Prices Rose at a Faster-Than-Expected Rate in January, a 40-Year High
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A key inflation measure set for release Thursday morning is expected to show that prices continued to climb at the fastest pace in 40 years.
But the data could also show some moderation in how much costs are going up each month — a potential silver lining as consumers wait for price pressures to lessen after a bruising year.
Economists expect the Consumer Price Index data for January to show that prices climbed by 7.2 percent over the past year, up from 7 percent in December. That would be the fastest clip since February 1982.
But prices are expected to have climbed 0.4 percent in January from the prior month. That is unusually rapid, but it is a moderation from the biggest monthly increases last year, which came in as high as 0.9 percent.
Forecasters anticipate that inflation will ease meaningfully in 2022: Many expect it to finish the year closer to 3 percent. But economists regularly predicted that price gains would fade quickly in 2021, only to have those projections foiled as booming consumer demand for goods collided with roiled global supply chains that could not ramp up production fast enough.
The recent spike in prices for food, fuel, cars and other goods has become a problem for both the Federal Reserve, which is responsible for keeping prices stable, and the White House, which has found itself on the defensive as rising costs eat away at household paychecks and detract from a strong labor market with solid wage growth.
On Wednesday, Jen Psaki, the White House press secretary, tried to put a positive spin on the numbers, acknowledging that the data to be released Thursday would most likely show a high reading for the year but that the trajectory is for prices to decrease.
“We expect a high year inflation rate reading in tomorrow’s data, given what we know about the last year,” Ms. Psaki said, adding that “it’s not about the recent trends.”
“Inflation is expected to decrease over the course — and moderate — over the course of this year,” she said.
Even so, the new data could add to the urgency for the Fed to begin weaning the economy off the rock-bottom interest rates that have been in place since March 2020.
Fed officials have signaled that they will begin raising rates at their meeting next month. Higher rates can slow down consumer and business spending by making it more expensive to finance a car, house or machine purchase. Policymakers have also suggested that they will soon begin to shrink their balance sheet of bond holdings, which should push up longer-term interest borrowing costs and further cool off the economy.
Investors now expect that central bankers might lift interest rates six times this year as they try to slow down the economy and tamp down price gains.
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Inflation in countries using the euro, which has soared to record-setting heights in recent months, is expected to peak in the first quarter of this year, the European Commission said on Thursday, as consumers feel the bite of higher energy prices and rising costs of key goods.
Euro area inflation for the January-March period will reach 4.8 percent, up from 4.6 percent in the fourth quarter of last year, which was a record since the bloc started measuring inflation collectively in 1997, the commission said in its quarterly economic forecast. Inflation is expected to move down over the course of the year, but it won’t reach the 2 percent benchmark target set by the European Central Bank until 2023, the forecast said.
Economies will continue to grow as the impacts of the pandemic ease, by an expected 4 percent in the euro area this year, according to the forecasts, and by the end of this year will have recovered all their pandemic-era economic losses.
But inflation will outpace that average rate of economic expansion, eroding gains and the benefits that such growth would otherwise bring to Europeans.
In comments to the news media, Paolo Gentiloni, the European commissioner for the economy, said that the mix of high energy prices and persistent staff shortages caused by the coronavirus were hitting Europe’s economic recovery.
“Supply constraints have grown and energy prices have continued to be very high,” Mr. Gentiloni said. “This has contributed to dent further manufacturing production and again pushed inflation above expectations, with a negative impact on consumers’ purchasing power.”
U.S. stock futures dipped lower ahead of the market open on Thursday as investors awaited the latest reading on American inflation, which is expected to show the fastest price increases since 1982.
The Consumer Price Index rose 7 percent in December from a year earlier, and economists expect to the pace to pick up to 7.2 percent in January when the data is released later this morning.
The yield on 10-year U.S. Treasury notes was little changed at 1.94 percent. Earlier this week, the yield climbed to 1.96 percent, the highest since mid-2019, as traders increased their bets on how fast the Federal Reserve would tighten monetary policy to cool the economy.
If inflation reading for January is higher than expected, it’s likely to further fuel speculation that the Fed will have to lift interest rates more frequently or in larger intervals, such as a 0.5 percentage point increase instead of a 0.25 percentage point change, which is more common. These expectations would send bond yields higher.
The S&P 500 is poised to halt its two-day run of gains on Thursday. But shares in the Walt Disney Company rose 7.7 percent in premarket trading after the entertainment giant said on Wednesday that Disney+ added 11.8 million subscribers worldwide in its most recent quarter to reach nearly 130 million, far exceeding analyst expectations.
Oil prices rose slightly on Thursday. Futures of West Texas Intermediate rose 0.8 percent to $90.38 a barrel. Futures climbed above $90 a barrel last week, prices not seen since 2014.
