Rising prices and sinking stocks plague U.S. as nation continues to reel from pandemic
Jun 13, 2022, 7:21 PM
People line uo to buy fast foot on June 11, 2022 in Woodbridge, New Jersey. The costs of petrol, food and other necessities jumped in May, rising inflation in the United States to a new four-decade high. Consumer prices surged 8.6 percent last month from 12 months earlier, faster than April year-over-year surge of 8.3 percent, the US Department of Labor said Friday. (Photo by Kena Betancur/VIEWpress)
(Photo by Kena Betancur/VIEWpress)
The annual inflation rate in the U.S. unexpectedly accelerated to 8.6% in May of 2022, the highest since December 1981.
Energy prices, in particular, have skyrocketed, rising 34.6%, the most since September of 2005. This includes gasoline (up 48.7%), fuel oil (up 106.7%, the largest increase on record), electricity (up 12%, the largest 12-month increase since August 2006), and natural gas (up 30.2%, the most since July 2008).
“The simplest explanation for higher prices is that we know that the economy was completely shut down two years ago, at the global economy,” said CBS News business analyst Jill Schlesinger on 成人X站 Newsradio. “And that put a lot of pressure on supplies.”
U.S. stocks sank Monday, with traders betting a fresh decades-high print on inflation will force the Federal Reserve to get even more aggressive than previously anticipated to help ease rising prices.
The Nasdaq Composite fell 4.7% by market close to end at its lowest level since September 2020. The S&P 500 dropped 3.9%. This set the index more than 20% below its recent record high from January, meaning it had officially fallen into a bear market.
“There was just not a lot of manufacturing. And the entire economy shifted from a more service-dominated economy to a goods-based economy,” Schlesinger said. “And so we had people who were sitting at home, stimulus checks in hand, savings piling up, they were buying a bunch of stuff, the supply was constrained. And then, as things started to open up, they shifted their dollars from buying stuff or goods to services. So the demand was really strong, but supply is still somewhat constrained. When you have strong demand, and you have constrained supply, prices go up.”
The inflation rate in the United States is expected to be 7.0% by the end of this quarter, according to Trading Economics’ global macro models and analysts’ expectations. In the long term, the U.S. inflation rate is projected to trend around 1.9% in 2023.
“I don’t know if we’re actually going to go into a classic recession. It does not look like we’re in a recession this second because, again, people are still spending money,” Schlesinger said. “But what happens usually is what is happening now, which is the Federal Reserve starts raising interest rates.”
The聽Federal Reserve recently raised interest rates for the first time since 2018.
鈥淚n my view, the probability of a recession within the next year is not particularly elevated,鈥� Jerome Powell, the Chair of the U.S. Federal Reserve, said at the . He cited strong spending, a strong labor market, and healthy household finances.
The聽COVID recession聽of early 2020 was the shortest U.S. recession on record.
Listen to Seattle鈥檚 Morning News with Dave Ross and Colleen O鈥橞rien weekday mornings from 5 鈥� 9 a.m. on 成人X站 Newsradio, 97.3 FM. Subscribe to the聽podcast here.
