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Tag: Inflation

  • Stocks come back strong, shrugging off hot inflation reading

    Stocks come back strong, shrugging off hot inflation reading

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    U.S. stocks soared Thursday, with gains of 2% and above across all major indexes, after falling sharply in opening trading on an unexpectedly hot inflation report that strengthened the Federal Reserve’s position on the need for more aggressive interest rate hikes.

    The S&P 500 rose 84 points, or 2.4%, to close at 3,662. The Dow Jones Industrial Average rose 785 points, or 2.7%, and the Nasdaq Composite climbed 2%. The S&P 500 is down 26% this year and close to a two-year low.

    The Dow’s swing of more than 1,300 points during the day was its largest since March 2020, as was S&P 500’s percentage move from low to high.

    Stocks in Europe also flipped from losses caused by the U.S. inflation data, while Treasury yields pulled back from their initial surge. The value of the U.S. dollar against other currencies sank after initially jumping.

    They’re the latest jagged, back-and-forth moves for markets, which have been swinging sharply due to all the uncertainties about economies around the world and how badly higher interest rates will hurt them.

    Is inflation heating or cooling?

    Analysts said some data points buried deep within the inflation report may be offering hope that inflation is on its way to marking a peak and then easing, even though current conditions look dour. Others said technical reasons could also be helping to support markets, as some investors closed out of trades betting on declines following the inflation report.

    “Hopefully it’s because people have dug into the details of the inflation report and noticed a few signs that we could get inflation relief by the end of the year,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

    “Markets have talked themselves off a ledge, so to speak, and they’re a bit more hopeful,” said Kristina Hooper, chief global markets strategist at Invesco.

    Most investors came into the morning already expecting the Fed to hike its key overnight interest rate by three-quarters of a percentage point next month, which would be its fourth straight hike that was triple the usual size.

    “Not only is the Federal Reserve going to raise rates by 75 bps next month, but there is now a possibility that they will raise rates by another 75 bps in December,” predicted Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

    Minutes from the Fed’s last meeting, released Wednesday, underscored the central bank’s commitment to taming “unacceptably high” inflation.

    Higher rates make buying a house, car or anything else purchased on credit more expensive, and the hope is that will slow the economy and job market enough to undercut inflation. But higher rates take a notoriously long time to take full effect, and the Fed risks causing a recession if it ends up going too far.

    As the day progressed, and investors had more time to dig into the inflation report’s details, analysts said they perhaps saw some glimmers of hope. Even though what’s called “core” inflation accelerated last month, overall inflation including food and energy prices slowed by a touch.

    September retail sales data to be released Friday could give a clearer picture of where prices are hottest and how Americans are reacting.


    El-Erian: “We are in this incredible situation where good news for the economy is bad news for the markets”

    06:48

    The Fed and other central banks in Europe and Asia have raised rates by unusually big margins to cool inflation that is at multidecade highs, but traders are afraid they might tip the global economy into recession.

    “While inflation is still way too high, and core inflation is at a new generational high, the Fed is unlikely to increase the increment of its rate hikes,” Bill Adams, Chief Economist for Comerica Bank, said in a report.

    Delta Air Lines shares jumped more than 4% premarket after it reported a $695 million third-quarter profit. Atlanta-based Delta said higher average fares this summer and a lucrative credit-card business more than offset rising fuel costs. The airline forecast that revenue during the final three months of the year will top pre-pandemic levels.

    Dollar edges back

    In energy markets, benchmark U.S. crude gained 13 cents to $87.40 per barrel in electronic trading on the New York Mercantile Exchange. 

    The dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears. The yen’s weakness has prompted expectations Japan’s central bank might intervene for a second time to prop up the exchange rate following an intervention in September.

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  • Amazon’s holiday sales event sees lower sales, group says

    Amazon’s holiday sales event sees lower sales, group says

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    NEW YORK — Amazon said Thursday its Prime members ordered more than 100 million items during a sales event this week that analysts are expecting to be a bellwether for the holiday shopping season.

    As expected, the Seattle-based e-commerce company did not share sales figures. Still, some third-party estimates offer clues on how consumers spent during the two-day discount event that ran on Tuesday and Wednesday.

    According to the data group Numerator, which tracked roughly 44,670 orders during the sale, the average order size clocked in at $46.68, $13 less than what it was during Amazon’s Prime Day sales event in July. Inflation also had an impact – 26% of shoppers passed on a deal because it wasn’t a necessity, Numerator said.

    Major retailers have been offering more holiday discounts this year and doing it much earlier than usual, aiming to offload excess goods and offer cash-strapped Americans better deals amid high inflation.

    Amazon’s discount event this week was the first time the company offered major sales to its Prime members twice in one year. Walmart has also been offering sales this week and has expanded its window for gift returns to between Oct. 1 and Jan. 31, compared with last year’s return window of Nov. 1 to Jan. 24. Meanwhile, Target began offering holiday deals last week during a two-day discount event. The company declined to share its revenue from those sales.

    According to Salesforce, which analyzes online shopping data, the average online discount rate on Tuesday and Wednesday was roughly 21%, the deepest discount rate since the beginning of the pandemic outside of Cyber Week, the time between Thanksgiving and Cyber Monday.

    But despite the deep discounts, consumers are still generally paying more than they did in the past two years due to high inflation. The average online selling price on Tuesday and Wednesday, for example, was up 8% compared to last year, and 17% compared to 2020, Salesforce said.

    Online spending in November and December is expected to hit $209.7 billion, a 2.5% jump from 2021, according to Adobe Analytics. That’s sluggish growth compared to last year’s gain of 8.6%.

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  • NOT REAL NEWS: A look at what didn’t happen this week

    NOT REAL NEWS: A look at what didn’t happen this week

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    A roundup of some of the most popular but completely untrue stories and visuals of the week. None of these are legit, even though they were shared widely on social media. The Associated Press checked them out. Here are the facts:

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    Harris comments on addressing climate inequity misrepresented

    CLAIM: Vice President Kamala Harris said that Hurricane Ian relief will be distributed based on race, with communities of color receiving aid first.

    THE FACTS: Speaking at the Democratic National Committee’s Women’s Leadership Forum in Washington last week, Harris discussed distributing resources equitably to help vulnerable groups, such as communities of color, recover from disasters related to climate change. She did not describe the structure that would be used to allocate aid to victims of the recent hurricane. Widespread social media posts mischaracterized Harris’ comments during her conversation with actress Priyanka Chopra Jonas to claim she said communities of color would be prioritized in the distribution of relief for this storm. A Facebook video with a clip of Harris at the event on Sept. 29 alleged: “Kamala Harris tells hurricane victims in Florida they may not get aid because of their skin color?!” The video was viewed more than 211,000 times. The post refers to Harris’ response to a multipart question from Chopra Jonas in which she asked first about Hurricane Ian aid, and then, separately, about long-term efforts related to climate change. “Can you talk a little bit about the relief efforts, obviously, of Hurricane Ian and what the administration has been doing to address the climate crisis in the states?” Chopra Jonas asked, according to a full recording of the event. Chopra Jonas continued: “But — and just a little follow up, because this is important to me: We consider the global implications of emissions, right? The poorest countries are affected the most. They contributed the least and are affected the most. So how should voters in the U.S. feel about the administration’s long-term goals when it comes to being an international influencer on this topic?” Harris mentioned Hurricane Ian in passing, but did not talk about specific relief efforts the federal government would undertake. She instead referenced money allocated to address climate change in the Inflation Reduction Act of 2022 and spoke about what she believes needs to be done to address the effects of climate change broadly, including the equitable distribution of resources. Pivoting to address the second part of Chopra Jonas’ question related to addressing disparities, Harris continued: “But also what we need to do to help restore communities and build communities back up in a way that they can be resilient — not to mention, adapt — to these extreme conditions, which are part of the future.” Harris then elaborated: “In particular on the disparities, as you have described rightly, which is that it is our lowest income communities and our communities of color that are most impacted by these extreme conditions and impacted by issues that are not of their own making,” she said, adding: “We have to address this in a way that is about giving resources based on equity, understanding that we fight for equality, but we also need to fight for equity; understanding that not everyone starts out at the same place. And if we want people to be in an equal place, sometimes we have to take into account those disparities and do that work.” Deputy White House Press Secretary Andrew Bates told the AP that claims Harris announced in this response that Ian aid would be race-based are “inaccurate.” He said Harris was discussing long-term goals for addressing climate change, having “explicitly moved on to answering the second question.” FEMA Director of Public Affairs Jaclyn Rothenberg also told the AP that claims the process will be race-based are false, and that Hurricane Ian aid will be given to all those affected by the storm. “The Vice President was talking about a different issue at that time and her comments were focused on long term climate investments,” she wrote in an email.

    — Associated Press writer Melissa Goldin in New York contributed this report.

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    World Cup ‘rules’ graphic created by citizens group, not Qatari officials

    CLAIM: Qatar’s government created an infographic with instructions on how to behave during the 2022 World Cup, including rules that ban alcohol, homosexuality and dating.

