Some of the longtime drivers of higher inflation - spiking gas prices, supply chain snarls, soaring used-car prices - are fading. Yet underlying measures of inflation are actually worsening.
The ongoing evolution of the forces behind an inflation rate that's near a four-decade high has made it harder for the Fed to wrestle it under control. Prices are no longer rising because a few categories have skyrocketed in cost. Instead, inflation has now spread more widely through the economy, fueled by a strong job market that is boosting paychecks, forcing companies to raise prices to cover higher labor costs and giving more consumers the wherewithal to spend.
The core price figures solidified worries that inflation has now spread into all corners of the economy. When inflation is driven mainly by demand, it can require more drastic action from the Fed than when it's driven mainly by supply shocks, such as an oil supply disruption, which can often resolve on their own.
The Fed is widely expected to raise its benchmark short-term rate by a substantial three-quarters of a point next week for a third consecutive time. Tuesday's inflation report even led some analysts to speculate that the central bank could announce a full percentage point hike. If it did, that would amount to the largest increase since the Fed began using short-term rates in the early 1990s to guide consumer and business borrowing.
Restaurant prices, for example, jumped 0.9% in August and have risen 8% in the past year. But that hasn't noticeably discouraged people from going out. Restaurant traffic has surpassed pre-pandemic levels on Open Table, an app that tracks reservations, and was still increasing into September. Wages and salaries jumped 6.7% in August from a year earlier, according to the Federal Reserve Bank of Atlanta's wage tracker, the biggest increase in nearly 40 years. And Luzzetti noted that the same data shows a record wage premium for people who switch jobs, compared with those who stay put. That means employers are still offering big raises to try to fill jobs.
Norge Siste Nytt, Norge Overskrifter
Similar News:Du kan også lese nyheter som ligner på denne som vi har samlet inn fra andre nyhetskilder.
Market Hasn't Bottomed Yet, Says Willy WooBitcoin still has room to fall, according to on-chain data and the profitability of the first cryptocurrency
Les mer »
Northrop Grumman exec says SpaceX's Starship rocket has 'awesome' potential but 'not there yet'The leader of a Northrop Grumman subsidiary sees exciting potential in the massive Starship rockets that Elon Musk's SpaceX is developing.
Les mer »
Samsung kicks off yet another phenomenal Galaxy Z Fold 4 deal for its fall Discover eventYou have until the end of the week to buy the hot new Galaxy Z Fold 4 from Samsung at a huge discount with a free memory upgrade and some cool store credit included.
Les mer »
Dodgers haven't clinched postseason berth yet as Major League Baseball cites mistakeJUST IN: Dodgers haven't clinched postseason berth yet as Major League Baseball cites mistake
Les mer »
Climate change tipping points report offers clearest warning yetAt least 4 climate tipping points — including the abrupt thawing of Arctic permafrost — are likely to be set off even at the Paris Agreement's most stringent warming target of 1.5°C, a study finds. It warns far more ambitious emissions cuts are needed.
Les mer »