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.
There will soon be another, lower-cost subscription option for Disney+ — but with commercials. Disney will launch the new ad-supported tier for its streaming service in the U.S. later this year and internationally in 2023, but so far there is no word on an exact launch date or price for the new service option. Tal Chalozin, co-founder and CTO of online ad tech company Innovid, joined Cheddar News' Closing Bell to discuss what the news could mean for the next chapter of the streaming wars. "I wouldn't say that are worried about subscriber growth, but they have big goals to fill," he said. "They need to go to the mid-market or the longer tail. An ad model, always proven that that that's the way to go to mass market in television."
From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
On this episode of ChedHER: Lissy Hu, CEO and Founder of CarePort, powered by WellSky, breaks down how to avoid 'mom guilt' at work; Katie Hotze, Founder and CEO of Grocery Shopii, explains how she's creating a platform that allows for personalized meal planning and recipes into a grocer's eCommerce platform; Nicole Wegman, Founder and CEO of Ring Concierge, talks how she's creating luxury designs for women, by women.
Londoners are facing travel chaos after around 10,000 transport workers walked off their jobs for the second day this week, leaving almost all of the capital’s subway lines suspended or severely disrupted.
Katie Hotze, Founder and CEO of Grocery Shopii, joins ChedHER to discuss how she's creating a platform that allows for personalized meal planning and recipes into a grocer's eCommerce platform, and her learnings from one of her very well known investors: Lance Bass.
Independent artists were caught off-guard and the Epic acquisition of Bandcamp quickly sparked fears it could ruin what many saw as their last best hope of getting paid online for their work.
Trying to meet people online has become a predictable routine. Now, one app is switching it up by allowing users to swipe right on plans and outings rather than faces. Pitch Social co-founders Daniel Antonio and Ryan Snowden joins Between Bells to talk about their app.
Playboy released its fourth quarter and full year 2021 results, reporting an annual revenue of $247 million, up 67 percent year-over-year. The venerable lifestyle and entertainment brand had a whirlwind of a year — going public for a second time, completing three acquisitions, and growing its workforce to more than 1,100 employees, all while dealing with ongoing supply chain issues and other COVID-related challenges. CEO Ben Kohn joined Cheddar's Opening Bell to discuss the long pivot away from its legacy print product to digital. "It gives us a truly competitive advantage, especially when you think of this world we live in today with the changes to iOS last year, what you saw happen with Facebook, the lack of performance marketing," he said. "We now have an organic audience in partnership with our creators that we can market other products and services to as well."