    THE FACTS: The infographic being shared online ahead of the 2022 World Cup, which opens in Qatar next month, was not created or released by the government there, according to the state agency in charge of organizing the event. It was created by a Qatari citizens group and published on social media as part of a campaign called “Reflect Your Respect.” The graphic, shared on social media with claims that it listed official rules on how to behave in the Muslim-majority country during the event, states: “Qatar welcomes you! Reflect your respect to the religion and culture of Qatari people by avoiding these behaviors.” The poster cites eight specific examples, including “drinking alcohol, homosexuality, immodesty, profanity,” and not respecting places of worship. Playing loud music, dating and taking people’s pictures without permission are also noted. Images representing each of those areas are featured on the infographic and are covered by a circle with a slash through it. “Qatar’s rules for people who will attend the World Cup 2022 in the country,” a tweet with the infographic claimed. But the infographic does not reflect official policies from Qatar related to conduct during the World Cup, according to the Supreme Committee for Delivery & Legacy, the state entity organizing the tournament. “The ‘Qatar Welcomes You’ graphic circulating on social media is not from an official source and contains factually incorrect information,” a committee spokesperson wrote in a statement to the AP. “We strongly urge fans and visitors to rely solely on official sources from tournament organisers for travel advice for this year’s FIFA World Cup Qatar 2022.” Qatar is easing its stance on alcohol for the tournament. World Cup organizers have finalized a policy that would allow alcoholic beer to be served to fans inside stadiums and fan zones, the AP has reported. Qatari law calls for a prison sentence of one to three years for adults convicted of consensual gay or lesbian sex. Despite same-sex relationships being criminalized, the AP reported that Qatari officials insist that LGBTQ couples would be welcomed and accepted in Qatar for the World Cup, complying with FIFA rules promoting tolerance and inclusion. Still a senior leader overseeing security for the tournament told the AP earlier this year that rainbow flags may be taken away from fans to protect them from being attacked for promoting gay rights. Planners involved with Reflect Your Respect did not immediately respond to a request for comment.

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    No, COVID shots don’t change human DNA to a ‘triple helix’

    CLAIM: COVID-19 mRNA vaccines alter recipients’ DNA by changing its shape to a “triple helix.”

    THE FACTS: There is no evidence that the COVID-19 vaccines are editing humans’ DNA, experts have told the AP. The false claim, which has been shared repeatedly on social media, has surfaced again, this time in posts that allege the mRNA shots change DNA to a “triple helix.” DNA is made of two linked strands that appear like a twisted ladder, referred to as a double helix. RNA is closely related to DNA, and one type, called messenger RNA or mRNA, sends instructions to the cell for different purposes. The mRNA in the COVID-19 vaccines helps train the body to recognize a protein from the coronavirus to trigger an immune response. In one TikTok video that also appeared on Instagram, a woman claims: “The magic potion, if you actually read the patents, it is adding a triple helix.” Another Instagram video claims that “this new technology they came out with introduces a third strand, through mRNA messaging technology it actually breaks a strand and puts in a third strand, which creates a triple helix.” But the videos distort the science, experts said. The video attempts to back up its assertion by showing language from a Moderna patent application published in 2014 that at one point states: “According to the present invention, the nucleic acids, modified RNA or primary construct may be administered with, or further encode one or more of RNAi agents, siRNAs, shRNAs, miRNAs, miRNA binding sites, antisense RNAs, ribozymes, catalytic DNA, tRNA, RNAs that induce triple helix formation, aptamers or vectors, and the like.” But Dr. Daniel Kuritzkes, chief of infectious diseases at Brigham and Women’s Hospital, told the AP the patent document was discussing RNA presenting as a triple helix, not changing humans’ DNA to a triple helix. “If you actually read the patent, it has nothing to do with forming a triple helix of the RNA therapeutic with the host DNA,” Kuritzkes said. It’s that the RNA molecule could theoretically form a triple helix, he said. For certain therapeutic applications, a triple helical RNA could be useful, he said. The patent was broad and not specific to Moderna’s eventual COVID-19 vaccine. “The messenger RNA from the vaccine does not form a triple helix, and it certainly doesn’t intercalate with the DNA to form a triple helix in any way,” Kuritzkes said. Experts emphasized that the mRNA in COVID-19 vaccines is not transforming humans’ DNA. “There is no mechanism for them to alter anyone’s DNA,” said Emily Bruce, an assistant professor of microbiology and molecular genetics at the University of Vermont. “It’s something that’s temporarily translated into protein and then the body gets rid of it.”

    — Associated Press writer Angelo Fichera in Philadelphia contributed this report.

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    Inflation is worse than it was a year ago, despite online claims

    CLAIM: New data shows that inflation has dropped to half of what it was a year ago, marking a win for President Joe Biden.

    THE FACTS: While inflation has slowed in recent months, the latest government estimates show that prices are still higher in August 2022 than they were in August 2021. As steep consumer price hikes continue to strain Americans’ budgets, a tweet downplaying the severity of recent inflation spread online. “BREAKING: New data has dropped that inflation has dropped to half of what it was a year ago,” read the tweet, which amassed more than 28,000 likes. ”That’s a Biden Win!” The tweet’s claim isn’t supported by data, economists told the AP. While the Consumer Price Index, a measure of change in consumer prices and a common metric of inflation published by the U.S. Department of Labor’s Bureau of Labor Statistics, was up just 0.1% in August from July, the index is still up 8.3% since August 2021. “There is no hard evidence of either inflation falling sharply on a monthly basis, on a quarterly basis, on a semi-annual basis, on a yearly basis, or announcement of any substantial revision of official statistics,” said Alessandro Rebucci, an associate professor of economics at Johns Hopkins Carey Business School. The Bureau of Labor Statistics did report that consumer prices increased 0.3% in August 2021 from July 2021, which is a higher monthly rate of change compared to the 0.1% monthly increase reported in August 2022. While the monthly change in consumer prices was lower in August 2022 than it was in August 2021, comparing those rates alone doesn’t accurately reflect how prices have changed during that 12-month timeframe, experts say. Lower gas prices slowed U.S. inflation for the second straight month in August, but most other prices kept rising, the AP reported. This jump in “core” prices, which exclude volatile food and energy costs, outpaced expectations and continues to pose a significant burden for U.S. households. “There’s still a fair amount of inflation embedded in the economy,” said Stephan Weiler, a professor of economics at Colorado State University, adding that Americans’ overall purchasing power has been reduced by 8.3%. The August CPI “basically means that things are getting more expensive,” said Yun Pei, an assistant professor of economics at the University at Buffalo. He characterized the idea that inflation has been halved over the last year as “clearly not true.”

    — Associated Press writer Josh Kelety in Phoenix contributed this report.

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    Find AP Fact Checks here: https://apnews.com/APFactCheck

    ___

    Follow @APFactCheck on Twitter: https://twitter.com/APFactCheck

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  • Stocks rally as inflation remains stubbornly high

    Stocks rally as inflation remains stubbornly high

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    U.S. markets rallied after falling sharply in opening trading Thursday after an unexpectedly hot inflation report strengthened the Federal Reserve’s position on the need for more aggressive interest rate hikes.

    The S&P 500 was up 69 points, or 1.9%, to 3,646, as of noon. Eastern time. The Dow Jones Industrial Average rose 668 points, or 2.3%, and the Nasdaq Composite climbed 1.5%. The S&P 500 is down 26% this year and close to a two-year low.

    “Not only is the Federal Reserve going to raise rates by 75 bps next month, but there is now a possibility that they will raise rates by another 75 bps in December,” predicted Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

    Minutes from the Fed’s last meeting, released Wednesday, underscored the central bank’s commitment to taming “unacceptably high” inflation.

    “A hawkish reaction to the data could add more pressure to stocks,” Anderson Alves of ActivTrades said in a report.

    September retail sales data to be released Friday could give a clearer picture of where prices are hottest and how Americans are reacting.


    El-Erian: “We are in this incredible situation where good news for the economy is bad news for the markets”

    06:48

    The Fed and other central banks in Europe and Asia have raised rates by unusually big margins to cool inflation that is at multidecade highs, but traders are afraid they might tip the global economy into recession.

    “While inflation is still way too high, and core inflation is at a new generational high, the Fed is unlikely to increase the increment of its rate hikes,” Bill Adams, Chief Economist for Comerica Bank, said in a report.

    Delta Air Lines shares jumped more than 4% premarket after it reported a $695 million third-quarter profit. Atlanta-based Delta said higher average fares this summer and a lucrative credit-card business more than offset rising fuel costs. The airline forecast that revenue during the final three months of the year will top pre-pandemic levels.

    Dollar edges back

    In energy markets, benchmark U.S. crude gained 13 cents to $87.40 per barrel in electronic trading on the New York Mercantile Exchange. 

    The dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears. The yen’s weakness has prompted expectations Japan’s central bank might intervene for a second time to prop up the exchange rate following an intervention in September.

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  • Bitcoin Tumbles To $18,100 Following Hot U.S. Inflation Report

    Bitcoin Tumbles To $18,100 Following Hot U.S. Inflation Report

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    U.S. inflation for the month of September was up 8.2% year-over-year (YoY), which exceeded market expectations of 8.1%, per the consumer price index (CPI) report. Bitcoin fell close to $18,000 following the data release.

    While the latest CPI report shows the fourth month of declining inflation, it is still notable that CPI continues to exceed market expectations. Thus, continued rate hikes could come from the Federal Reserve which tends to drive instruments like risk assets and bitcoin to lower prices.

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    Shawn Amick

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  • Food prices are still surging — here’s what’s getting more expensive | CNN Business

    Food prices are still surging — here’s what’s getting more expensive | CNN Business

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    New York
    CNN Business
     — 

    Prices at the grocery store continued to soar last month, adding even more pressure to shoppers’ wallets.

