Thu. Nov 14th, 2024

How consumer prices are moving and what it mesns for the economy

By 37ci3 Oct10,2024



Ahead of the latest monthly inflation reading, consumers are still coming to terms with sticker shock in the prices of everyday goods and services and uncertainty about the economy.

According to Dow Jones estimates, the rate of consumer price growth in September was expected to remain largely unchanged.

While costs have normalized, America continues to adjust to prices that are more than 21% higher on average than at the start of 2020, with some goods and services rising even more.

Higher costs remain a major concern for voters heading into the November election. Former President Donald Trump tried to pin Vice President and Democratic presidential nominee Kamala Harris on those price hikes, accusing her of sitting by while the Biden administration approved spending he said helped fuel the inflationary boom.

But economists remain uncertain about the extent to which fiscal stimulus is affecting inflation, with many saying supply chain issues and changes in consumer behavior play an equal or greater role.

While Trump has proposed a set of tariffs that he says will boost jobs and boost incomes, Trump has not offered a detailed economic plan — results that many economists say are controversial.

Harris, for his part, has proposed measures including rent and food price hikes, policies whose effectiveness — let alone the possibility of being approved by lawmakers — has been questioned by some analysts. There is Harris narrowed the gap in some polls about which presidential candidate would be better on economic issues, Trump is still leading on this indicator.

While candidates from both parties agree that the prices are hurting everyday consumers, the nation is also sharply divided when it comes to views on the state of the economy. According to the latest consumer survey from the University of MichiganRepublicans’ ratings of the current economic situation are at record lows, while Democrats’ views are nearly three times more favorable.

The Biden-Harris administration is enjoying a tailwind in the form of a minimal increase in gasoline prices: The average price of a gallon is about $0.50 cheaper than the same period a year ago. According to AAA. Oil prices may start to rise again amid turmoil in the Middle East, pushing oil prices higher, but for now one of the most accessible signals of a price rally remains muted.

Analysts generally agree that this is a sign that the economy remains on solid footing, at least according to the data. Today’s inflation numbers could cause Wall Street to scale back expectations for a rate cut by the Federal Reserve at its next meeting in November. Follows unexpectedly strong jobs report last weektraders have effectively written off the odds of another half-point cut, and moving into Thursday has increased the odds of no cut to more than 1 in 5.

However, serious questions remain about where the economy is headed. In its latest reading, the National Federation of Independent Business, which represents small business owners, found that the uncertainty reading has reached an all-time high.

“Uncertainty makes owners hesitant to invest in capital expenditures and inventory, especially as inflation and finance costs continue to put pressure on their bottom lines,” NFIB economist Bill Dunkelberg said.

“While there is some hope for the holiday selling season, many Main Street owners are left wondering if business conditions will improve going forward,” he said.



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