European stocks tentatively extended gains on Thursday. The Stoxx Europe 600 rose 0.1 percent, after climbing 1.7 percent on Wednesday.
Shares in Unilever fell 1.4 percent in London after the company warned that it expected “very high” inflation for its own costs, such as raw materials and shipping, of 2 billion euros in the first half of the year, which would further squeeze its profit margins. Unilever added it had listened to shareholders and would not pursue any major acquisitions “in the foreseeable future” after it dropped an unpopular bid for GlaxoSmithKline’s consumer health business earlier this year.
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The Biden administration said on Thursday that it would require states to submit proposals to line highways with electric vehicle chargers, part of a $5 billion plan to fill a gap in the infrastructure needed to support booming sales of battery-powered cars.
Electric vehicles have been surging in popularity, accounting for almost 9 percent of new cars sold worldwide last year. But America lags Europe in the number of places where an owner of a battery-powered vehicle can recharge.
On Thursday, administration officials detailed how they aimed to address the deficit using $5 billion that Congress allocated as part of the $1 trillion infrastructure bill signed by President Biden in November.
That money, to be spent over five years, will not nearly be enough to build the charging network that experts says is needed to serve the growing fleet of electric vehicles. But administration officials hope the plan will act as a catalyst, encouraging utilities and private operators to build additional chargers.
The administration outlined a relatively speedy timetable for deploying an initial installment of $615 million. All 50 states, as well as Washington, D.C., and Puerto Rico, would be required to submit plans by the beginning of August, at the latest, explaining how they would install high-voltage chargers along or very close to major highways.
The chargers must be no more than 50 miles apart, and states are encouraged to place them at rest areas or other places with food and other services. Federal officials must decide by the end of September whether to approve the states’ plans.
Later, the administration plans to spend another $2.5 billion on chargers in rural areas or other communities where private sector operators may be less inclined to invest.
The money “will help us win the E.V. race by working with states, labor and the private sector to deploy a historic nationwide charging network that will make E.V. charging accessible for more Americans,” Transportation Secretary Pete Buttigieg said in a statement.
Administration officials billed the interstate charger plan as a way to create jobs for electricians and other workers. Mr. Biden has been portraying the switch to electric vehicles as part of his effort to revive manufacturing in the United States. One fear is that, because electric vehicles require far fewer workers to build, they could lead to job losses at auto manufacturers and suppliers.
On Tuesday, Mr. Biden appeared at the White House with Jane Hunter, the chief executive of Tritium, an Australian manufacturer of charging equipment that announced plans to build a factory in Lebanon, Tenn., that would employ 500 people.
“We’re seeing the beginnings of an American manufacturing comeback,” Mr. Biden said at the event.
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Last year, Twitter executives set ambitious goals for their company, with hopes of attracting more than 100 million new users and doubling revenue by 2023. The last three months of 2021, however, showed the challenges the company must overcome before it can hit its objectives.
Twitter said on Thursday that its revenue grew more slowly than analysts had expected in the last quarter 2021, and the company predicted that it would report a loss in the current quarter. But it added new users, potentially easing concerns that it was having a hard time drawing interest in an increasingly diverse market for social media.
Twitter reported revenue of $1.56 billion in the final three months of 2021, a 22 percent increase from a year earlier but lower than analyst expectations. Twitter said it earned $176 million in income, a 34 percent decline from the year-ago period. The company said it had 217 million daily active users who see ads, a 13 percent increase.
Twitter also announced that its board had authorized a $4 billion buyback of its stock. The company plans to repurchase $2 billion of its shares on what it described as an accelerated timeline, with the remaining $2 billion to be purchased over time. The plan follows an earlier buyback of $2 billion that was authorized in 2020, although $819 million of that program remained unspent.
“It represents confidence in our strategy and execution,” Ned Segal, Twitter’s chief financial officer, said of the share repurchasing plan. “We are putting our money where our mouth is.”
Twitter has said that it plans to grow rapidly over the next two years, reaching 315 million daily active users and $7.5 billion in annual revenue by the end of 2023.
The company added one million daily active users in the United States in the fourth quarter, and five million users internationally. Its total revenue in 2021 was $5.08 billion, a 37 percent increase from the previous year.
Twitter’s stock price swung wildly last week, when Facebook’s parent company, Meta, said that privacy changes introduced by Apple had dampened its advertising business. Investors viewed Meta’s earnings report as a bellwether for the social media industry, but Twitter said that Apple’s privacy changes had a minimal impact on its advertising business.
“Our strong 2021 performance positions us to improve execution and deliver on our 2023 goals,” Parag Agrawal, Twitter’s new chief executive, said in a statement. “We are more focused and better organized to deliver improved personalization and selection for our audience, partners and advertisers.”
