Inflation surged more than expected in January, notching another four-decade high as strong consumer demand and pandemic-related supply-chain snarls fueled rapid price gains that wiped out the benefits of rising wages for most Americans.

The consumer price index rose 7.5% in January from a year ago, according to a new Labor Department report released Thursday, marking the fastest increase since February 1982, when inflation hit 7.6%. The CPI – which measures a bevy of goods ranging from gasoline and health care to groceries and rents – jumped 0.6% in the one-month period from December.

Economists expected the index to show that prices surged 7.3% in January from the previous year and 0.5% on a monthly basis.

So-called core prices, which exclude more volatile measurements of food and energy, climbed 6% in January from the previous year – a sharp increase from December, when it rose 5.5%. It was the steepest 12-month increase since August 1982.

“U.S. annual CPI is the highest since 1982, and what’s worse is that this likely isn’t the peak,” said Seema Shah, chief strategist at Principal Global Investors. “Higher-than-expected monthly gains in core CPI indicate continued underlying heat and will do nothing to relieve pressure on the Fed to tighten sharply and urgently.”

Stocks declined after the report, with tech leading the broad market selloff.

Rising inflation is eating away at strong wage gains that American workers have seen in recent months: Real average hourly earnings rose just 0.1% in January from the previous month, as the 0.6% inflation increase eroded the 0.7% total wage gain, according to the Labor Department. On an annual basis, real earnings actually declined 1.7% in January.

Price increases were widespread: Although energy prices rose just 0.9% in January from the previous month, they’re still up 27% from last year. Gasoline, on average, costs 40% than it did last year. Food prices have also climbed 7% higher over the year, while used car and truck prices – a major component of the inflation increase – are up 40.5%. Shelter costs jumped 0.3% for the month and 4% year-over-year.

The inflation spike has been bad news for President Biden, who has seen his approval rating tumble as consumer prices rise. The White House has blamed the price spike on supply-chain bottlenecks and other pandemic-induced disruptions in the economy, while Republicans have pinned it on the president’s massive spending agenda and his energy policies targeting the oil and gas industries.

The eye-popping reading – which marked the eighth consecutive month the gauge has been above 5% – could also amp up pressure on the Federal Reserve to kick off its interest rate increases next month with a half-basis point hike. Raising interest rates tends to create higher rates on consumers and business loans, which slows the economy by forcing them to cut back on spending.

Traders are now pricing in over a 44% chance of a hefty half-point rate jump when policymakers meet next month, instead of a more modest quarter-point increase. It would mark the first time since 2000 that the U.S. central bank raised the federal fund rate by 50 basis points. The Fed has not raised rates since December 2018. The odds of a sixth quarter-basis point hike this year, meanwhile, jumped to 63% after the inflation report.

“At this point it’s not a question of will they, won’t they – it’s a question of how many hikes we’ll see in 2022, and what the magnitude and pace will be,” said Mike Loewengart, managing director of investment strategy at E*Trade. “Given views on these aspects are all over the map at this point, there is a lot for the market to be uncertain about.”

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Fed Chairman Jerome Powell has left open the possibility of a rate hike at every meeting this year and has refused to rule out a more aggressive, half-percentage point rate hike, but said it’s important to be “humble and nimble.”

“We’re going to be led by the incoming data and the evolving outlook,” he told reporters during the central bank’s policy-setting meeting last month.

Source: https://www.foxbusiness.com/economy/consumer-price-index-inflation-january-2022?test=38861ea43380e1402f1c90f21546ad4b

The post Inflation accelerates 7.5% in January, hitting a fresh 40-year high first appeared on Garner Ted Armstrong Evangelistic Association.

U.S. job growth significantly undershot expectations in November, suggesting that difficulty in attracting new workers is weighing on the labor market’s recovery from the pandemic, even as COVID-19 cases dissipated nationwide.

The Labor Department said in its monthly payroll report released Friday that payrolls in November rose by just 210,000, well below the 550,000 jobs forecast by Refinitiv economists. It marked the worst month for job creation so far this year. The unemployment rate (which is calculated based on a separate survey) dropped more than expected to 4.2% from 4.6% — the lowest level since the pandemic began.

The labor market had been gaining momentum after a delta-induced slowdown over the summer, but the latest figure represents a significant drop from October’s upwardly revised number of 546,000 and September’s upwardly revised 379,000. There are still about 3.9 million fewer jobs than there were last February, before the crisis began.

“Today’s employment report is doubly disappointing, because the reference week occurred just as it looked like Covid was on the retreat,” said Justin Wolfers, a University of Michigan economist. “This was a moment for people to return to malls and to return to work. The COVID-related news has only gotten worse since then.”

The report wasn’t all bad news, however: The labor force participation rate rose to 61.8%, wages rose 4.8% from a year ago and the survey of households offered a brighter outlook, pointing to an employment gain of 1.13 million for the month. (The jobs report consists of two surveys – one based on employers and the other on households).

RSM chief economist Joe Brusuelas described the report as a “tale of two surveys.”

