care such as haircuts also dropped.

Supply chain snarls that previously inflated the cost of goods have largely unraveled. Consumers have also shifted much of their spending away from physical goods and instead toward services, such as travel and entertainment. As a result, the cost of goods, including used cars, furniture and clothing, has dropped for two straight months.

Last week’s jobs report for December bolstered the possibility that a recession could be avoided. Even after the Fed’s seven rate hikes last year and with inflation still high, employers added a solid 223,000 jobs in December, and the unemployment rate fell to 3.5%, matching the lowest level in 53 years.

At the same time, average hourly pay growth slowed, which should lessen pressure on companies to raise prices to cover their higher labor costs.

Another positive sign for the Fed’s efforts to quell inflation is that Americans overall expect price increases to decline over the next few years. That is important because so-called “inflation expectations” can be self-fulfilling: If people expect prices to keep rising sharply, they will typically take steps, like demanding higher pay, that can perpetuate high inflation.

On Monday, the Federal Reserve Bank of New York said that consumers now anticipate inflation of 5% over the next year. That’s the lowest such expectation in nearly 18 months. Over the next five years, consumers expect inflation to average 2.4%, only barely above the Fed’s 2% target.

Still, in their remarks in recent weeks, Fed officials have underscored their intent to raise their benchmark short-term rate by an additional three-quarters of a point in the coming months to just above 5%. Such increases would come on top of seven hikes last year, which led mortgage rates to nearly double and made auto loans and business borrowing more expensive.

Futures prices show that investors expect the central bank to be less aggressive and implement just two quarter-point hikes by March, leaving the Fed’s rate just below 5%. Investors also project that the Fed will cut rates in November and December, according to the CME FedWatch Tool.

Fed Chair Jerome Powell has sought to push back against that expectation of fewer hikes this spring and cuts by the end of the year, which can make the Fed’s job harder if investors bid up stock prices and lower bond yields. Both trends can support faster economic growth just when the Fed is trying to cool it down.

The minutes from the Fed’s December meeting noted that none of the 19 policymakers foresee rate cuts this year.

Still, last week James Bullard, president of the Federal Reserve Bank of St. Louis, expressed some optimism that this year, “actual inflation will likely follow inflation expectations to a lower level,” suggesting 2023 could be a “year of disinflation.”

 

[hanimmal]

Wow, so the House GQP is actually going to try to pass a junk bill that would cut federal taxes and put it all on people with a sales tax that impacts lower income people far greater. Got to love when they just show how irresponsible the Republicans are when it comes to giving the rich everything they could possibly want.