    The food at home index, a proxy for grocery store prices, increased 0.7% in September from the month prior and a stunning 13% over the last year, according to new government data released Thursday.

    Just about everything got more expensive in September.

    Fruits and vegetables surged 1.6% for the month, while cereals and bakery products rose 0.9%. Other groceries increased 0.5% in September, following a 1.1% increase in August.

    Meats, poultry, fish and eggs rose 0.4% over the month and beverages increased 0.6%.

    Prices on many of these items are up double digits annually.

    A number of factors have contributed to the surge in prices. Producers say they’re paying more for labor and packaging materials. Extreme weather, including droughts and flooding, and disease, such as the deadly avian flu, have been hurting crops and killing egg-laying hens, squeezing supplies.

    “The environment clearly is still very inflationary with a lot of supply chain challenges across the industry,” Pepsi

    (PEP)    CEO Ramon Laguarta said on an earnings call Wednesday. The company’s prices increased 17% annually.

    Meanwhile, demand is high. Consumers may be able to pull back on some discretionary items, but they have to eat. Many people are still working from home and consuming more of their meals there than they did before the pandemic.

    This imbalance between supply and demand means companies can pass along higher prices to shoppers without sales plunging.

    But higher prices at the grocery store are forcing customers to make some trade offs.

    Many shoppers are buying fewer products, switching to cheaper private-label brands and pulling back on discretionary items.

    More than one million new households have shopped at discount grocery chain Aldi for the first in the past year, according to the company.

    Walmart

    (WMT)     said recently that high levels of food inflation are impacting customers’ ability to purchase discretionary goods such as clothing and furniture.

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  • Saudis say US sought 1 month delay of OPEC+ production cuts

    Saudis say US sought 1 month delay of OPEC+ production cuts

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    DUBAI, United Arab Emirates — Saudi Arabia said Thursday that the U.S. had urged it to postpone a decision by OPEC and its allies — including Russia — to cut oil production by a month. Such a delay could have helped reduce the risk of a spike in gas prices ahead of the U.S. midterm elections next month.

    A statement issued by the Saudi Foreign Ministry didn’t specifically mention the Nov. 8 elections in which U.S. President Joe Biden is trying to maintain his narrow Democratic majority in Congress. However, it stated that the U.S. “suggested” the cuts be delayed by a month. In the end, OPEC announced the cuts at its Oct. 5 meeting in Vienna.

    Holding off on the cuts would have likely delayed any rise in gas prices until after the elections.

    Rising oil prices — and by extension higher gasoline prices — have been a key driver of inflation in the U.S. and around the world, worsening global economic woes as Russia’s months-long war on Ukraine also has disrupted global food supplies. For Biden, gasoline prices creeping up could affect voters. He and many lawmakers have warned that America’s longtime security-based relationship with the kingdom could be reconsidered.

    The decision by the Saudi Foreign Ministry to release a rare, lengthy statement showed how tense relations between the two countries have become.

    The White House pushed back on Thursday, rejecting the idea that the requested delay was related to the U.S. elections and instead linking it to economic considerations and Russia’s war on Ukraine.

    “We presented Saudi Arabia with analysis to show that there was no market basis to cut production targets, and that they could easily wait for the next OPEC meeting to see how things developed,” said John Kirby, coordinator for strategic communications at the National Security Council.

    “Other OPEC nations communicated to us privately that they also disagreed with the Saudi decision, but felt coerced to support Saudi’s direction,” he added.

    U.S.-Saudi ties have been fraught since the 2018 killing and dismemberment of Washington Post columnist Jamal Khashoggi, which Washington believes came on the orders of Saudi Crown Prince Mohammed bin Salman. Meanwhile, higher energy prices provide a weapon Russia can use against the West, which has been arming and supporting Ukraine.

    The statement by the Saudi Foreign Ministry acknowledged that the kingdom had been talking to the U.S. about postponing OPEC+’s 2 million barrel cut announced last week.

    “The government of the kingdom clarified through its continuous consultation with the U.S. administration that all economic analyses indicate that postponing the OPEC+ decision for a month, according to what has been suggested, would have had negative economic consequences,” the ministry said in its statement.

    The ministry’s statement confirmed details from a Wall Street Journal article this week that quoted unnamed Saudi officials saying the U.S. sought to delay the OPEC+ production cut until just before the midterm elections. The Journal quoted Saudi officials as describing the move as a political gambit by Biden ahead of the vote.

    The kingdom also criticized attempts to link its decision to Russia’s war on Ukraine.

    “The kingdom stresses that while it strives to preserve the strength of its relations with all friendly countries, it affirms its rejection of any dictates, actions, or efforts to distort its noble objectives to protect the global economy from oil market volatility,” it said. “Resolving economic challenges requires the establishment of a non-politicized constructive dialogue, and to wisely and rationally consider what serves the interests of all countries.”

    Both Saudi Arabia and the neighboring United Arab Emirates, key producers in OPEC, voted in favor of a United Nations General Assembly resolution Wednesday to condemn Russia’s “attempted illegal annexation” of four Ukrainian regions and demand its immediate reversal.

    Once muscular enough to grind the U.S. to a halt with its 1970s oil embargo, OPEC needed non-members like Russia to push through a production cut in 2016 after prices crashed below $30 a barrel amid rising American production. The 2016 agreement gave birth to the so-called OPEC+, which joined the cartel in cutting production to help stimulate prices.

    The coronavirus pandemic briefly saw oil prices go into negative territory before air travel and economic activity rebounded following lockdowns around the world. Benchmark Brent crude sat over $92 a barrel early Wednesday, but oil-producing nations are worried prices could sharply fall amid efforts to combat inflation.

    Biden, who famously called Saudi Arabia a “pariah” during his 2020 election campaign, traveled to the kingdom in July and fist-bumped Prince Mohammed before a meeting. Despite the outreach, the kingdom has been supportive of keeping oil prices high in order to fund Prince Mohammed’s aspirations, including his planned $500 billion futuristic desert city project called Neom.

    On Tuesday, Biden warned of repercussions for Saudi Arabia over the OPEC+ decision.

    “There’s going to be some consequences for what they’ve done, with Russia,” Biden said. “I’m not going to get into what I’d consider and what I have in mind. But there will be — there will be consequences.”

    ———

    Associated Press writer Aamer Madhani in Washington contributed to this report.

    ———

    Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.

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  • Asian stocks fall ahead of US inflation update

    Asian stocks fall ahead of US inflation update

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    BEIJING — European stocks and Wall Street futures gained Thursday while Asian markets fell ahead of U.S. inflation data that investors worry will reinforce Federal Reserve plans for more aggressive interest rate hikes.

    London and Frankfurt advanced. Shanghai, Tokyo and Hong Kong declined. Oil prices advanced.

    Wall Street’s benchmark S&P 500 ended lower Wednesday after inflation in producer prices edged down but still was near a multi-decade high.

    The more closely watched consumer price index was due out later Thursday.

    “A hawkish reaction to the data could add more pressure to stocks,” Anderson Alves of ActivTrades said in a report.

    The Fed and other central banks in Europe and Asia have raised rates by unusually big margins to cool inflation that is at multi-decade highs, but traders are afraid they might tip the global economy into recession.

    In early trading, the FTSE 100 in London gained 0.2% to 6,840.35. The DAX in Frankfurt rose 0.8% to 12,272.20 and the CAC 40 in Paris added 0.5% to 5,845.55.

    On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.5%.

    On Wednesday, the S&P 500 gave up 0.3% for its sixth daily decline and the Dow slide 0.1% after a report showed producer price inflation is very hot.

    Prices rose 8.5% in September, down from March’s peak of 11.7%. But prices gained 0.4% compared with August following two months of declines.

    Consumer inflation on Thursday and retail sales data Friday could give a clearer picture of where prices are hottest and how consumers are reacting.

    Minutes from the Fed’s last meeting, released Wednesday, underscored the central bank’s commitment to taming “unacceptably high” inflation.

    The S&P 500 is down 25% so far this year and close to a two-year low.

    In Asia, the Shanghai Composite Index lost 0.1% to 3,016.35 and the Nikkei 225 in Tokyo sank 0.6% to 26,237.42. Hong Kong’s Hang Seng tumbled 1.9% to 16,389.11, its lowest close in more than 11 years.

    The Kospi in Seoul fell 1.8% to 2,162.87 while Sydney’s S&P-ASX 200 gained less than 0.1% to 6,642.60.

    India’s Sensex lost 0.7% to 57,205.89. New Zealand’s benchmark lost 0.5% and Southeast Asian markets also declined.

    In energy markets, benchmark U.S. crude gained 19 cents to $87.64 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, added 31 cents to $92.67 per barrel in London.

    The dollar strengthened to 146.74 after hitting a 24-year high of 145.85 on Wednesday.

    The dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears. The yen’s weakness has prompted expectations Japan’s central bank might intervene for a second time to prop up the exchange rate following an intervention in September.

    The euro gained to 97.39 cents from 97.06 cents.

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  • Social Security benefits to jump by 8.7% next year

    Social Security benefits to jump by 8.7% next year

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    WASHINGTON (AP) — Millions of Social Security recipients will get an 8.7% boost in their benefits in 2023, a historic increase but a gain that will be eaten up in part by the rising cost of everyday living.

    The cost-of living adjustment — the largest in more than 40 years — means the average recipient will receive more than $140 extra a month beginning in January, the Social Security Administration said Thursday.

    While Social Security recipients welcomed the benefit increase, many said it wasn’t enough to cover the impact of inflation.

