Another Republican President, Another Recession.

hanimmal

Well-Known Member
https://apnews.com/article/inflation-europe-business-economy-gross-domestic-product-e1a95c0c9e7b046ed88ad2e9e3150dce
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WASHINGTON (AP) — The U.S. economy grew at a better-than-expected 2.6% annual rate from July through September, snapping two straight quarters of economic contraction and overcoming punishingly high inflation and interest rates.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — grew in the third quarter after having shrunk in the first half of 2022. Stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the world’s biggest economy.

Consumer spending, which accounts for about 70% of U.S. economic activity, expanded at a 1.4% annual pace, down from a 2% rate from April through June. Last quarter’s growth also got a boost from exports, which shot up at an annual pace of 14.4%.

Housing investment, though, plunged at a 26% annual pace, hammered by surging mortgage rates as the Federal Reserve raises borrowing costs to combat chronic inflation.

The outlook for the overall economy has darkened. The Fed has raised interest rates five times this year and is set to do so again next week and in December. Chair Jerome Powell has warned that the Fed’s hikes will bring “pain” in the form of higher unemployment and possibly a recession.

The government’s latest GDP report comes as Americans, worried about inflation and the risk of recession, have begun to vote in midterm elections that will determine whether President Joe Biden’s Democratic Party retains control of Congress. Inflation has become a signature issue for Republican attacks on the Democrats’ stewardship of the economy.

With inflation still near a 40-year high, steady price spikes have been pressuring households across the country. At the same time, rising interest rates have derailed the housing market and are likely to inflict broader damage over time. The outlook for the world economy, too, grows bleaker the longer that Russia’s war against Ukraine drags on.

Last quarter’s U.S. economic growth reversed annual declines of 1.6% from January through March and 0.6% from April through June. Consecutive quarters of declining economic output are one informal definition of a recession. But most economists have said they believe the economy skirted a recession, noting the still-resilient job market and steady spending by consumers. Most of them have expressed concern, though, that a recession is likely next year as the Fed steadily tightens credit.

Preston Caldwell, head of U.S. economics for the financial services firm Morningstar, noted that the economy’s contraction in the first half of the year was caused largely by factors that don’t reflect its underlying health and so “very likely did not constitute a genuine economic slowdown.” He pointed, for example, to a drop in business inventories, a cyclical event that tends to reverse itself over time.

Higher borrowing costs have weakened the home market, in particular. The average rate on a 30-year fixed-rate mortgage, just 3.09% a year ago, is approaching 7%. Sales of existing homes have fallen for eight straight months. Construction of new homes is down nearly 8% from a year ago.

Still, the economy retains pockets of strength. One is the vitally important job market. Employers have added an average of 420,000 jobs a month this year, putting 2022 on track to be the second-best year for job creation (behind 2021) in Labor Department records going back to 1940. The unemployment rate was 3.5% last month, matching a half-century low.

Hiring has been decelerating, though. In September, the economy added 263,000 jobs — solid but the lowest total since April 2021.

International events are causing further concerns. Russia’s invasion of Ukraine has disrupted trade and raised prices of energy and food, creating a crisis for poor countries. The International Monetary Fund, citing the war, this month downgraded its outlook for the world economy in 2023.
 

hanimmal

Well-Known Member
Another 261,000 jobs added.
https://apnews.com/article/inflation-business-economy-prices-government-and-politics-42dbebe9d9e3f94a0f51e5b693931e16?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_02Screen Shot 2022-11-04 at 12.52.52 PM.png
WASHINGTON (AP) — America’s employers kept hiring vigorously in October, adding 261,000 positions, a sign that as Election Day nears, the economy remains a picture of solid job growth and painful inflation.

Friday’s report from the government showed that hiring was brisk across industries last month, though the overall gain declined from 315,000 in September. The unemployment rate rose from a five-decade low of 3.5% to a still-healthy 3.7%.

A strong job market is deepening the challenges the Federal Reserve faces as it raises interest rates at the fastest pace since the 1980s to try to bring inflation down from near a 40-hear high. Steady hiring, solid pay growth and low unemployment have been good for workers. But they have also contributed to rising prices.