Truck drivers are enjoying the upper hand. Trucking fleets are handing out across-the-board raises to retain drivers while offering $10,000 cash bonuses in a frantic effort to court new hires.
Still, a three-day run in the truck of Stephen Graves — from Kansas City, Mo., to Fort Worth and back — reveals the inherent pressures of a relentlessly stressful job.
Here is a life spent navigating the hazards of piloting a truck weighing 26,000 pounds and pulling a 53-foot trailer, while balancing the need to ingest caffeine against the imperative to limit bathroom breaks.
The hours pass, the towns recede, while the gnawing loneliness of the road is constant. READ THE ARTICLE →
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Sarah Palin, the former governor of Alaska who is suing The New York Times for defamation, is expected to continue her testimony on Thursday as jurors weigh her accusations that The Times acted recklessly in writing and publishing the editorial in 2017 that incorrectly linked a mass shooting in Arizona to her political rhetoric.
With late afternoon approaching on Wednesday, Judge Jed S. Rakoff adjourned for the day after Ms. Palin’s lawyer had questioned her for roughly 15 minutes, touching only on biographical points about her political career and life in Alaska.
Ms. Palin, who has receded from the public eye in recent years despite once being one of the Republican Party’s most dynamic but polarizing stars, explained that she was now spending most of her time in her hometown, Wasilla, Alaska, where she was “holding down the fort” as a single mother raising a child with special needs.
The bulk of the day’s proceedings were consumed by the second and final day of testimony from James Bennet, the former editor of the opinion section of The Times, who also is named as a defendant in Ms. Palin’s suit.
Mr. Bennet said under questioning from a lawyer representing The Times that it was never his intention to blame Ms. Palin for the 2011 mass shooting outside Tucson, Ariz., that wounded Gabrielle Giffords, then a Democratic member of Congress, and left six others dead.
Mr. Bennet said his use of the phrase “the link to political incitement was clear” — which he inserted into the editorial as he edited it — was meant as a critique of the overheated political rhetoric of that moment.
Mr. Bennet testified that once he saw a flood of social media criticism, he thought that “the editorial was being read in a way we did not intend.”
Ms. Palin’s lawyers also called to the stand Ross Douthat, a Times columnist who wrote to Mr. Bennet around 11 on the night the editorial was published expressing his “bafflement” at the reference to Ms. Palin. Mr. Douthat testified that while he knew there had been no connection established between the Tucson shooting and Ms. Palin’s political rhetoric, he understood that others at the time believed there was.
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Wells Fargo told U.S. employees on Wednesday that it expected most corporate workers to begin a hybrid work on March 14. A memo from its chief operating officer, Scott Powell, said that workers could immediately return to the office on a voluntary basis and that masks would be optional for fully vaccinated employees unless they were required under local rules. Those who are not fully vaccinated will be required to wear masks and follow testing requirements.
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Uber said on Wednesday that growing revenue and returning passengers sent a strong signal that its business was bouncing back in the final three months of 2021 from the slowdown caused by the pandemic.
The quarter also provided another indication of how Uber’s fortunes rise and fall with its investments in other companies.
Uber’s revenue grew to $5.8 billion, an 83 percent increase from a year earlier, exceeding analyst expectations. The company also marked its second profitable quarter as a public company, earning $892 million largely from its investments in Grab, the Southeast Asian ride-hailing company that went public in December, and Aurora, the autonomous vehicle start-up.
Uber lost $968 million during the same period a year earlier and reported a loss of $2.4 billion in the third quarter of 2021 caused by its investment in Didi, the Chinese ride-hailing company. READ THE ARTICLE →
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A blockade at the busiest route linking Canada to the United States is further snarling global supply chains, leading to production stoppages and other difficulties for automakers and other manufacturers with dwindling inventories.
Automakers, who have already been suffering from a global shortage of semiconductors needed to power their cars, are being particularly affected by the partial shutdown of the Ambassador Bridge, which links Detroit, Mich., with Windsor, Ontario, and accounts for roughly a quarter of trade between the two countries.
Ford Motor Company said it had shut down two Canadian plants and reduced production at another as of Wednesday afternoon. Toyota Motor Corporation and Honda Motor Company would likely be closing some production lines later on Wednesday because of border closures, said David Adams, the president at Global Automakers of Canada, which represents both companies. READ THE ARTICLE →
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Three of President Biden’s nominees to the Federal Reserve committed to lawmakers that, if confirmed to their posts, they would not work in financial services for four years after leaving the Fed.
The pledge comes amid growing concern about the revolving door between Washington and Wall Street.
The three potential Fed governors in question — the economists Lisa D. Cook and Philip N. Jefferson and a longtime government official and lawyer, Sarah Bloom Raskin — said they would “commit not to seek employment or compensation” from any financial services company after leaving the board, which oversees the largest banks.
