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.
Michele Schneider, Partner and Director of Trading Research & Education for MarketGauge, breaks down the major risks to the markets and discusses why tech and Agriculture are the best sectors to hedge inflation concerns.
Bitcoin took a nosedive over the weekend, falling to its lowest price level in nearly two months. According to data from Coindesk, the crypto dropped more than 20% to $42,000 on Saturday before rebounding some. Prices of Ether, Dogecoin and Shiba Inu dropped as well, with Ether tumbling by more than 15%at one point. Lance Ippolito, head trader at the Future of Wealth, joined Cheddar to discuss why crypto plummeted and what to expect next.
Less than six months after making its public debut on the NYSE, Chinese ride-hailing giant Didi says it will delist in the U.S. and pivot to Hong Kong instead. Chinese regulators are citing cybersecurity and data concerns. Shehzad Qazi, Managing Director, China Beige Book International joined Cheddar's Opening Bell to discuss.
As offices shifted to remote schedules, and people were forced into a new way of work, many began to re-think their career path and their purpose in the workforce, leading to what many are calling 'The Great Resignation.' During the last year, Americans quit their jobs in unprecedented numbers, seeking more flexibility, better benefits, a higher salary, and ultimately greater independence. Danielle Neal, CEO of Digital with Danielle, is just one of the millions who quit their job during the pandemic, and she joined Cheddar's Opening Bell to tell her story.
As Americans quit their jobs in record numbers this year, companies have been scrambling to try and fill those gaps. Gad Levanon, head of the labor market institute at The Conference Board, says companies need to focus more on salary if they want to better retain their employees. Levanon joined Cheddar to discuss the labor shortage, the "Great Resignation," and what companies can learn from it going into 2022.
The U.S. has seen several retailers across the country forced to close their brick-and-mortar stores amid the rise of e-commerce over the past few years. However, we are in the midst of a brick-and-mortar boom, with retailers expected to open more stores this year than they close, for the first time since 2017, according to an analysis of more than 900 chains by IHL Group, a research and advisory company. At the same time, the e-commerce businesses of retailers have become more dependent on physical stores to fulfill orders, especially during the holiday shopping season. Lionesque Group CEO Melissa Gonzalez joins Cheddar News' Closing Bell to discuss.
Stocks closed higher Tuesday with the S&P 500 and Nasdaq marking their best day since March. Tech stocks and chipmakers were on the move, lifting the Nasdaq higher as investors shake off recent COVID-19 omicron variant fears. Chris Konstantinos, Chief Investment Strategist at RiverFront Investment Group, joins Cheddar News' Closing Bell to discuss today's close, investor sentiment around COVID-19, inflation's impact on markets, and more.
Alyse Killeen, Founder & Managing Partner at Stillmark VC, joins Cheddar News' Closing Bell to discuss what the jury had to evaluate in the Craig Wright trial and if uncovering the identity of Bitcoin inventor Satoshi Nakamoto will actually impact crypto investors.
Heila Technologies, a startup that develops hardware and software to integrate renewables and batteries on a microgrid, is helping to power the first clean energy microgrid for Auto Mercado, a top supermarket chain in Costa Rica. The plant will reduce 20 tons of CO2 emissions per year. Heila Technologies CEO Francisco Morocz joins Cheddar Climate to discuss.
GitLab CFO Brian Robins joined Cheddar's "Closing Bell" to discuss the single platform software development app's first earnings report since going public in October. The company frames itself as a one-stop-shop for businesses to transition into software development to manage in-network chat, video conferencing, and meeting scheduling among other applications. GitLab saw Q3 revenue jump 58 percent and was able to add a number of new customers since its IPO.