    It’s “not much help,” said 85-year-old Shirley Parker, who lives in Chatham on Chicago’s South Side,

    Home maintenance costs and high grocery prices are cutting steeply into her budget. “Food is ridiculous. I come out with a bag full of groceries — $50 — don’t have about 10 items,” she said.

    A separate government report Thursday showed inflation newly accelerating. The Consumer Price Index rose 0.4% for September after just 0.1% in August and is up 8.2% for the past 12 months. Jobless claims for unemployment benefits rose for the week.

    The Social Security Administration said the estimated average monthly Social Security benefit for all retired workers will be $1,827 starting in January, according to an agency fact sheet.

    The boost in Social Security benefits will be coupled with a 3% drop in Medicare Part B premiums, meaning retirees will get the full impact of the Social Security increase.

    “This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,” said the Social Security Administration’s acting commissioner, Kilolo Kijakazi.

    President Joe Biden on Thursday afternoon echoed the sentiment that the Medicare premium reduction would have some impact on retirees’ wallets. “Seniors are gonna get ahead of inflation next year,” Biden said. “For the first time in 10 years, their Social Security checks will go up while their Medicare premiums go down.”

    Jo Ann Jenkins, CEO of the AARP, said the benefits increase “will provide much needed relief to millions of Americans.”

    Several government indexes show that inflation hits older Americans harder than the rest of the population. Medical costs are a big part of the burden.

    The Social Security announcement comes just weeks before the midterm elections, and at a time when Democrats and Republicans are sparring about high prices now and how best to shore up the program financially in the future.

    William Arnone, chief executive of the National Academy of Social Insurance, an advocacy organization for Social Security, said the benefit increase is “no cause for celebration,” since it will not help all recipients overcome inflation, especially if prices continue to rise.

    “There’s already indications that health care inflation is going to be through the roof next year,” Arnone said.

    Margaret Toman, a 78-year-old in Garner, North Carolina, who had stopped working to take care of her mother, who has since died, described the 8.7% increase as “quite stingy.”

    “I think most of us who are older receiving Social Security are grateful for that Social Security,” she said. “But that gratitude sometimes covers up or replaces a certain feeling of anger at having paid into a system for so long and still struggling to survive.”

    About 70 million people — including retirees, disabled people and children — receive Social Security benefits. This will be the biggest increase in benefits that baby boomers, those born between the years 1946 and 1964, have ever seen. The last time a COLA was higher was in 1981, at 11.2%.

    Willie Clark, 65, of Waukegan, Illinois, says his budget is “real tight” and the increase in his Social Security disability benefits could give him some breathing room to cover household expenses he’s been holding off on.

    Still, he doubts how much of the extra money will end up in his pocket. His rent in an apartment building subsidized by the U.S. Department of Housing and Urban Development is based on his income, so he expects that will rise, too.

    Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.

    The financing setup dates to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed a payroll tax would foster among average Americans a sense of ownership that would protect the program from political interference.

    Next year’s higher payout, without an accompanying increase in Social Security contributions, could put additional pressure on a system that’s facing a severe shortfall in coming years.

    The annual Social Security and Medicare trustees report released in June says the program’s trust fund will be unable to pay full benefits beginning in 2035.

    If the trust fund is depleted, the government will be able to pay only 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits if the fund is depleted.

    In January, a Pew Research Center poll showed 57% of U.S. adults saying that “taking steps to make the Social Security system financially sound” was a top priority for the president and Congress to address this year. Securing Social Security got bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.

    Some solutions for reforming Social Security have been proposed, but none has moved forward in a sharply partisan Congress.

    House Speaker Nancy Pelosi said Thursday the COLA announcement is a reminder that “extreme MAGA Republicans are openly plotting new schemes to slash seniors’ benefits and raise their costs – including by threatening to cause an economic catastrophe by holding the debt limit hostage for their toxic agenda.”

    Earlier this year, Sen. Rick Scott, R-Fla., issued a detailed plan that would require Congress to come up with a proposal to adequately fund Social Security and Medicare or potentially phase them out.

    Senate Minority Leader Mitch McConnell, R-Ky., publicly rebuked the plan and Biden has used Scott’s proposal as a political bludgeon against Republicans before the midterm elections.

    “If Republicans in Congress have their way, seniors will pay more for prescription drugs and their Social Security benefits will never be secure,” White House press secretary Karine Jean-Pierre said.

    ___

    Claire Savage in Chicago and Hannah Schoenbaum in Raleigh, North Carolina, contributed to this report.

    Follow the AP’s coverage of inflation: https://apnews.com/hub/inflation

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  • Worsening inflation will pressure Fed to keep raising rates

    Worsening inflation will pressure Fed to keep raising rates

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    WASHINGTON (AP) — Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains and ensuring that the Federal Reserve will keep raising interest rates aggressively.

    Consumer prices, excluding volatile food and energy costs, jumped 6.6% in September from a year ago — the fastest such pace in four decades. And on a month-to-month basis, such “core” prices soared 0.6% for a second straight time, defying expectations for a slowdown and signaling that the Fed’s multiple rate hikes have yet to ease inflation pressures. Core prices typically provide a clearer picture of underlying price trends.

    Overall prices rose 8.2% in September compared with a year earlier, down slightly from August, the government said Thursday in its monthly inflation report. But from August to September, prices increased 0.4%, faster than the July-to-August increase. Though cheaper gas helped slow the broadest measure of inflation, costlier food, medical care and housing pointed to the breadth of price pressures across the economy.

    “We still have no evidence that inflation is decelerating,” said Matthew Luzzetti, an economist at Deutsche Bank. “Let alone the clear and convincing evidence that the Fed is looking for.”

    Stock markets fell sharply in early trading, but then rebounded and moved higher. The Dow Jones was up 560 points, or 1.9%, in mid-day trading.

    Thursday’s report represents the final U.S. inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices have fueled public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

    Speaking Thursday in Los Angeles, Biden acknowledged the pain that inflation is causing many people, while suggesting that the latest figures showed “some progress.”

    “Americans are squeezed by the cost of living,” the president said. “It’s been true for years, and folks don’t need to read a report to tell them they’re being squeezed. Fighting this battle every day is a key reason why I ran for president.”

    Even with widespread price spikes, the September data showed that the prices for many physical goods, including clothing, used cars, furniture, and appliances, dropped last month. A key factor is that supply chain snarls have eased, and many large retailers such as WalMart and Target have discounted some items to clear excess stockpiles.

    Yet the price drops were not as steep as many economists expected, and they were more than offset by sharp increases in services prices, including health care, auto repair and housing.

    A measure of housing costs jumped 0.8% in September, the largest such increase in 32 years. The Fed’s rate hikes have led to much higher mortgage rates — the average on a 30-year fixed home loan is nearly 7% — and caused home sales to tumble and prices to falter. But declining house prices will take time to feed through into the government’s measure.

    The cost of health insurance jumped 2.1% from August to September and more than 28% over the past 12 months — a record one-year increase. The cost of auto repairs surged 15% in September from a year earlier, also a record high. The supply chains of many car parts are still disrupted.

    “The primary driver of inflation has rotated away from goods prices and to services,” said Eric Winograd, U.S. economist at AB. “Services inflation is heavily influenced by wages, and so it is going to take a meaningful weakening of the labor market to bring inflation to heel.”

    Inflation in services is also being fueled by steady consumer demand. Though there are signs that lower-income Americans are cutting back, higher-income households still appear willing to spend on travel, restaurant meals and services like veterinary care.

    Both Delta and American Airlines, for example, reported strong revenue growth this week, driven by increased demand from travelers. Airfares rose a brisk 0.8% from August to September.

    Service businesses are having to rapidly raise wages to attract the workers they need. Those higher labor costs, in turn, are often passed on to consumers in the form of higher prices.

    Inflation has swollen families’ grocery bills, rents and utility costs, among other expenses, causing hardships for many and deepening pessimism about the economy despite strong job growth and historically low unemployment.

    Kasondra Mathews is among those feeling the squeeze. Mathews, 50, who lives near Denver, has been working overtime as a nurse’s assistant to keep up with her rent and grocery bills. Her rent has increased roughly 5% a year for the past several years, shrinking her budget for other items.

    With her daughter a senior in high school and headed soon to college, Mathews has found ways for her to apply to her preferred schools for free. She’s also forgoing any visits to a college to avoid the travel expense.

    “We didn’t get to do college tours, because we can’t afford it,” she said. “I couldn’t do the things you might want to do for your senior.”

    As the elections near, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

    The September inflation numbers essentially guarantee that the Fed will raise its key short-term rate by three-quarters of a point for a fourth straight time when it next meets in early November. The Fed has already raised its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.

    At their last meeting in late September, Fed officials had projected that by early next year, they would raise their key rate to roughly 4.5%, which would be the highest level in 14 years. Some economists now predict that the Fed will have to boost rates even higher to defeat what appears to be an entrenched bout of inflation. The risk is that such higher borrowing costs would push the economy into recession.

    Fed policymakers said at the September meeting that inflation was “showing little sign so far of abating,” according to minutes from the Fed’s most recent meeting.

    Used car prices dropped 1.1% from August to September, the third straight decline. Wholesale used car prices have fallen much faster, yet dealers have resisted passing on those declines to consumers, resulting in much bigger profits.

    Lael Brainard, vice chair of the Federal Reserve, noted this week that retailers have also reported healthy profit margins, having raised prices more than they have increased wages.

