Here is where inflation stands as the Federal Reserve meets.
Daily Business Briefing
June 16, 2021, 7:33 a.m. ET
June 16, 2021, 7:33 a.m. ET
The Federal Reserve will release its June policy decision and newest economic projections at 2 p.m. on Wednesday, and investors will be scrutinizing its announcements for clues on whether the central bank’s thinking about inflation might be changing.
Price gains have been coming in quicker than central bankers had expected when they last released economic projections in March, and that has invited questions about whether and when the Fed will need to begin removing its economic policy supports, which remain set to emergency mode. Any tweaks to the Fed’s policy statement or estimates about the outlook will be closely watched.
Economists generally expect Jerome H. Powell, the Fed chair, to stick to the script when it comes to price increases: Predicting that inflation pressures will fade as the United States gets through a funky reopening period and noting that the central bank has the tools to deal with inflation if gains do last.
There are reasons to expect the bump to wane. Prices sank during lockdowns last year, making the year-over-year comparison look artificially big, and prices are rising now because demand is bouncing back faster than supply. Officials expect that the bottlenecks restricting the supply of items like cars and airline tickets will clear up as things return to normal.
But as climbing costs for consumers dominate headlines and political debates in Washington, Mr. Powell is likely to face questions about how much inflation the Fed is willing to tolerate before the situation is no longer seen as manageable and temporary.
Here are the inflation indicators the Fed is working with headed into its meeting:
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Personal consumption expenditures, the Fed’s preferred gauge: up 3.6 percent in April from the prior year, the fastest pace in 13 years.
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Core P.C.E., which strips out volatile food and energy prices: up 3.1 percent in April over the year, the fastest pace since 1992.
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Consumer Price Index, an important Labor Department gauge: up 5 percent in May from a year earlier.
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University of Michigan consumer inflation expectation for next year: moderated to 4 percent in preliminary June data, but still up from 3 percent at the start of the year.
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University of Michigan consumer inflation expectation for five years from now: moderated to 2.8 percent in preliminary June data, little changed from 2.7 percent at the start of 2021.
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Five-year, five-year forward inflation expectation rate, a market-based measure: appears to have stabilized around 2.3 percent after climbing sharply earlier this year.
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Federal Reserve Bank of New York’s Survey of Consumer Expectations, inflation expectation for next year: 4 percent, up from 3 percent at the start of the year.
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New York Fed Survey of Consumer Expectations, inflation expectation for three years from now: 3.6 percent, up from 3 percent at the start of the year.
The Fed targets 2 percent inflation on average, and officials had been hoping to coax inflation slightly higher so that price gains average their goal rate after years of weakness. Officials have also aspired to lift inflation expectations, which had been drifting too low. As a result, the recent moves higher might be received as good news.
The key question is how long stronger price pressures will last — and at what point they will have overstayed their welcome.
Inflation in Britain accelerated at its fastest pace in nearly two years last month, as businesses reopened and social distancing restrictions were relaxed. Consumer prices rose 2.1 percent in May compared with last year, the national statistics agency said on Wednesday.
It is the first time the annual inflation rate has climbed above the Bank of England’s 2 percent target since July 2019. In April, the rate was 1.5 percent.
Prices rose 0.6 percent in May from the previous month, driven by increases in clothing, transport, restaurants and hotels, and recreational expenses like computer game downloads.
Across Europe and the United States, policymakers and investors are watching inflation closely for signs of whether the current upward pressure on prices is temporary or here to stay. Some of the jump in annual inflation rates can be explained by the fact that prices were so low a year ago, when economies shut down in response to the pandemic.
But the reopening is also causing prices to jump as businesses try to keep up with a sudden increase in demand. If inflation remains high and keeps rising faster than expected, it could be a sign the economy is overheating and central banks would be forced to pull back on monetary stimulus. On Wednesday, the Federal Reserve will make its next policy announcement amid rising inflation expectations in the United States.
“The firming of price pressures in the U.K. is part of a global phenomenon as the world emerges from the Covid-19 pandemic,” Ambrose Crofton, a strategist at JPMorgan Asset Management, wrote in a note. “As a result, central banks are gradually tiptoeing towards the exit of their emergency monetary support programs.”
The Bank of England expects inflation to rise to about 2.5 percent by the end of this year before drifting lower. Its next policy meeting is on June 24.
VidCon, the annual online video convention that has become the biggest event in the influencer industry, is returning to the Anaheim Convention Center in California this fall. And it has a new top sponsor: TikTok.
The announcement on Tuesday, which was first reported by Variety, solidified the app’s ascendancy after a year of tremendous growth and reflected a changed social media landscape, one where overnight stardom is more likely to happen on TikTok than on YouTube, which had been VidCon’s top sponsor since 2013.