“Employers continue to be worried that it’s going to be harder to to hire tomorrow than today, so that actually suggests they don’t see a recession on the horizon,” said Betsey Stevenson, an economist at the University of Michigan who was an economic adviser to President Barack Obama.

Stevenson noted that more than half of last month’s net hiring was in industries — health care, education, restaurants and hotels, for example — that still appear to be catching up from the sharp job losses they endured during the pandemic recession. Hiring in such sectors will likely continue, she suggested, even if the economy slows.

The October jobs figures were the last major economic report before Election Day, with voters keenly focused on the state of the economy. Chronic inflation is hammering the budgets of many households and has shot to the top of voter concerns in the midterm congressional elections. Republican candidates have attacked Democrats over inflation in their drive to regain control of Congress.

The latest data offered hints that the job market might be cooling, if only gradually, as the Fed is hoping to see. Over the past three months, hiring gains have averaged 289,000, down from a sizzling monthly rate of 539,000 a year ago. Average hourly pay, on average, rose 4.7% from a year ago, a smaller year-over-year gain than in September and down from a 16-year peak of 5.6% in March.

The tick-up in the jobless rate occurred because about 300,000 Americans said they were no longer employed. The unemployment rate is calculated from a separate survey from the jobs figure and can sometimes move in a different direction in the short term.

Still, last month’s wage increase will likely continue to fuel inflation pressures.

“This report was definitely strong enough to keep the Fed on track raising rates,” said Jonathan Pingle, an economist at UBS.

President Joe Biden and congressional Democrats have pointed to the vigorous resurgence in hiring as evidence that their policies have helped get Americans back to work faster than the nation managed to do after previous downturns. But that message has been overtaken in the midterm political campaigns by the crushing surge of inflation, which has soured many Americans on the economy under Democratic leadership in Congress and the White House.

The October jobs report showed that job gains were widespread. Health care added 53,000, with hospitals and doctors’ offices continuing to re-staff after having lost many workers at the height of the pandemic. Manufacturing added 32,000. A category that includes engineers, accountants and lawyers added 39,000.

Still, some corners of the economy have begun to flag under the weight of rising prices and much higher borrowing costs engineered by the Fed’s aggressive rate hikes. Especially in industries like housing and technology, hiring has waned. Many tech companies, such as the ride-hailing firm Lyft and the payment company Stripe, have announced plans to lay off workers. Amazon says it will suspend its corporate hiring.

More broadly across the economy, though, the pace of layoffs remains unusually low. And companies in travel, restaurants, manufacturing and health care are still hiring steadily. Southwest Airlines told investors last week that it was on track to hire 10,000 employees this year, including 1,200 pilots. Laboratory Corporation of America said it plans significant hiring.

Jerry Flanagan, CEO of JDog Brands, says his company’s sales are still growing and its franchisees are still hiring even after the company raised prices to cover higher fuel costs. The company employs mostly veterans to do junk hauling and carpet and floor cleaning and has about 300 outlets nationwide.

“They need laborers,” Flanagan said of the company’s branches. “They need people hauling the junk. They need drivers, they need carpet cleaning technicians.”

Flanagan said his company would try to avoid layoffs even if the economy slows. If sales decline, workers can shift to distributing door hanger advertisements, lawn signs and other marketing.

“They’re going to hold onto these people as long as they can,” Flanagan said. “There’s so much work out there.”

Some employers are finally finding all the staff they need.

This week, the Rainbow Blossom Natural Foods Markets in Louisville, Kentucky, finally filled all the jobs it had been advertising after more than a year of struggling with short staffing.

“It’s a great feeling,” said Summer Auerbach, co-owner of the family-owned five-store chain.

Auerbach said the economic environment appears to be shifting back toward the pre-pandemic economy. For the first time in months, for example, applicants are following up via email to check on their applications.

At a news conference Wednesday, Fed Chair Jerome Powell noted that the strong job market is feeding inflationary pressures as businesses continue to raise pay. In September, average wages rose more than 6% from 12 months earlier, according to the Federal Reserve Bank of Atlanta. Pay raises can feed inflation if companies pass on at least part of their higher labor costs to their customers in the form of higher prices.