    “The return of retail (profit) margins to more normal levels could meaningfully help reduce inflationary pressures in some consumer goods,” Brainard said.

    Some large chains have started to cut prices. But it’s not clear how much effect on inflation that will have in the coming months. Walmart has said it will offer steep discounts on such items as toys, home goods, electronics and beauty. Target began offering holiday deals earlier this month.

    But after jacking up prices for the past 18 months, companies are reluctant to reverse course. Until consumer demand slows further, forcing more companies to compete on price, costs for many goods will likely stay high, economists say.

    “There’s a saying in economics that prices go up like rockets and down like feathers,” said Eric Swanson, a former Fed economist who is now a professor at the University of California, Irvine. “You’re kind of seeing that a little bit.”

    ___

    Associated Press writer Colleen Long contributed to this report from Los Angeles.

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  • Kansas City Workers Earn More Using Instawork Ahead of Holidays

    Kansas City Workers Earn More Using Instawork Ahead of Holidays

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    The flexible work app matches a network of on-demand hourly workers with Missouri businesses

    Press Release
    –

    Oct 13, 2022


    SAN FRANCISCO, October 13, 2022 (Newswire.com)
    –
    Instawork, the leading platform for connecting businesses with skilled workers, announced today the platform’s availability to hourly workers in the Kansas City area looking to earn higher wages during the holiday season and beyond.

    In Kansas City, the average hourly pay rate on the Instawork platform is $17.20 per hour, more than 50% over the state’s minimum wage of $11.15. That increase gives Show-Me State residents a way to pay for added expenses to their household budgets during the upcoming holidays by downloading the Instawork app and staffing business locations across the area. 

    More than 23,000 people in Kansas City have already downloaded the Instawork app and are working to staff business locations across the area. Common roles for Instawork in Kansas City include general labor, warehouse, event server, and prep cook shifts. 

    The news comes following Instawork’s announcement that over 1 million people have joined the app in the last six months leading up to the holiday season to fill shifts in the first post-Covid holiday season. 

    “From gifts to groceries for special meals, the holidays can be an expensive time of year, particularly for those making minimum wage,” said Kira Caban, Instawork’s Head of Strategic Communications. “With Instawork, Kansas City workers can quickly increase their income, allowing them to enjoy this special time with their families even more.”

    Pros can easily create a profile, find a shift that matches their skills and interests, and start working in as little as 24 hours.

    Hourly professionals (Instawork Pros) using Instawork experience: 

    • Work flexibility: build schedules around personal lives and income goals
    • Financial stability: view shift earnings before you work
    • Unlimited income potential: work as little or as much as you want
    • Get paid quickly: ability to get paid the same day
    • Unique and exciting work opportunities

    Businesses that rely on Instawork Pros range from nationally recognized hotels and restaurant groups to some of the city’s favorite local hot spots and sports venues, including in Kansas City. These businesses are consistently matched with high-quality, reliable Pros to fill available shifts and deliver valuable services. The Instawork platform encourages both hourly workers and businesses to rate each other on a five-star scale after each shift to help match future shifts with those who are best qualified. 

    Businesses using Instawork experience:

    • Quick access to qualified workers in their community
    • Improved operational efficiency with quality and reliable staffing
    • Increased customer loyalty due to happier staff and better experiences
    • Time saved on administrative tasks, returning focus to other top priorities

    Instawork is currently staffing businesses in more than 30 markets across the U.S. and Canada. Those interested in learning more about Instawork should visit www.instawork.com or download the app.

    About Instawork
    Founded in 2016, Instawork is the leading flexible work app for local, hourly professionals. Its digital marketplace connects thousands of businesses and more than three million workers, filling a critical role in local economies. Instawork has been featured on CBS News, the Wall Street Journal, The Washington Post, Associated Press, and more. In 2022, Instawork was ranked in the top 10% of the country’s fastest-growing companies by Inc. 5000 and was included in the Forbes Next Billion Dollar Startup list. Instawork was also named the 2022 ACE Award recipient for “Best Innovation,” one of the “Best Business Apps” by Business Insider. Instawork helps businesses in the food & beverage, hospitality, and warehouse/logistics industries fill temporary and permanent job opportunities in more than 30 markets across the U.S. and Canada. Follow us on Twitter, Instagram, LinkedIn, and Facebook.

    Media Contact
    Kira Caban
    Head of Strategic Communications
    kcaban@instawork.com

    Source: Instawork

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  • Preparing For The CPI Reading: Market Braces For Volatility

    Preparing For The CPI Reading: Market Braces For Volatility

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    The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

    Markets Prepare For CPI Surprise

    The U.S. Producer Price Index (PPI) data was released on October 12, 2022, a day before the highly anticipated consumer price index release the following morning. In short, it’s not a good sign for those expecting a below-consensus CPI beat. Although headline PPI is coming down, the month-over-month (MoM) growth came in higher than expected at 0.4% (consensus: 0.2%) and the headline annual change came in at 8.5%. PPI has less of an impact on immediate market moves compared to the CPI as it doesn’t account for inflationary costs being passed on to the end consumer. Still, it’s an inflationary measure that gauges if businesses are facing accelerated prices and tends to move in the same direction as CPI.

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    Sam Rule

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  • Little sign of relief expected in September inflation data

    Little sign of relief expected in September inflation data

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    WASHINGTON — Any Americans hoping for relief from months of punishing inflation might not see much in Thursday’s government report on price increases in September.

    Lower gas prices will probably reduce overall consumer inflation for a third straight month. But measures of “core” inflation, which are closely watched because they exclude volatile food and energy costs, are expected to return to a four-decade peak.

    Economists have estimated that the government’s consumer price index jumped 8.1% in September from 12 months earlier, according to a survey by the data provider FactSet. That is a distressingly large gain, though below the 9.1% year-over-year peak that was reached in June.

    Core prices are estimated to have risen 0.4% from August to September, slower than the previous month but still a much faster pace than was typical before the pandemic. Measured over the past 12 months, core prices are forecast to have surged 6.5%, up from 6.3% in August. That’s far above the 2% inflation that the Federal Reserve has long set as its target rate.

    Thursday’s report will provide the final inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices across the economy have fed widespread public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

    Inflation has escalated families’ grocery bills, rents and utility costs, among many other expenses, inflicting hardships on households and deepening gloom about the economy despite strong job growth and historically low unemployment.

    As the election nears, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

    The September inflation report, whatever it shows, isn’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.

    Minutes from the Fed’s most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected that they would raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed’s key rate at its highest level in 14 years.

    Along with lower gas prices, economists expect to see that the prices of used cars tumbled in September after small declines the previous two months. Wholesale used car prices have dropped for most of this year, though the declines have yet to show up in consumer inflation data. (Used vehicle prices had soared in 2021 after factory shutdowns and supply chain shortages reduced production.)

    Large retailers, too, have started offering early discounts for the holiday shopping season, after having amassed excess stockpiles of clothes, furniture and other goods earlier this year. Those price cuts might have lowered inflation in September or will do so in the coming months.

    Walmart has said it will offer steep discounts on such items as toys, home goods, electronics and beauty. Target began offering holiday deals earlier this month.

    Yet prices for services — particularly rents and housing costs — are remaining persistently high and will likely take much longer to come down. Health care services, education and even veterinary services are still rising rapidly in price.

    “Services price increases tend to be more persistent than increases in the prices of goods,” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, noted in remarks last week.

    Rising rental costs are a tricky issue for the Fed. Real-time data from websites such as ApartmentList suggest that rents on new leases are starting to decline.

    But the government’s measure tracks all rent payments — not just those for new leases — and most of them don’t change from month to month. Economists say it could be a year or longer before the declines in new leases feed through to government data.

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  • Little sign of relief expected in September inflation data

    Little sign of relief expected in September inflation data

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    WASHINGTON — Any Americans hoping for relief from months of punishing inflation might not see much in Thursday’s government report on price increases in September.

    Lower gas prices will probably reduce overall consumer inflation for a third straight month. But measures of “core” inflation, which are closely watched because they exclude volatile food and energy costs, are expected to return to a four-decade peak.

    Economists have estimated that the government’s consumer price index jumped 8.1% in September from 12 months earlier, according to a survey by the data provider FactSet. That is a distressingly large gain, though below the 9.1% year-over-year peak that was reached in June.

    Core prices are estimated to have risen 0.4% from August to September, slower than the previous month but still a much faster pace than was typical before the pandemic. Measured over the past 12 months, core prices are forecast to have surged 6.5%, up from 6.3% in August. That’s far above the 2% inflation that the Federal Reserve has long set as its target rate.

    Thursday’s report will provide the final inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices across the economy have fed widespread public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

    Inflation has escalated families’ grocery bills, rents and utility costs, among many other expenses, inflicting hardships on households and deepening gloom about the economy despite strong job growth and historically low unemployment.

    As the election nears, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

    The September inflation report, whatever it shows, isn’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.

    Minutes from the Fed’s most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected that they would raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed’s key rate at its highest level in 14 years.

    Along with lower gas prices, economists expect to see that the prices of used cars tumbled in September after small declines the previous two months. Wholesale used car prices have dropped for most of this year, though the declines have yet to show up in consumer inflation data. (Used vehicle prices had soared in 2021 after factory shutdowns and supply chain shortages reduced production.)

    Large retailers, too, have started offering early discounts for the holiday shopping season, after having amassed excess stockpiles of clothes, furniture and other goods earlier this year. Those price cuts might have lowered inflation in September or will do so in the coming months.