“Rarely has the estimate produced by the good folks at the Bureau of Labor Statistics resulted in such divergent results as that illustrated by the twin establishment and household surveys that are the foundation of the monthly tally,” Brusuelas said.

The job growth stumble comes before the emergence of the newly identified omicron variant of COVID-19, which could jeopardize the global economy’s recovery. There is still a lack of clarity over how dangerous the new variant is, including whether it is more transmissible or capable of causing more severe illness. Early evidence suggests an increased risk of reinfection.

Public health officials have urged caution against panic.

But the economic impacts of the new strain – which has been found in at least 38 countries including the U.S. – have already been felt, with the U.S. and at least 10 European nations suspending air travel from southern Africa. The 27-nation European Union also recommended an “emergency brake” on travel from southern Africa, citing the “very concerning” new variant.

Surveys for the November jobs report were conducted about three weeks ago, before the new variant was detected.

Leisure and hospitality, one of the hardest-hit sectors that has become a bellwether of sorts for the economy’s recovery, saw a gain of just 23,000 new jobs last month. By comparison, it added 170,000 new jobs in October. The sector, which includes bars, restaurants and hotels, has recovered about 7 million of the jobs it lost during the pandemic, but remains about 1.3 million below its February 2020 level.

A mixed bag of industries accounted for growth last month. Substantial gains took place in professional and business services (90,000), transportation and warehousing (50,000), and construction (31,000). But retail employment fell by 20,000 last month on a seasonally adjusted basis, despite the upcoming holiday season.

Markets remained relatively calm, despite the disappointing report.

Federal Reserve policymakers have been closely watching the labor market for signs that employment is reaching pre-crisis levels after the pandemic triggered one of the steepest – but shortest – recessions in nearly a century.

Although the jobs figure came in well below economists’ expectations, the U.S. central bank may plow ahead with tentative plans to begin more aggressively unwinding the economic support put in place in March 2020 in order to curtail surging inflation.

“If you think this report will push back the accelerated taper mentioned by Fed Chairman Jerome Powell this week, you would be mistaken,” said Jamie Cox, managing partner for Harris Financial Group.

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The central bank has been purchasing $120 billion in bonds each month throughout most of the pandemic in order to keep credit cheap and stabilize the financial markets. In November, Fed officials announced plans to scale back the program by $15 billion a month, a timeline that would end the program by late June.

Chairman Jerome Powell suggested this week that Fed officials may accelerate their plan to reduce their monthly purchases of bonds and mortgage-backed securities later this month.

“At this point, the economy is very strong, and inflationary pressures are high,” Powell said on Tuesday. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner.”

Source: https://www.foxbusiness.com/economy/november-jobs-report-coronavirus-pandemic?test=38861ea43380e1402f1c90f21546ad4b

The post US hiring stumbles in November as economy adds just 210,000 new jobs first appeared on Garner Ted Armstrong Evangelistic Association.

Lenders’ confidence on how they expect the U.S. economy to perform during the next six months reached a new record high in the history of the Phoenix “Lending Climate in America” survey. Lenders’ confidence continues to remain positive on how they expect the U.S. economy to perform in the near term with a grade point average of 2.83, a 9-percentage point increase from the Q1 2018 results of 2.74. On the contrary, the GPA for the U.S. economy beyond the next six months saw a slight decrease of five percentage points to 2.42 from the previous quarter’s results of 2.47.

Furthermore, lenders were surveyed on whether they believe legislation will be passed in the next 12 months to materially change the United States’ trade policy and how they expect this to impact the U.S. economy. Of the lenders surveyed, 28% think legislation will be passed in the next twelve months to change the U.S.’s trade policy and the impact on the U.S. economy will be neutral.

In addition, lenders were surveyed on what direction their institution believes the Fed will move interest rates and by how much. 96% of respondents expect the Fed will move interest rates +1/2 point or more in the coming six months. When asked whether they expect interest rates to be up, down, or remain at the same level, 100% of lenders expect interest rates to be up.

Lenders were also surveyed this quarter on if they agree with Fed Chairman Jerome Powell that market participants should worry less about the yield’s current slope given recent economic growth. Sixty-percent of lenders somewhat agree with Fed Chairman Jerome Powell and that while the flattening of the yield curve is concerning, a recession is highly unlikely given the current economic climate. However, when asked the factor with the strongest potential to affect the near-term economy, 46% of lenders believe the stability of the stock market has the strongest potential to affect the near-term economy.

“This quarter’s results showed a near term GPA grade of 2.83 which represents an overall ‘B’ grade and sets a record high GPA in the history of the firm’s ‘Lending Climate in America’ survey, proving lenders confidence in the U.S. economy in the near-term continues to strengthen,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix.

To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit http://www.phoenixmanagement.com/survey/.

Source: http://www.abladvisor.com/news/14184/lender-confidence-in-u-s-economy-hits-record-high-survey-finds

The post Lender Confidence in U.S. Economy Hits Record High, Survey Finds first appeared on Garner Ted Armstrong Evangelistic Association.