Powell spoke after the Fed announced a fourth straight three-quarter-point increase in its benchmark rate. It was the latest in a series of unusually large hikes that have heightened the risk of a recession.

Housing has absorbed the worst damage from higher borrowing costs. The Fed’s rate hikes have sent average long-term mortgage rates surging to around 7%. Home sales have cratered, and once-soaring home prices have started to slow.

For now, the economy is still growing. It expanded at a 2.6% annual rate in the July-September quarter after having contracted in the first six months of the year. With inflation still painfully high and the Fed making borrowing increasingly expensive for consumers and businesses, most economists expect a recession by early next year.
 

hanimmal

Well-Known Member
https://www.washingtonpost.com/business/2022/11/10/inflation-october-economy-fed/
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Inflation stayed high but showed signs of slowing in October, as families and businesses continued to face rising costs for basics like food and rent — and as the Federal Reserve ramped up its efforts to lower consumer prices, even at the risk of forcing a recession.

Prices rose 7.7 percent in October compared with the year before, and 0.4 percent over September, the same rate as the previous month, according to data released Thursday morning by the Bureau of Labor Statistics. That’s far above normal levels, but it was lower than analysts had expected. So the report brought some hope that the soaring cost of living may be easing. Officials at the Fed have made clear that they need to see months of encouraging data to get a sense of how the economy is evolving. The latest data may mark a shift, but they’ll want to see it continue.

Inflation continues to hammer basic necessities like housing, food and gas. The shelter index made up more than half of the monthly increase, showing how high rental costs remain despite a recent slowdown in the housing market. Rent was up 0.7 percent compared to the month before, and it’s up 7.5 percent over the year.

Gasoline prices rose 4 percent over September, after three months of consecutive declines. Gas is also up 17.5 percent over the past year, largely because of Russia’s invasion of Ukraine and the sanctions the West has imposed on a major oil producer. Other oil-exporting nations are also cutting back production.

Food rose 0.6 percent over September, easing slightly from the month before. Costs for meats, poultry, fish and eggs rose, as did the cost of cereals and bakery products.

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Still, there were some month-to-month declines, including includes drops in prices for used cars and trucks (2.4 percent), medical care (0.5 percent), apparel (0.7 percent) and airline fares (1.1 percent). That helped overall inflation come down slightly more than analysts were expecting. Indeed, October marked the smallest 12-month increase since the period ending in January.

Voters in Tuesday’s elections told exit pollsters that inflation was among the most important issues swaying their choice, and nearly half of voters said jobs and the economy were the most pressing issue facing the country.

In a desperate bid to get prices down to normal levels, the Fed is raising interest rates at its most forceful pace in decades. But progress has largely been limited to the housing market, and officials have made clear they have a long way to go before letting up. A growing number of economists and Democratic lawmakers say they’re concerned that the Fed will end up slowing the economy so much that it causes a downturn next year.

“We’re already seeing it hit in housing, and now the spillover effects are going through,” said Diane Swonk, chief economist at KPMG, pointing to discounts on furniture and appliance manufacturers pulling back on production. “But that doesn’t mean the Fed stops.”

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In the past year, inflation emerged as a fraught political issue in the run-up to the midterm elections. Republicans were hoping to seize major gains in Congress by attacking Democrats’ sprawling spending measures from earlier in the pandemic, arguing that trillions of dollars in government funds helped push the economy into overdrive. But although control of Congress is still undecided, the issue appears not to have driven anything like the backlash the GOP was seeking.

President Biden on Wednesday pointed to Democrats’ moves to lower prescription drug costs and a steady fall in gas prices since their summer peak. “I can’t guarantee that we’re going to be able to get rid of inflation,” he told reporters.
“But I do think we can.”

“I am optimistic — because we continue to grow, and at a rational pace — we are not anywhere near a recession right now,” he said at a news conference to discuss the election results. “I’m convinced that we’re going to be able to gradually bring down prices so that they, in fact, end up with us not having to move into a recession to be able to get control of inflation.”