    Walmart has said it will offer steep discounts on such items as toys, home goods, electronics and beauty. Target began offering holiday deals earlier this month.

    Yet prices for services — particularly rents and housing costs — are remaining persistently high and will likely take much longer to come down. Health care services, education and even veterinary services are still rising rapidly in price.

    “Services price increases tend to be more persistent than increases in the prices of goods,” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, noted in remarks last week.

    Rising rental costs are a tricky issue for the Fed. Real-time data from websites such as ApartmentList suggest that rents on new leases are starting to decline.

    But the government’s measure tracks all rent payments — not just those for new leases — and most of them don’t change from month to month. Economists say it could be a year or longer before the declines in new leases feed through to government data.

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  • The pandemic forced innovation, but the expected recession may force businesses to do even more

    The pandemic forced innovation, but the expected recession may force businesses to do even more

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    The effects of COVID-19 forced companies across many industries to adapt and innovate rapidly. Yet even as the pandemic subsides, there are opportunities for business leaders to continue to apply the lessons they have learned over the last few years.

    “Where we are today … retail is a completely different industry [than in 2019],” Kohl’s CEO Michelle Gass said Tuesday during Fortune’s Most Powerful Women Summit in California. “So many changes—from living through the pandemic, supply chain challenges, the spikes in demand, the pull back in demand, labor.”

    But the roller coaster ride likely isn’t over yet, as many experts predict the U.S. will enter a recession next year due to the Federal Reserve’s attempts to tamp down soaring inflation with interest rate hikes.

    Gass said Kohl’s is already grappling with recession fears and inflation woes. “We’ve already started feeling it,” she said. “We operate in the more discretionary categories, as opposed to food and gas, and where a lot of budgets are being constrained. And so, as we see this unfolding, we are quickly adapting.” 

    While Gass acknowledged that her company is holding off on stocking up on inventory, Kohl’s, like many companies today, is using the current circumstances as a “catalyst for change,” she explained. “Oftentimes the harder things are around really structurally changing your cost, structurally changing the way you’re working,” she said. 

    The retailer is also utilizing customer data more than ever before. Gass noted that Khol’s serves 65 million customers across the country, and the chain has over 30 million subscribers in its loyalty program.

    “For someone passionate about data—because it’s a treasure chest—we’re able to tailor and actually do different offers for Julie and Alan, based on what’s going to get them motivated to come and shop,” Gass said. “That, especially in this environment, is extremely powerful to make sure that you’re giving offers to people who need it, versus not.”

    But utilizing data comes with challenges as well, said Julie Sweet, chair and CEO of Accenture. “This is the area where I think everyone intuitively understands that data is important. And I’ve not yet found a company that has actually solved the problems of data,” she said. 

    Sweet’s team is spending time talking to CEOs today around five key forces of change, the first being the “total enterprise reinvention through technology.” Sweet said most businesses have talked about digitization, but reinvention goes a step further and asks companies to systematically overhaul everything that they do. “That has profound implications for how you invest and think about the future,” Sweet said. 

    Talent is the second key—how companies access talent, create opportunities to unlock talent potential and build pathways to future growth. 

    Sustainability, broadly, is third. It includes aspects like energy transformation, but it’s also about diversity and what companies are doing within the communities they operate and how that all translates to the bottom line, Sweet said.  

    The metaverse is the fourth key force of change, an area where Accenture in particular has made a  lot of investment, building its own metaverse for onboarding and employee training. “I will say lots of debate around this, but there isn’t a company or industry that doesn’t need to be thinking about what is it going to be like to go in and out of the virtual and physical world and how will that profoundly change everything, from what we buy, how we buy it, to how we work,” Sweet said. 

    Finally, the last aspect is the “ongoing technology revolution,” Sweet said. Companies are already investing in this today, but Sweet said leaders need to be able to think ahead and really understand how those trends might affect the business. “It’s also an important part of what CEOs and their leadership teams have to do today.”

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    Megan Leonhardt

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  • Truss’ jittery Tories blame Bank chief over market meltdown

    Truss’ jittery Tories blame Bank chief over market meltdown

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    As Britain’s central bank boss, tasked with managing inflation and setting interest rates, Andrew Bailey likes targets. Now he is one.

    Markets are dumping U.K. assets amid chaotic policymaking from Liz Truss’ new government — but Bailey’s rocky stewardship of the Bank of England is getting a growing share of the blame. His harshest critics include some of Truss’ most senior Conservative Party colleagues.

    At stake are home loans for 2 million households coming due for renewal amid cripplingly high interest rates in the next two years and the viability of pension funds managing more than £1 trillion worth of assets. Failure to quell a “fire sale” of U.K. bonds and currency risks a financial meltdown that could spread far beyond British shores.

    The current bond market pressure began after U.K. Chancellor Kwasi Kwarteng announced a vast package of unfunded tax cuts, stoking investors’ fears about the long-term sustainability of the government’s debt. 

    The dramatic selloff of government bonds sparked a panic at U.K. pension funds, which couldn’t handle the price falls, and has huge knock-on impacts for mortgage rates and borrowing costs.

    The political fallout has so far landed on Truss’ government’s shoulders — prompting U-turns on key policies as opinion polls showed cratering support.

    Yet before the U.K.’s self-inflicted turmoil, Bailey was feeling political pressure over the central bank’s handling of double-digit inflation and the rising cost of living that comes with it. 

    While No. 10 refuses to be drawn on the Bank’s decisions, Business Secretary Jacob Rees-Mogg suggested a failure to raise interest rates quickly was at the root of the turmoil in financial markets.

    He dismissed it as “commentary” to draw a direct link between the government’s mini-budget and concerns over the U.K.’s financial stability that led to emergency intervention from the Bank, adding that pension funds’ “high-risk” activities had played a role.

    “It could just as easily be the fact that the day before, the Bank of England did not raise interest rates by as much as the Federal Reserve did,” he told the BBC’s Today program. 

    In another apparent swipe at the Bank, Rees-Mogg added: “The pound and other currencies have been falling against the dollar because interest rates in the U.S. have been rising faster than they have in other markets.”

    In the immediate aftermath of Kwarteng’s disastrous mini-budget, the Bank seemed to be in command of the situation when it stepped in to calm the pension fund crisis and refused to be pushed into an early interest rate rise by markets. But two further interventions this week and confusion over stark comments from Bailey himself risk undermining that impression.

    The governor on Tuesday issued a rare ultimatum to beleaguered pension funds struggling to meet cash calls in the government bond market. “You’ve got three days left now. You’ve got to get this done,” he warned at an event in Washington.

    The bank has effectively bailed out pension funds since the U.K. government’s mini-budget roiled the markets. The bond-buying intervention is intended to offer temporary relief and give the affected funds time to raise enough cash to handle historic surges in yields.

    Bailey’s message appeared to be aimed at upping the pressure on funds to sell assets in time rather than expecting an extension beyond Friday’s deadline. “We will be out by the end of this week,” he said.

    Yet the remarks seemed to backfire instantly, sparking a sharp fall in the pound, although it has since recovered.

    U.K. government borrowing costs also increased again on Wednesday, with the yield on 30-year gilts moving above 5 percent — the level that first sparked the bank’s intervention — before dropping back after the Bank used its firepower to buy £4.4 billion of gilts.

    Financial market experts think the governor’s comments were a mistake that will force the bank into following the government’s recent U-turns. 

    Mike Howell of CrossBorder Capital described Bailey’s words as the “shortest suicide note in history,” and said the governor will have to change course. 

    “Andrew Bailey’s insistence that emergency support will end on Friday is an unsustainable position that we expect to be reversed quickly,” said Oxford Economics chief economist Innes McFee.

    If the Bank loses credibility, its ability to rescue the economy from market disruption will be severely hampered. Increasingly costly interventions will yield ever more limited results if investors lose faith in the U.K.’s most important financial institution.

    Before Bailey’s comments on Tuesday, one markets strategist said the Bank could “test the water” by stopping the program on Friday and then restarting if necessary — but that would be risky because it’s unclear how much yields would have to rise before triggering the same problems at pension funds.

    “While a very able central banker, he has spent most of his career outside the BoE’s monetary policy and markets areas,” said EFG Bank chief economist Stefan Gerlach, previously a central banker himself.

    “He is not the best fit for the job, given the nature of the problems the Bank is facing now. His communications missteps over the last year were damaging,” he said, pointing to Bailey’s confusing guidance on interest rates. “It’s like the fire brigade saying ‘you have to have your fire before Friday because then we are heading home.’”

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  • Social Security payments set for big increase. What to know.

    Social Security payments set for big increase. What to know.

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    NEW YORK — Tens of millions of older Americans are about to get what may be the biggest raise of their lifetimes.

    On Thursday, the U.S. government is set to announce how big a percentage increase Social Security beneficiaries will see in monthly payments this upcoming year. It’s virtually certain to be the largest in four decades. It’s all part of an annual ritual where Washington adjusts Social Security benefits to keep up with inflation, or at least with one narrow measure of it.

    Plenty of controversy accompanies the move, known as a cost-of-living adjustment or COLA. Critics say the data the government uses to set the increase doesn’t reflect what older Americans are actually spending, and thus the inflation they’re actually feeling. The increase is also one-size-fits-all, which means beneficiaries get the same raise regardless of where they live or how big a nest egg they may have.

    Here’s a look at what’s happening:

    WHAT’S THE BIG DEAL?