TikTok, which was introduced in the United States in 2018, made a memorable appearance at the last VidCon, in 2019. Its splashy party drew such a crowd that hundreds of creators were left standing at the entrance.
This year, the company’s presence will only be bigger. TikTok will bring many of the app’s top creators to appear at events, and an executive at the company will deliver the keynote address.
Since its founding in 2010, VidCon has been an opportunity for creators to network with executives in entertainment and technology; source brand deals; socialize; and meet fans. Last year’s VidCon drew more than 75,000 attendees.
In years past, YouTubers dominated the convention, but the creator economy has changed substantially in the last year.
A YouTube representative said that the company would maintain a large presence at this year’s event, which is scheduled to take place Oct. 21-24.
“We prioritized the health and safety of our creators, fans and employees as we thoughtfully worked through our VidCon plans months ago,” the representative wrote in an email. “We are excited to continue our investment in our creators and VidCon as we have done since 2013 through new and different opportunities as part of the overall program.”
A day after ousting two top executives, the electric truck start-up Lordstown Motors said on Tuesday that it was on track to start production in September even if it does not raise additional funding, contradicting what it told securities regulators just a week ago.
In a filing to the Securities and Exchange Commission last week, Lordstown said it needed to raise more money and might not survive. Then, on Monday its founder and chief executive, Steve Burns, and the company’s chief financial officer resigned.
But in a news conference hosted by the Detroit-based Automotive Press Association, the company’s new executive team presented a far more optimistic outlook without providing many details.
Lordstown’s president, Rich Schmidt, said that the company would start making trucks at its plant in Lordstown, Ohio, in late September and that it had enough money to last until May 2022. He said the company would be able to make about 15,000 trucks over the next 24 months.
He also said the company was still actively seeking new funding to increase production.
“It’s a new day at Lordstown Motors, and there is no and will be no disruption to our plans to start production,” the company’s new executive chairwoman, Angela Strand, said. She had previously served as the lead independent director on Lordstown’s board.
Lordstown’s stock had climbed to nearly $31 a share earlier this year, but fell to about $7 in May, after Mr. Burns acknowledged that the thousands of “pre-orders” the company had been touting were not binding orders. Some large orders the company had announced had also come from “influencers” who did not plan to buy the trucks themselves, the company said on Monday.
Mr. Schmidt, who joined Lordstown in 2019 after a stint at Tesla, said on Tuesday that the company had “binding” orders for all the trucks the company is likely to make in 2021 and 2022. But he declined to disclose the total number, name specific customers or say whether they had paid deposits to secure their orders.
“Those are firm orders,” Mr. Schmidt said. “They have been reconfirmed last week.”
Lordstown shares jumped more than 10 percent on Tuesday.
He said production would start in September even though the company’s Endurance truck has not passed all the required crash and engineering tests needed to be cleared for sale in the United States. Trucks that roll off its assembly line would be held until the testing is complete and then modified, if necessary, before being shipped to customers, a highly unusual practice in the auto industry.
Mr. Schmidt offered little detail on what prompted Mr. Burns’s departure. About a dozen other senior executives were also let go on Monday.
Lordstown gained attention in 2019 when it agreed to buy a plant that General Motors was closing. The shutdown drew scorn from President Donald J. Trump, and G.M. sold the plant to Lordstown for just $20 million. Mr. Trump later hosted Mr. Burns at the White House.
Lordstown plans to make a rugged, electric pickup truck for commercial customers like mining and construction businesses. Mr. Burns had hoped the company would become the Tesla of the pickup market. But investors grew concerned about Lordstown’s prospects after a small investment firm, Hindenburg Research, published a report in March that raised questions about interest in the company’s trucks.
The housing market — like the broader economy — is split between two divergent tracks, according to the annual State of the Nation’s Housing Report released by Harvard’s Joint Center for Housing Studies on Wednesday.
While one group of households is rushing to buy homes with savings built during the pandemic, another group is essentially locked out of ownership as prices continue to rise. And millions of lower-income families who bore the brunt of the job losses during the pandemic remain saddled with debt and in danger of losing their homes, Conor Dougherty and Glenn Thrush report for The New York Times.
Roughly seven million tenants were behind on rent earlier this year. With savings tapped out and unemployment benefits set to lapse, the financial damage to low-income households remains severe enough that they will need more support if they’re to recover with the broader economy, the Harvard report said.
At the peak last year, the majority of states and large cities had some sort of heightened eviction protection in place, though the degree of protection varied widely. Many of those safeguards have expired over the past few months, and the federal eviction moratorium issued by the Centers for Disease Control and Prevention in September is set to lapse at the end of the month.
