Wholesale inflation over past year jumps by record amount
Nearly 60% of the gain in wholesale prices in June reflected a jump in the cost of services, led by higher margins received by wholesalers and retailers.
Nearly 60% of the gain in wholesale prices in June reflected a jump in the cost of services, led by higher margins received by wholesalers and retailers.
The pickup in inflation, which has coincided with the economy’s rapid recovery from the pandemic recession, has heightened concerns that the Federal Reserve might feel compelled to begin withdrawing its low-interest rate policies earlier than expected.
Federal Reserve officials said the $35.3 billion seasonally adjusted increase in May was the largest one-month gain on records that go back to 1943.
The discussions, revealed in the minutes of the Fed’s June meeting released Wednesday, indicate that the Fed is moving closer to tapering those purchases, even though most analysts don’t expect a reduction until late this year.
There are signs that people are re-evaluating their work and personal lives and aren’t necessarily interested in returning to their old jobs, particularly those that offer modest wages.
In terms of inflation, which is the bogeyman for investors right now, a big and sustained gain in wages would be even more dangerous than the price spikes already seen for oil and other commodities.
June was the 13th consecutive month manufacturing has grown after contracting in April 2020, when coronavirus fears triggered business shutdowns across the country.
Last week’s drop in jobless claims nationally was steeper than economists had expected. Applications for unemployment benefits have now fallen in 10 of the past 12 weeks.
The proportions of consumers planning to purchase homes, automobiles and major appliances all rose in June, as did intentions to take vacations.
The Labor Department said Thursday that jobless claims declined by 7,000 from the previous week, to 411,000. The number of weekly applications for unemployment aid has fallen steadily this year, from about 900,000 in January.
Retail workers, drained from the pandemic and empowered by a strengthening job market, are leaving jobs like never before.
Sawmills, veterinary clinics and psychologists’ offices are among the businesses gripped by escalating worker shortages, as employers in a few pockets of the economy step up competition for workers and sharply increase wages.
The monthly gain in the producer price index, which measures inflation pressure before it reaches consumers, followed a 0.6% increase in April and a 1% jump in March, the Labor Department reported Tuesday.
Retail sales fell in May, dragged down by a decline in auto sales and a shift by Americans to spend more on vacations and other services instead of goods.
With inflation rising in a fast-rebounding economy, the Federal Reserve is poised this week to discuss when it will take its first steps toward dialing back its ultra-low interest rate policies. It will be a fraught discussion.
American consumers absorbed another surge in prices in May—a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.
The Labor Department reported Tuesday that a record 4 million people quit their jobs in April, a sign that they are confident enough in their prospects to try something new.
Last month’s job growth was above April’s revised total of 278,000, the Labor Department said Friday, yet well short of employers’ need for labor. The unemployment rate fell to 5.8% from 6.1%.
Job postings in late May were nearly 26% above pre-pandemic levels, as posted jobs reached their highest level on record dating to 2000.
Several of the central bank’s districts reported that increased vaccination rates and relaxed social-distancing measures were having a positive impact on the economy.