    The U.S. government is about to announce an increase to how much the more than 65 million Social Security beneficiaries will get every month. Some estimates say the boost may be as big as 9%.

    WHAT DO BENEFICIARIES HAVE TO DO TO GET IT?

    Nothing.

    WILL THIS BE THE BIGGEST INCREASE EVER?

    No, but it’s likely the heftiest in 40 years, which is longer than the vast majority of Social Security beneficiaries have been getting payments. In 1981, the increase was 11.2%.

    WHEN WILL THE BIGGER PAYMENTS BEGIN?

    January. They’re also permanent, and they compound. That means the following year’s percentage increase, whatever it ends up being, will be on top of the new, larger payment beneficiaries get after this most recent raise.

    HOW BIG WAS THIS PAST YEAR’S INCREASE?

    5.9%, which itself was the biggest in nearly four decades.

    WHAT’S THE TYPICAL INCREASE?

    Since 2000, it’s averaged 2.3% as inflation remained remarkably tame through all kinds of economic swings. During some of the toughest years in that stretch, the bigger worry for the economy was actually that inflation was running too low.

    Since the 2008 financial crisis, the U.S. government has announced zero increases to Social Security benefits three times because inflation was so weak.

    SO THE INCREASE IS TO MAKE UP FOR INFLATION?

    That’s the intent. As Americans have become painfully aware over the past year, each $1 doesn’t go as far at the grocery store as it used to.

    HAS SOCIAL SECURITY ALWAYS GIVEN SUCH INCREASES?

    No. The first American to get a monthly retirement check from Social Security, Ida May Fuller from Ludlow, Vermont, got the same $22.54 monthly benefit for 10 years.

    Automatic annual cost-of-living adjustments didn’t begin for Social Security until 1975, after a law passed in 1972 requiring them.

    HOW IS THE SIZE OF THE INCREASE SET?

    It’s tied to a measure of inflation called the CPI-W index, which tracks what kinds of prices are being paid by urban wage earners and clerical workers.

    More specifically, the increase is based on how much the CPI-W increases from the summer of one year to the next.

    IS THAT THE INFLATION MEASURE EVERYONE FOLLOWS?

    No. People generally pay more attention to a much broader measure of inflation, the CPI-U index, which covers all urban consumers. That covers 93% of the total U.S. population.

    The CPI-W, meanwhile, covers only about 29% of the U.S. population. It has been around longer than the CPI-U, which the government began compiling only after the legislation that required Social Security’s annual increases be linked to inflation.

    IS THAT WEIRD?

    Yes, and some critics have argued for years that Social Security should change to a different measure, one that’s pegged to older people in particular.

    Another experimental index, called CPI-E, is supposed to offer a better reflection of how Americans aged 62 and above spend their money. It has historically shown higher rates of inflation for older Americans than the CPI-U or CPI-W, but it has not taken hold. Neither have other measures compiled by organizations outside the government that hope to show how inflation affects older Americans specifically.

    Recently, the CPI-E has shown a bit milder inflation than CPI-W or CPI-U.

    WHY NOT USE ONE OF THOSE OTHER INDEXES?

    To calculate the CPI-E, the government pulls from the same survey data used to measure the broad CPI-U. But there are relatively few older households in that data set, meaning it may not be the most accurate.

    All indexes give just a rough approximation of what inflation really is. But the more pressing challenge may be that if the government switched to a different index, one that showed higher inflation for older Americans, Social Security would have to pay out higher benefits.

    That in turn would mean a faster drain on Social Security’s trust fund, which looks to run empty in a little more than a decade at its current pace.

    HOW IS THE SIZE SET FOR SOCIAL SECURITY BENEFITS?

    Through a complicated formula that takes into account several factors, including how much a worker made in their 35 highest-earning years. Generally, those who made more money and those who wait longer to start getting Social Security get larger benefits, up to a point.

    This year, the maximum allowed benefit for someone who retired at full retirement age is $3,345 monthly.

    WILL RICH PEOPLE GET THE SAME BOOST IN SOCIAL SECURITY?

    Yes. Everyone gets the same percentage increase, whether they have millions of dollars in retirement savings or are just scraping by.

    IF THE INCREASE IS BASED ON INFLATION IN URBAN AREAS, WILL PEOPLE IN RURAL AREAS GET THE SAME BOOST?

    Yes.

    “The COLA doesn’t take into account where you live or your actual spending patterns,” said William Arnone, CEO of the National Academy of Social Insurance. “For some people, it’s an overstatement of cost of living for, say, small towns in the Midwest versus urban areas like New York, D.C. or Chicago. With many older people choosing to live in suburban areas or rural areas, some will benefit more” than others from the same-sized increase.

    DO BIGGER PAYOUTS NOW MEAN SMALLER PAYOUTS IN THE FUTURE?

    The expected increase is great news for every beneficiary and for the businesses around them that could see more in sales. But it also means the Social Security system will pay out more money sooner, which can add more strain on its trust fund.

    One year of big increases driven by inflation won’t drain the system by itself, but it’s already long been heading toward an unsustainable future. The latest annual trustees report for Social Security said its trust funds that pay out retirement and survivors and disability benefits will be able to pay scheduled benefits on a timely basis until 2035. After that, incoming cash from taxes will be enough to pay 80% of scheduled benefits.

    WILL THIS MAKE INFLATION WORSE?

    It will put more cash in the hands of people who mostly really need it, and they’re very likely to use it. That will feed more fuel into the economy, which could keep upward pressure on inflation.

    Social Security’s boost, though, will have a smaller impact on the economy than past stimulus packages provided by Washington, snarls in supply chains caused by worldwide shutdowns of businesses or other factors that economists say are behind the worst inflation in decades.

    SO EVERYTHING’S GOING TERRIBLY?

    The risk of a recession seems to grow by the day, but many economists expect inflation to come down as interest-rate hikes take effect and supply chains continue to improve.

    Economists at Deutsche Bank, for example, expect inflation to ease from 8.2% this past August to 7.2% in the last three months of this year. In 2023, they see it dropping to 3.9% in the second half of the year.

    This is key for many Social Security beneficiaries. That would mean the COLA they receive this upcoming year would be bigger than the inflation they’re feeling at the moment. That would help make up for this past year, where actual inflation far outstripped the cost-of-living increase they got in January 2022.

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  • Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

    Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

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    CNN
     — 

    Saudi Minister of State for Foreign Affairs Adel al-Jubeir said his country partnered with Russia to slash oil production in order to stabilize markets and denied that there were political motives behind the decision, which has enraged US leaders and sparked calls to rethink ties with Riyadh.

    “We’re trying to make sure we don’t have erratic swings in prices,” al-Jubeir, one of Saudi Arabia’s top diplomats, told CNN’s Becky Anderson on Wednesday. “Our track record has been clear – we have always worked assiduously to maintain stability in the oil markets.”

    Last week, OPEC+, the oil cartel led by Saudi Arabia and Russia, agreed to slash production by 2 million barrels per day, twice as much as analysts had predicted, in the biggest cut since the Covid-19 pandemic.

    The move came despite an intense pressure campaign from the United States, which had warned Arab allies that such a move would increase prices and help Russian President Vladimir Putin continue to fund his war in Ukraine. Experts also fear that continued high oil prices could make it more difficult for the US to tamp down inflation, which has already skyrocketed this year.

    Al-Jubeir, who is also the country’s climate minister, denied that there were any political motives to the decision and said the production cut was made to avoid major swings in the price of oil, which can affect consumers worldwide, and pointed to the fact that the price of oil has gone down since the reduction was announced last week.

    “Saudi Arabia is not siding with Russia,” he told CNN. “Saudi Arabia is taking the side of trying to ensure the stability of the oil markets.”

    “Saudi Arabia does not politicize oil. We don’t see oil as a weapon. We see oil as our commodity. Our objective is to bring stability to the oil market,” al-Jubeir said.

    US President Joe Biden told CNN on Tuesday that Washington must now “rethink” its relationship with Riyadh following the cut. The decision was a particular affront for Biden because of his efforts over the summer to repair ties with Saudi Arabia, despite the kingdom’s woeful human rights record and the role of Saudi Crown Prince Mohammed bin Salman in the murder of dissident journalist Jamal Khashoggi. Bin Salman denied involvement in the murder, which captured international headlines in part due to the lurid details of the killing.

    “I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” Biden said.

    Watch the full exclusive interview with President Joe Biden

    On Wednesday, US national security adviser Jake Sullivan said Biden would examine all aspects of US ties with Saudi Arabia, including arms sales, as administration officials begin quiet discussions with members of Congress and congressional aides about how the US could impose consequences on the kingdom following the oil output cut.

    “There is a range of interests and values that are implicated in our relationship with that country,” Sullivan told reporters. “The President will examine all of that. But one question he’s going to ask is: Is the nature of the relationship serving the interest and values of the United States and what changes would make it better serve the interests and values?”

    Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said in an interview with Saudi TV earlier Wednesday that OPEC+ needed to be proactive as central banks in the West moved to tackle inflation with higher interest rates, a move that could raise prospects of a global recession, which could in turn reduce demand for oil and drive its price down. Cutting production would ensure a smaller supply of oil, keeping its price higher. While that would protect the Saudi economy by ensuring it receives a steady flow of income from oil sales, it would force consumers across the world to pay more for energy and gas, further fueling inflation.

    Saudi officials have insisted that the production cut is being done to protect the country’s economic interests. Because of its heavy dependence on oil revenues, the Saudi economy has a history of falling victim to boom and bust cycles in the oil market, where high prices bring in a flow of cash followed by downturns.

