A worrisome bout of inflation struck the economy in April, with U.S. consumer prices for goods and services surging 0.8%, the largest monthly jump in more than a decade, and the year-over-year increase reaching its fastest rate since 2008.
The acceleration in prices, which has been building for months, has unsettled financial markets and raised concerns that it could weaken the economic recovery from the pandemic recession.
Wednesday's report from the Labor Department showed sharply higher prices for everything from food and clothes to housing. A 10% surge in the prices of used cars and trucks — a record jump — accounted for roughly one-third of last month's increases. Prices for vehicles, both used and new, have been soaring as a result of a computer chip shortage that has slowed auto production and reduced dealer supplies.
Over the past 12 months, consumer prices have jumped 4.2% — the fastest rise since a 4.9% gain in the 12 months that ended in September 2008. Excluding volatile food and energy, core inflation rose 0.9% in April and 3% over the past 12 months.
After years of dormant inflation, with the Federal Reserve struggling to increase it, worries about rising prices have shot to the top of economic concerns. Shortages of goods and parts related to disrupted supply chains have been a key factor.
The Fed, led by Chair Jerome Powell, has repeatedly expressed its belief that inflation will prove temporary as supply bottlenecks are unclogged and parts and goods flow normally again. But some economists have expressed concern that as the economic recovery accelerates, fueled by rising demand from consumers spending freely again, so will inflation.
“It looks like inflation pressures are not only building but are likely to be here at least through the rest of the year,” said Joel Naroff, chief economist at Naroff Economic Advisors. “With growth robust, firms have a measure of pricing power tat they haven't had in decades, and they appear to be using it.”
Investors, too, have grown increasingly jittery. On Tuesday, the Dow Jones Industrial Average sank more than 470 points — 1.4% — its worst day since Feb. 26.
Wednesday's inflation report showed that food prices rose 0.4%, the biggest such increase since a 0.5% rise last June. Energy costs, though, edged down 0.1%, with gasoline pump prices falling 1.4%, the biggest drop since May 2020.
Last month, Powell suggested at a news conference that Fed officials expect inflation to move above its 2% annual target over the next few months. The Fed has said it will allow prices to rise slightly above 2% for a period of time to make up for the past decade's shortfalls in inflation.
Powell has said that as long as the increase in inflation doesn't appear to be hurting consumer and business expectations about price increases, the central bank would be willing to let prices rise without acting to raise interest rates. That view has been supported by comments from other Fed officials including Lael Brainard, a board member who warned Tuesday against a premature Fed tightening that could harm the economy.
Four-day week global, an organization in the UK, is pushing for a society where health and wellbeing come first, and a world in which people work to live, rather than live to work. They're demanding a four-day work week based o a recent study that proves productivity increases when working hours are reduced to 32 hours a week. Now, at least 30 companies in the UK are taking part in a four-day work week trial. joining me now is Charlotte Lockhart, founder of four-day week global.
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The gambling industry has seen a boom since shutting down in 2020, outpacing even pre-pandemic levels. But as gamblers have returned to the tables, there's been a rise in reports of gambling addiction as well. Sara Slane, founder of Slane Advisory and sports betting/casino gaming executive, joined Cheddar to discuss the state of the gambling industry.
Shares of Peloton recovered after CEO John Foley debunked rumors that the company would halt production of some products, confirming that the company will instead be quote 'right-sizing' production as it faces lagging demand.
This comeback for the stock comes after reports surfaced that Peloton could completely hit the brakes on production of its bikes and treadmills. In the last year, Peloton has wiped nearly $40 billion off its market cap, with its stock down over 70% in 2021. Doug Astrop, managing partner at Exponential Investment Partners, joined Cheddar Movers to discuss.
After an intense hours-long meltdown Monday, stocks closed higher in a last minute, stunning comeback. At one point, the Dow shed over 1,000 points, the tech-heavy Nasdaq was down close to 5% and inching toward correction territory, and the S&P 500 briefly hit a correction earlier in the day. During most of Monday's session, stocks were on track to mark their worst months since March 2020, and for the Nasdaq, since October 2008. Philip Palumbo, Founder, CEO and Chief Investment Officer of Palumbo Wealth Management, joined Cheddar News' Closing Bell to discuss today's stunning market comeback, whether there's more room for stocks to fall, his 2022 market predictions, and more.
