What CPI inflation print means for recession, plunging stock market

In response to higher-than-desired inflation rates via the CPI, the Fed adjusts the Fed funds rate. Overall, food prices rose 2.9 percent in the year through November, slower than the 3.3 percent rate in October. The stock gains reflected expectations that the Fed may not need to raise interest rates again, after new data showed consumer price inflation slowed in October. The central bank has been increasing borrowing costs since March of last year in an attempt to rein in economic activity and slow the pace of price increases.

Stock futures rose sharply following the fresh numbers, up almost 1 percent for the day on the S&P 500. Private rental indexes from companies like Zillow and Apartment List have been slowing for more than a year, and even show rents falling outright in some markets. But the government’s measure of rents has been slower to moderate, in part because it includes all rental homes, not just those that turn over to new tenants. Shelter costs rose 0.3 percent in October, down from 0.6 percent in September — reversing a surprising acceleration that had alarmed some economists.

When inflation rises, the purchasing power declines, which means that a consumer can buy fewer goods and services for every currency unit (let’s say, 1 dollar). Otherwise, when inflation falls, the purchasing power increases, which means that a consumer can buy more goods and services for every currency forex arbitrage unit. The CPI attempts to measure the inflation felt by consumers, but the gross domestic product (GDP) deflator measures a wider range of inflationary effects. By accounting for the impact on institutions, such as governments, the GDP deflator makes year-to-year GDP comparisons more accurate.

So interesting that stocks and gold are having the same reaction, which is up, even though it may be for very different reasons, depending on how you parse the report. Copper, not always such a mover on these reports, but we did get a bit of a spike here. And WTI Crude Oil doesn’t usually move too much, and we didn’t get that much movement on it. Let me get to the interest rates because that’s where the bond market has been kind of wagging the dog, which is everything else. Unlike the CPI, the PCE includes spending done on behalf of consumers.

1. The BLS refers to a variety of sources to calculate CPI, including the prices of goods and services from about 23,000 retail and service establishments throughout the U.S.
2. The latest figures from the Major Cities Chiefs Association show a 10.7% decline in the number of murders from Jan. 1 to Sept. 30, 2023, compared with the same time period in 2022, in 69 large U.S. cities.
3. As of December, the U.S. added 790,000 manufacturing jobs during Biden’s time, a 6.5% increase in the space of 35 months, according to the BLS.
4. The percentage change in CPI over a period of time is referred to as the inflation rate.
5. The December figure is 4,861,000 higher than the February 2020 peak of employment before COVID-19 forced massive shutdowns and layoffs.

“The next step down in inflation will likely be driven by shelter where price pressures have decreased significantly over the last year but are not yet evident in the CPI data,” said Mr. Temple. For the largest U.S. airlines, the good times have continued, fueled in particular by thriving demand for international travel. Several reported disappointing financial results for the three months that ended in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flying more difficult.

Yardi Matrix, a commercial real estate data firm, said that the average asking rent at U.S. multifamily developments fell to $1,718 per month in October from the month before, and was up 0.4 percent year over year. Most economists are confident that the government measure of rents will converge with the private measures eventually, but they aren’t sure about the timing. Housing costs rose more slowly last month, an encouraging sign of progress for one of the most stubborn holdouts in the battle to bring down inflation. The FBI’s 2022 report is based on figures voluntarily provided by 15,724 law enforcement agencies, which represent 93.5% of the U.S. population.

The S&P 500 rose 1.9 percent on Tuesday, while the Russell 2000 index of smaller companies’ stocks, which are more exposed to the ups and downs of the economy, climbed roughly 5 percent. Stocks soared on Tuesday, after an inflation reading raised hopes that the Federal Reserve’s campaign to slow inflation may have reached its limits. “Consumer sentiment plunges to record low amid surging inflation.” 10 Jun 2022. There were about 41.4 million beneficiaries receiving food assistance through SNAP, as of October. The figures, which are preliminary, were published by the Department of Agriculture earlier this month. For the third straight year, since a spike during the pandemic, annual gun purchases appear to have declined, according to figures from the National Shooting Sports Foundation.

Housing costs climbed more quickly than expected.

Typically, Americans can expect the CPI to increase between about 1% and 4% each year, based on data from the last couple of decades. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

The core CPI is useful because food, oil, and gas prices are volatile, and the Fed’s tools are slow-acting. Information about food and energy price increases are both summarized in the beginning of the report, since these two categories directly impact consumers. Core inflation, which refers to inflation minus food and energy prices, comes next. The calculation also factors in the substitution effect as consumers shift spending away from the products rising in price on a relative basis. The CPI also adjusts for changes in product quality and features.

What Is the Current CPI?

It then multiplies this percentage by 100 to get the number for the index. Do want to check out Bitcoin, though, because Bitcoin has been on fire recently. Not seeing– a whole bunch of sideways to up-action here, but not really anything other than some chop. That means the dollar was weakening on the move, and that would be concurrent with the move that we saw in gold. Let’s go to gold because gold has really been on fire after reaching a record high versus the US dollar last week.

How Is the CPI Used?

The U.S. imported roughly $789.4 billion more in goods and services than it exported over the last 12 months through November, according to figures published this month by the Bureau of Economic Analysis. The international trade deficit in that period was $136.5 billion higher, or about 20.9% more, than the gap for the 2020 calendar year. Still, over the last 12 months, the U.S. imported about 6.39 million barrels of crude oil per day on average. That’s up more than 8.7% from average daily imports in 2020 — but lower than the pre-pandemic average of 6.80 million barrels per day in 2019. In its Short-Term Energy Outlook for January, the EIA projected that crude oil production averaged 12.92 million barrels per day in 2023, which would be the highest average on record.

What Is the Consumer Price Index?

As the CPI increases and the government enacts policy changes to slow inflation, rates often increase. On the other hand, landlords may use CPI information to adequately assess what annual rent increases for renters should be. The Consumer Price Index for All Urban Consumers (CPI-U) represents 93% of the U.S. population not living in remote rural areas. It doesn’t cover spending by people living in farm households, institutions, or on military bases. CPI-U is the basis of the widely reported CPI numbers that matter to financial markets.The BLS also publishes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

CPI print sees inflation rise by 0.1% in November

The CPI-W covers 29% of the U.S. population living in households with income derived predominantly from clerical employment or jobs with an hourly wage. The calculation of the CPI indexes from the data factors in substitution effects—consumers’ tendency to shift spending away from products and categories has grown relatively more expensive. It also adjusts price data for changes in product quality and features. The weighting of the product and service categories in the CPI indexes corresponds to recent consumer spending patterns derived from a separate survey. The CPI is one of the most popular measures of inflation and deflation.

Food inflation has moderated over the past few months as other inflationary pressures, such as supply shocks and high transportation costs, have eased. In August 2022, overall food prices rose at a peak rate of 11.3 percent. Although food price growth has cooled since https://bigbostrade.com/ then, prices are still climbing at a faster rate than they were before the pandemic. Tuesday’s report offered renewed evidence of progress on those critical fronts. A closely watched measure of housing costs moderated after unexpectedly ticking up in September.

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