So far, the labor market remains hot and has proved remarkably resilient to the highest inflation levels in 40 years. But that could change if employers start nixing their plans to hire new workers — or lay people off altogether. Already, Silicon Valley is taking a hit, with major companies shedding workers in recent weeks. Facebook parent company Meta announced plans on Wednesday to cut more than 11,000 jobs, or 13 percent of its workforce, and is extending its hiring freeze through March.

Getting control of inflation is the Fed’s job, and the central bank’s power lies in interest rates. Higher rates cool off demand in the economy by making all kinds of borrowing — from mortgages to business loans — more expensive. Last week, the Fed hiked rates for the sixth time this year, announcing a fourth consecutive hike of 0.75 percentage points.
Fed Chair Jerome H. Powell emphasized that his colleagues were a long way from finished, saying, “We have a ways to go.”

With that commitment comes the growing likelihood that the economy could enter a recession in 2023 once the full weight of the Fed’s rate hikes wash over the economy.

“Has it narrowed? Yes. Is it still possible? Yes,” Powell said last week of the prospect of achieving what’s known as a “soft landing.” “I think we’ve always said it was going to be difficult, but I think to the extent rates have to go higher and stay higher for longer, it becomes harder to see the path.”

There are few signs that the Fed’s all-out effort is working yet. Prices in September rose 8.2 percent compared with the year before, and 0.4 percent compared with August, more than analysts’ expectations. Core inflation, a measure closely watched by the Fed that strips out more volatile categories such as food and energy, also came in hot.

A major question is whether prices can be tamed with rate hikes alone. The Fed’s decisions can’t fix certain sources of inflation, like bungled supply chains, worker shortages or Russia’s war in Ukraine.

In Lansing, Mich., Jerry’s Automotive is still having issues getting enough engines and transmissions in stock. Owner Chris Luoma said he can only absorb so many costs, and he tries to be honest with customers about the supply chain issues that have long dogged the car market, saying that “you’ve got to stay open, stay in business and pay the bills.”

Luoma said his shop made it through the pandemic in part because people had a cushion of savings they could use to pay for repairs and they often didn’t want to hunt for a new car. The shop has been around for over 50 years, and Luoma hopes it’ll make it through the uncertainty ahead. People always need their cars fixed, after all.

“While a recession might make us step back and think...we’ve seen peaks and valleys with the economy,” Luoma said. “And we’ve always managed to be okay.”

With the latest batch of inflation data, analysts and Fed officials are likely to pay special attention to rental costs, which make up a large portion of what economists refer to as the “basket of goods” used to calculate what’s known as the consumer price index. So far, rents are showing little improvement. Rent costs rose 0.8 percent in September, up slightly from the previous two months. It was also up 7.2 percent in the past year, marking the largest increase since 1982.

But the hope is that, eventually, a major slowing in the housing market will pull rental costs down, too. The housing market is the main part of the economy that has responded to the Fed’s rate hikes, since mortgage ratesare especially sensitive to the central bank’s decisions. The average rate for a 30-year fixed mortgage, the most popular home-loan product, reached 7.08 percent in late October, causing more prospective buyers to bow out of the market. As a result, home prices are falling, demand for mortgages is plummeting and, in October, builder confidence fell for the 10th month in a row. On Wednesday, the real estate firm Redfin said it would lay off more than 860 workers, or about 13 percent of its staff, as business fell off.
 

hanimmal

Well-Known Member
https://apnews.com/article/ftx-trading-former-ceo-d2c2b881dc0eb0ec37b454674f446b52?utm_source=homepage&utm_medium=TopNews&utm_campaign=position_04
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NEW YORK (AP) — The man who had to clean up the mess at Enron says the situation at FTX is even worse, describing what he calls a “complete failure” of corporate control.

The filing by John Ray III, the new CEO of the bankrupt cryptocurrency firm, lays out a damning description of FTX’s operations under its founder Sam Bankman-Fried, from a lack of security controls to business funds being used to buy employees homes and luxuries.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Ray was appointed CEO on November 11, after the company was near collapse and its previous management sought legal counsel on what to do next. Bankman-Fried was persuaded to give up control of the company by his lawyers as well as his father, Joseph Bankman, a professor at Stanford Law School, according to Thursday’s filing.

Since his resignation, Bankman-Fried has sought out news outlets for interviews and has been active on Twitter trying to explain himself and the firm’s failure.

