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.
Gerald Johnson, Executive VP, Global Manufacturing and Sustainability at General Motors, joins Cheddar News to break down what Factory ZERO signifies for GM's all-electric future and why the auto manufacturer will be a leader in the growing EV industry.
According to the U.S. Labor Department, a record 4.4-million people quit their job in September, with data showing there are seven unemployed workers for every ten job openings.
However, Americans aren't just quitting their jobs for more suitable ones, many are embracing their entrepreneurial side, leaving to start their own business. Dick Schulze, founder of Best Buy joined Cheddar's Opening Bell to discuss.
Airlines are gearing up for a busy winter season as they continue to rebound from the pandemic. But jet fuel prices combined with the ongoing labor shortage could put a damper on those holiday gains. Christian Vernet, president of La Compagnie, the only all business class airline in the world, joined Cheddar for an update on the state of the airline industry and how it's dealing with the surge in demand after the U.S. reopened its border to international visitors.
Cadillac is launching its first ever all-electric vehicle. The 2023 Lyriq boasts an estimated 300 mile range, $60,000 dollar starting price, a 33-inch advanced LED display, among many other features. The rollout comes as Cadillac has posted record third quarter global sales and plans to become all-electric by 2030. Rory Harvey, vice president of Cadillac, joined Cheddar to discuss what drivers can expect from the Lyriq, and how the brand has been able to deal with the ongoing chip shortage.
Octavio Marenzi, Founder & CEO of Opimas, discusses how labor participation is directly correlated with wage pressures and why supply chain issues are having little effect on earnings from the retail sector.
Philip Palumbo, Founder, CEO & Chief Investment Officer of Palumbo Wealth Management, discusses why wage pressure could impact earnings going forward and talks about the valuation mismatch within the tech sector.
Adam Coons, Portfolio Manager at Winthrop Capital Management, explains why supply chain constraints are the biggest risk to markets and which sectors are poised to outperform if interest rates rise.
Macy's reported a Q3 earnings beat and raked in $5.4 billion in revenue. The department store giant also said it is equipped to handle the expected holiday shopping rush. The company also announced it would be launching its own curated digital marketplace in 2022.
Zumba Fitness CEO Alberto Perlman joined Cheddar's "Between Bells" to talk about the rise in demand for in-person training after the company saw a 55 percent jump in scheduled classes over Q3. Perlman noted that while demand for in-person training is increasing, the pandemic exposed a market for at-home sessions that will likely persist even after it ends. "The world is becoming hybrid, and people are finding ways to fit in two workouts a week at home and then three workouts at the gym. And our instructors are perfectly positioned to adapt to those environments," he said.
Sting is the latest recording artist looking to unload his music catalog — for a staggering $250 million. Universal Music Group is said to be at the top of the list of suitors but the pop star's hits could still end up remaining with Sony.