Their promises came at the urging of Senator Elizabeth Warren, the Massachusetts Democrat who has criticized the so-called revolving door between government and finance. Fed officials regularly go to work for Wall Street after leaving the institution, making the commitment notable.
“These are the strongest ethics standards ever agreed to by Federal Reserve Board nominees,” Ms. Warren said in a statement on Wednesday. “U.S. Senators and the American people can be confident that these public servants will make sound economic policy decisions in the public’s best interest.”
Republicans have been questioning Ms. Raskin’s nomination by highlighting her stint on the board of directors for a financial technology company, Reserve Trust.
The company got a critical account with the Fed — known as a master account — while Ms. Raskin was on the company’s board. The account provided the firm with advertisable benefits, like access to the Fed’s payments system.
During her confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs last week, senators questioned whether she had used her previous positions at the Fed and Treasury to help secure the account. Ms. Raskin did not confirm or deny whether she had been in touch with the company’s local Fed bank while she sat on its board.
The Federal Reserve Bank of Kansas City, which approved the master account, has said that it “did not deviate from its review process in evaluating this request.”
Senator Patrick J. Toomey, Republican of Pennsylvania, asked Ms. Raskin to respond in writing by Wednesday about the Reserve Trust situation.
Ms. Raskin, in her response, said she did “not recall any communications I made to help Reserve Trust obtain a master account. Had I done so, I would have abided by all applicable ethics rules in such communications.”
Amanda Thompson, the communications director for Republicans on the Banking Committee, called those responses a “case of selective amnesia.”
The White House has continued to stand behind its nominees. Christopher Meagher, a spokesman for the White House, called the Republican questioning “smears” and said that they “continue to fall flat in the face of scrutiny and facts.”
Dr. Cook, Dr. Jefferson and Ms. Raskin are up for confirmation alongside Jerome H. Powell — who Mr. Biden renominated to be Fed chair — and Lael Brainard, a Fed governor who is the Biden administration’s pick for vice chair.
Senator Sherrod Brown, Democrat of Ohio and the chairman of the Banking Committee, said last week that all five candidates would face a key committee vote on Feb. 15.
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Union efforts that began late last year at three Starbucks locations in Buffalo have spread across the country, and now they have landed in New York.
Employees at three Starbucks stores in Manhattan and Brooklyn, including the company’s marquee roastery in the meatpacking district, and a store on Long Island filed petitions by Thursday morning with the National Labor Relations Board to organize with Workers United, an affiliate of the Service Employees International Union.
The employees are asking to hold a vote on March 3.
These locations join more than 60 Starbucks stores that have sought to unionize over the last several months. Unions at two stores in Buffalo have been established. There are 9,000 corporate-owned Starbucks locations in the country.
In letters addressed to Kevin Johnson, the company’s president and chief executive, employees at the four New York-area stores described years of deteriorating trust between the corporation and its employees, who are referred to as partners. They detailed struggles to make a living and concerns about work conditions during the pandemic, and they expressed the belief that a union would give them the opportunity to shape their workplace into a better one.
“We realize, like our fellow partners across the nation, a union is the way to build back that trust and create a true partnership,” a letter signed by six employees at a store in Brooklyn said. “We want transparency and accountability, and unionizing gives us the power to make sure our presence is felt.”
In the past, Starbucks has maintained that it is not anti-union but “pro-partner,” and that it has been responsive to concerns brought by its workers.
This week, Starbucks fired seven employees who were trying to form a union at a store in Memphis, saying they had violated company policies. And in 2019, the company fired two employees seeking to unionize a Philadelphia location.
Mark Mao, a roasting operator at the meatpacking district location, said the past several years had felt like a “litany of broken promises” about wages, staffing and safety.
The entire 10-member manufacturing team at the roastery, who handle the beans used on site, has signed union cards to qualify for a formal vote, Mr. Mao said. He added that they were not deterred by the recent events in Memphis.
“That just makes me feel that this is the right way to do it, the right way forward,” Mr. Mao said. “Having a union represent our interests, having us collectively bargain for better working conditions and wages, is more important since this happened.”
Dozens of lawmakers in New York, including City Council members and U.S. representatives, are supporting the union efforts generally and wrote a letter dated Thursday to Mr. Johnson urging Starbucks to respect the right to organize.
“New York City is a union town and union-busting has no place here,” reads the letter, signed by 75 elected officials, including Representative Alexandria Ocasio-Cortez and Tiffany Cabán, a City Council member. “We believe that these organizing efforts will ultimately lead to a stronger and more sustainable future for Starbucks, the workers, and our city and state.”
Source: https://www.nytimes.com/live/2022/02/10/business/inflation-stocks-economy-news
