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.
Stocks closed lower on Friday as investors continue to worry over rate hikes. John Lynch, CIO of Comerica Wealth Management, joins Cheddar News' Closing Bell, where he says value is back in play with investors. Lynch also believes the market has overreacted to the latest Fed minutes, suggesting a bounce-back at some point.
Private equity firms in 2021 spent $401.71 billion in U.S. tech investments — doubling 2020's level of $196.34 billion. As tech becomes increasingly interwoven into our lives amid the pandemic, investors grow bullish on the sector, especially software-as-a-service companies. How will 2022 stack up to 2021, and is there potential for parts of the tech sector to sink this year? John Jannarone, Editor in Chief at IPO-Edge, joins Cheddar News' Closing Bell to discuss 2021's record year of deals, how potential interest rate hikes will impact tech investments in 2022, the fastest-growing IPOs, and more.
Bed Bath & Beyond delivered disappointing fiscal third-quarter results for 2022. Shares initially dove more than 9% in premarket trading on the news but finished the day up nearly 8%. Bed Bath & Beyond has been a meme-stock target for online investors in the past -- so was meme-stock mania a factor in the recent stock movement for the company? Jaime Rogozinski, the founder of the subreddit WallStreetBets, joins Cheddar News' Closing Bell for more, as his forum helped spark the meme stock phenomena. He also discussed some decentralized finance services and trends for the retail investor to watch for in 2022.
College athletes scored big in 2021 when they were finally allowed to begin earning money based off of their name, image, and likeness, known as NIL. But how can young athletes best manage their money so they can set themselves up for years of success? Nicole Pullen Ross, Head of Goldman Sachs Sports and Entertainment Solutions, joins Cheddar News' Closing Bell to discuss why financial management for college athletes is important, common pitfalls they could run into, and more.
December's jobs report was weaker than expected: the economy only added 199,000 nonfarm payrolls compared to an estimate of 422,000. However, the unemployment rate hit a new pandemic-era low of 3.9%, beating expectations. One thing to consider is the fact that the impact of the COVID-19 omicron variant is not factored into these results as the read is taken around the middle of the month. So — how might the variant impact job reports over the next few months? Mark Zandi, Chief Economist at Moody's Analytics, joins Cheddar News' Closing Bell to discuss December's jobs numbers, his 2022 labor market outlook, how COVID-19 will continue to impact the labor market, and more.
Digital medical care provider Pear Therapeutics rang the closing bell on the Nasdaq Friday and President and CEO Dr. Corey McCann, joined Cheddar to talk about how the company plans to grow the business of software-based therapeutics and how the first FDA authorized prescription digital therapeutics company will go about treating illnesses like insomnia and addiction. "These really are pieces of software. In many cases, they're apps and in the cases of our addiction products, these are based on something called cognitive behavioral therapy or CBT," he said. "These products change the patient's brain circuitry to help them be abstinent, to help them stay in treatment, and that's exactly what we see in randomized clinical trials and that's what we see in the real world." He also addressed the ongoing mental health crises brought on by the pandemic. **copy updated to remove IPO information as Pear Therapeutics went public in December**
Gamestop shares were up on The Wall Street Journal report that the video game retail company plans to enter the NFT and crypto space. Adam Hollander, the founder of Hungry Wolves NFT, joined Cheddar to break down how it could be a lifeline for the struggling meme stock darling. "They're not resigning themselves to becoming the next Blockbuster story, and so while people may not be buying as many video games in a retail environment anymore, NFTs, in particular, people are starting to expect more gaming utility on the backend — at least for a variety of projects — and I personally think its a very smart move for them to do this," Hollander told Cheddar.
On Saturday, New York will join neighboring New Jersey and Connecticut in authorizing mobile sports betting. Matt Kalish, president and co-founder of Draftkings North America, joined Cheddar to talk about the landmark change that is estimated to rake in $500 million in annual tax revenue on a potential billion-dollar market. Kalish also addressed the possibility that legalized sports betting in the Empire State could cannibalize his company's revenues in the bordering states. "It's pretty inconvenient, you know, to go across the border to make a bet. And people were doing it, but I think it really stifled a lot of the opportunity," he said. "So while there's some of that going on, I think really a tremendous amount, like a giant percent, of New York will be very incremental."
James Tattersall, director of sales and marketing for Lake Nona Wave Hotel, talks about the hotel's initiatives to foster diversity and how these amenities champion inclusivity in the Orlando area.
Desmond Howard, former NFL wide receiver and Modelo college football playoff ambassador, joins Cheddar News to talk about the Modelo sweepstakes honoring the 30th anniversary of his iconic punt return.