In an interview with the online news outlet Vox, Bankman-Fried admitted that his previous calls for regulation of cryptocurrencies were mostly for public relations.

“Regulators, they make everything worse,” Bankman-Fried said, using an expletive for emphasis.

In a terse statement, Ray said that Bankman-Fried’s statements have been “erratic and misleading” and “Bankman-Fried is not employed by the Debtors and does not speak for them.”

Ray noted that many of the companies in the FTX Group, particularly those in Antigua and the Bahamas, didn’t have appropriate corporate governance and many had never held a board meeting. Ray also addressed the use of corporate funds to pay for homes and other items for employees.

“In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors. I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas,” he said.

So far, debtors have found and secured “only a fraction” of the group’s digital assets that they hope to recover, with about $740 million of cryptocurrency secured in new cold wallets, which is a way of holding cryptocurrency tokens offline, said Ray.

Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy protection and its CEO and founder Bankman-Fried resigned. The embattled cryptocurrency exchange, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run.

In its bankruptcy filing, FTX listed more than 130 affiliated companies around the globe. The company valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities.

Bankman-Fried was recently estimated to be worth $23 billion. His net worth has all but evaporated, according to Forbes and Bloomberg, which closely track the net worth of the world’s richest people.

FTX’s failure goes beyond finance. The company had major sports sponsorships as well, including Formula One racing and a sponsorship deal with Major League Baseball. Miami-Dade County decided Friday to terminate its relationship with FTX, meaning the venue where the Miami Heat play will no longer be known as FTX Arena. Mercedes was planning to remove FTX from its race cars starting last weekend.
A signal of concern from California

That is an interesting read. It looks like they are estimating a huge drop in tax revenue because they think that the Fed is going to push us into a recession. The impact on tech companies laying people off is something they need to keep an eye on for sure.

https://lao.ca.gov/Publications/Report/4646
 

hanimmal

Well-Known Member
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https://apnews.com/article/biden-kevin-mccarthy-impeachments-alejandro-mayorkas-border-security-5b2a8fa00a8cc724922b89c328fe6609
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WASHINGTON (AP) — House Republican leader Kevin McCarthy on Tuesday called on Homeland Security Secretary Alejandro Mayorkas to resign over management of the U.S. southern border with Mexico, warning that the new House GOP majority will open investigations that could lead to impeachment proceedings.

McCarthy, who is positioned to become the new House speaker when the new Congress convenes in January, said the Republican majority would use “the power of the purse and the power of the subpoena” to hold President Joe Biden’s administration accountable for border security.

“If Secretary Mayorkas does not resign, House Republicans will investigate every order, every action and every failure to determine whether we can begin an impeachment inquiry,” McCarthy said at a press conference in El Paso, Texas.

“This investigation could lead to an impeachment inquiry,” he said.

Standing with fellow House Republicans mostly from Texas, McCarthy said he had spoken with the incoming chairmen of the relevant investigatory committees and given his “full support” to Rep. Jim Jordan, R-Ohio, at the Judiciary Committee and Rep. James Comer, R-Ky., at the Oversight Committee to open investigations.

McCarthy said he expects Mayorkas’ resignation by Jan. 3, when the new Congress convenes. Investigations would begin on day one, he said. “Enough is enough,” he said.

House Republicans have put border security among their top priorities — and Mayorkas among their top officials to investigate and try to remove from office, potentially through impeachment.

McCarthy has not yet secured the votes from House Republicans to become speaker, and he is working swiftly to shore up support before the vote from what is expected to be a slim, few-seat majority.

The California Republican particularly needs votes from his conservative right-flank lawmakers, who are eager to begin impeachment proceedings against Mayorkas and other Biden administration officials.

The lawmakers pledged to hold public hearings at the border to highlight the security concerns.

“Alejando Mayorkas must resign,” said Rep. Kat Cammack, R-Fla., who joined the group at the border. “And if he doesn’t we will make him.”
 

Roger A. Shrubber

Well-Known Member

hanimmal

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

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

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

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

Well-Known Member
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

Well-Known Member
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

Well-Known Member

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

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

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