    In the United States, however, the cut could have massive political ramifications ahead of next month’s midterm elections. After reaching highs over the summer, gas prices in the United States had been steadily decreasing, providing Biden and his top aides a potent talking point in the lead-up to the elections.

    But a combination of factors, including rising demand and maintenance at some US refineries, has caused prices to begin ticking back up. The OPEC+ decision is likely to aggravate those factors.

    The decision set off bipartisan fury in Washington when it was first announced last week. Saudi Arabia is now being accused of filling the Kremlin’s coffers with oil revenues just days after President Putin’s regime began carrying out large-scale missile attacks on civilian targets across Ukraine

    “What Saudi Arabia did to help Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans,” tweeted Senate Majority Leader Chuck Schumer, a Democrat, on Friday.

    Democratic Sen. Richard Blumenthal of Connecticut on Wednesday called for immediate action on his bill that would stop US arm sales to Saudi Arabia.

    “The Saudis actions aid and abet a murderous and brutal criminal invasion by Russia,” Blumenthal said.

    When asked about growing calls in Washington to limit ties with Saudi Arabia, al-Jubeir said he hoped that such talk was motivated by domestic politics ahead of the midterms.

    Al-Jubeir said the relationship between the US and Saudi Arabia remains “robust.”

    “The Kingdom of Saudi Arabia and the US have had a very strong relationship for eight decades … and we look forward to this relationship continuing for the next eight decades,” he added.

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  • The Fed only cares about inflation. That’s bad news for you | CNN Business

    The Fed only cares about inflation. That’s bad news for you | CNN Business

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    New York
    CNN Business
     — 

    Jerome Powell and other members of the Federal Reserve are obsessed with choking off inflation once and for all, even if the Fed’s series of aggressive rate hikes slow the economy to a crawl. That could be bad news for consumers, investors and Corporate America.

    What’s more, many market experts and economists note that the rate of inflation, while still uncomfortably high, is falling and should continue to decline – but there is a noted lag effect. Fed vice chair Lael Brainard admitted as much in a speech Monday, saying that “policy actions to date will have their full effect on activity in coming quarters.”

    Still, the Fed isn’t done raising rates. Investors are pricing in the strong probability of a fourth consecutive three-quarters of a percentage point hike at the Fed’s next meeting on November 2. And the chances of a fifth straight hike of that magnitude at the Fed’s December 14 meeting are also on the rise.

    It seems that Powell wants to atone for his mistake of repeatedly calling inflation “transitory” for much of last year. So the Fed is going to keep raising rates to prove that it is taking inflation seriously, even if that leads to a bigger pullback in stocks…and tipping the economy into a recession.

    Needless to say, that’s a problem. Especially since the Fed has two mandates: price stability and maximum employment. That means the jobs market might get hit due to the Fed’s laser-like focus on inflation.

    “My concern is that the Fed is tightening so quickly and so significantly without knowing what it means for the economy,” said Brian Levitt, global market strategist with Invesco.

    Keep in mind that the Fed’s series of rate hikes are unprecedented in the “modern” era of central banking, i.e. after Alan Greenspan became Fed chair in 1987 and the Fed became far more transparent.

    The Fed was far more opaque before Greenspan, and the market didn’t pick apart every speech, policy move and economic forecast the way Wall Street does now. Inflation in the 1970s and early 1980s was also a much different animal, due largely to an oil price shock that lasted years because of a supply shortage.

    The current inflation crisis stems from more temporary (we won’t say transitory) supply chain issues tied to the pandemic as well as the rapid reopening of the global economy following a brief recession.

    But the economy is now showing cracks. Long-term bond yields have surged, and mortgage rates have popped, cooling off the housing market. The stock market has deflated as well, wringing even more excess from the economy.

    “We’re more cautious because the Fed is tightening into a weakening economy,” said Keith Lerner, co-chief investment officer and chief market strategist with Truist Advisory Services. “These supersized hikes are the most aggressive in decades. But the Fed has scar tissue from inflation.”

    As painful this current bout of inflation is for Americans, it’s nothing compared to what people lived through in the early 1980s before then Fed chair Paul Volcker squashed inflation with a series of massive rate hikes.

    Unless pricing pressures pick up again, it appears the year-over-year increase for the consumer price index (CPI) peaked at 9% in June. That’s a big move from about 2.3% in February 2020 just before the pandemic shutdown. But 9% is still a far cry from the CPI high during the Volcker years of 14.6% in early 1980.

    And with consumer and wholesale prices already edging lower, some experts worry that the continued uber-hawkish stance by the Fed will do more harm than good for the economy.

    “The speed at which the Fed is increasing rates will certainly have some unintended consequences,” said Michael Weisz, president of Yieldstreet, an investment firm that specializes in so-called alternative assets such as real estate, private equity, venture capital and art.

    Weisz said the surge in interest rates could lead to a “consumer credit crunch being more pronounced,” in which loans beyond mortgages might become more expensive and harder to get.

    Rate hikes raise the costs for companies to pay down their debt, increasing the possibility of corporate bankruptcies and defaults on commercial loans. It may even potentially lead to stagflation…the double whopper of stagnant growth and continued inflation. In other words, prices may remain high and the job market will probably be worse.

    “The Fed runs a real risk of over-tightening, as the impacts of the restrictive policy may not flow through inflation and unemployment data until it’s too late,” Weisz added.

    As long as inflation remains the bigger issue for the economy, the Fed is going to focus more on getting prices under control. After all, the unemployment rate is at 3.5%, a half-century low.

    “The Fed has made it clear their number one priority right now is price stability,” said Dustin Thackeray, chief investment officer of Crewe Advisors. “Until the Fed sees sustained evidence their monetary policy is having a material impact on…the job market, they will maintain their persistent efforts in reining in inflationary pressures.”

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  • France orders striking oil workers back to refineries amid

    France orders striking oil workers back to refineries amid

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    Queue at petrol station in Paris, France
    Lines formed at gas stations as some pumps have been running dry in France because of a strike by energy workers, as seen here on October 12, 2022 in Paris.

    Geoffroy Van der Hasselt/Anadolu Agency/Getty


    Paris — France’s premier ordered striking oil workers back to their refineries on Wednesday, as long lines persisted at gas stations across the country. Prime Minister Elisabeth Borne told France’s parliament that the situation had become “unbearable” in some parts of France, as drivers lined up for hours and many gas pumps ran dry.

    Her decision to order the requisition of essential workers came after a deal was negotiated Monday between oil producer Esso, the French branch of ExxonMobil, and two workers’ unions. Other unions voted to continue the strike at two Esso refineries, despite the order from the government in Paris.

    The striking workers said they would continue their action despite the government’s move. The workers are demanding a pay rise, arguing their salaries cannot keep up with inflation that has soared to almost 6% in France this year. The strike action began two weeks ago, shutting down refineries across much of the north and east of the country.

    Angered by the requisition order, another union joined the strike on Wednesday, extending the blockades.

    FRANCE-SOCIAL-PROTEST-ENERGY-STRIKE-WAGES
    A CGT Trade Union member (C) gestures as he speaks to journalists at the ExxonMobil refinery site, in Port-Jerome-sur-Seine, near Le Havre, northwest France, October 12, 2022.

    LOU BENOIST/AFP/Getty


    Government spokesman Olivier Véran warned that the requisition of essential workers could be extended to strikers at four other refineries, owned by France’s TotalEnergies.

    Officials have said that more than 30% of gas stations across France are now having trouble getting fuel supplies. Véran said, however, that once essential workers were ordered back to an Esso plant in Normandy, it should free up supplies and prompt “a real improvement” in the situation at gas stations.

    There have been some raised tempers in the long lines for gas, but most station owners have said people are trying to make the best of the situation. Riders were seen pushing scooters and motorcycles, rather than wasting precious fuel, and most drivers seemed more worried about the levels in their tanks than the high cost of the gas.

    France Fuel Shortages
    A gas station worker and a police officer set up a ribbon as they close a gas station in Paris, October 11, 2022, amid supply shortages caused largely by strikes that have hit French fuel refineries.

    Christophe Ena/AP


    In Vincennes, just outside Paris, drivers waited in line patiently, hoping their turn would come before the pumps ran dry.

    Najat Hakem, 36, said she had already tried several gas stations that day. “Every time, it says they have diesel, and when it’s my turn they run out, because people jump the queue,” she said. “People on scooters, cars like Ubers, they all say they have a valid reason to jump the queue. But I work, too.” 

    She said the minimum wait was around an hour. “This is my third attempt; I’ve been up since 6.30 a.m.,” she said.

    Odette Libert, 81, said she was in favor of requisitioning the refinery workers and was against the strike.

    “This is not acceptable in France, just because a few people want to annoy everyone. It’s their problem, not the problem of all the French people,” she said. “They have jobs, there are many people who can’t get work. If they don’t want to work there, they should leave and go elsewhere. So, requisition.”


    Gas prices in the U.S. expected to rise

    02:26

    Six of France’s seven refineries have been hit by the strikes. Only the Lavera refinery near Marseille was still operating normally on Wednesday. It is one of the largest refining sites in southern Europe, with the capacity to process 210,000 barrels per day.

    The war in Ukraine has hit energy supplies in Europe hard, and prices have soared since it began. That, in turn, has pushed inflation higher and raised the general cost of living. Inflation in France is currently at 5.6%.

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