Worry about stagflation, a flashback to '70s, begins to grow
Economy Stagflation Threat FILE - Cars line up in two directions at a gas station in New York City, on Dec. 23, 1973. Stagflation is the bitterest of economic pills: High inflation mixes with a weak job market to cause a toxic brew that punishes consumers and befuddles economists. "This time, it is facing high inflation and slow growth at the same time. Stagflation, and especially chronically high inflation, became a defining feature of the 1970s. The United States has endured periods of high unemployment — it reached 10% after the 2007-2009 Great Recession and 14.7% after COVID-19 erupted of 2020.wftv.com
Worry about stagflation, a flashback to '70s, begins to grow
Economy Stagflation Threat FILE - Cars line up in two directions at a gas station in New York City, on Dec. 23, 1973. Stagflation is the bitterest of economic pills: High inflation mixes with a weak job market to cause a toxic brew that punishes consumers and befuddles economists. Saudi Arabia and other oil-producing countries imposed an oil embargo on the United States and other countries that supported Israel in the 1973 Yom Kippur War. Stagflation, and especially chronically high inflation, became a defining feature of the 1970s. The United States has endured periods of high unemployment — it reached 10% after the 2007-2009 Great Recession and 14.7% after COVID-19 erupted of 2020.wftv.com
Inflation costing families hundreds per month, analyst says
IN-DEPTH: Inflation costing families hundreds per month, analyst says Inflation costing families hundreds per month, analyst saysORANGE COUNTY, Fla. — The slight tick down in the inflation rate last month did little to ease the pain of families stretching their budgets. Moody’s Analytics Chief Economist Mark Zandi said the average family is now paying hundreds of dollars more per month to maintain their lifestyle. READ: US inflation dips from 4-decade high but still causing painApril’s year-over-year inflation rate was 8.3%, down slightly from the 8.5% price increases the nation saw for the month of March. Because these all are beyond U.S. control, no one is sure when the inflation rate will return to Earth. VIDEO: Biden says inflation is his ‘top domestic priority,’ slams GOP ahead of midterm races President Biden addressed the nation Tuesday to discuss rising inflation and supply chain challenges.wftv.com
Biden aims to do what presidents often can't: Beat inflation
The Ford administration printed buttons exhorting Americans to “Whip Inflation Now.’’Over the years, American presidents have tried, and mostly floundered, in their efforts to quell the economic and political menace of consumer inflation. Oil markets, having anticipated the move, were unimpressed with the details: Oil prices actually rose on the news. WHAT IS HAPPENING TO CONSUMER PRICES? The government's consumer price index skyrocketed 6.2% in the 12 months that ended in October — the sharpest such jump since 1990. Compounding the pain and heightening the pressure on Biden, inflation has been outpacing Americans' income.wftv.com
Gas prices expected to rise following Ida, experts say
Hurricane Ida Makes Landfall In Louisiana Leaving Devastation In Its Wake A family waits to pump gas after Hurricane Ida passed through on August 30, 2021 in New Orleans, Louisiana. (Brandon Bell/Getty Images)WASHINGTON — Gas prices may go up soon following Hurricane Ida, the fifth-strongest hurricane ever to hit the mainland. >> Read more trending newsAlmost 95% of oil and gas production facilities across the South were forced to shut down operations before Ida made landfall in Louisiana as a Category 4 hurricane on Aug. 29. Analysts say the storm might result in a 5 to 10 cent increase in gas prices for a short period. Zandi also said that the increase in pump prices might last for only a few weeks.wftv.com
As Ida leaves Gulf, analysts foresee modest economic damage
Tropical Weather Atlantic New Orleans Police detective Alexander Reiter, looks over debris from a building that collapsed during Hurricane Ida in New Orleans, Monday, Aug. 30, 2021. Hurricane Ida knocked out power to all of New Orleans and inundated coastal Louisiana communities on a deadly path through the Gulf Coast that is still unfolding and promises more destruction. But the impact on the overall U.S. economy will likely be modest so long as damage estimates don't rise sharply and refinery shutdowns are not prolonged, economists say. Analysts at Boenning & Scattergood, a financial consultancy, noted that Ida’s wind-field is smaller than Katrina, which likely narrows the area of catastrophic damage. “The key channel for Ida to impact the broader economy is through energy prices,” Zandi said.wftv.com
Ida: Economists expect only slight storm hit to US economy
(NOAA via AP) (Uncredited)WASHINGTON — (AP) — The impact of Hurricane Ida on the U.S. economy should be modest as long as damage estimates do not rise sharply and refinery shutdowns are not prolonged, economists said Sunday. Zandi said he expects GDP to grow 6.5% in the second half of this year, matching the average growth seen in the first six months. “The key channel for Ida to impact the broader economy is through energy prices,” Zandi said. “The worst case scenario is Ida might add 10 cents to 20 cents to the price of a gallon of gas through September,” Zandi said. In addition, Platts said that close to 4.4 million barrels per day of operating refinery capacity in the path of Ida, primarily in Louisiana, was taken offline before Ida came ashore.wftv.com
US slightly upgrades GDP estimate for last quarter to 6.6%
Economy GDP FILE - Shoppers wait in line outside a Chicago downtown retail store as others pass by, Wednesday, May 26, 2021. The economy’s expansion last quarter followed a solid 6.3% annual growth rate in the January-March quarter. Likewise, Wells Fargo economists have downgraded their third quarter GDP forecast from an 8.8% annual rate to 6.8%, also because of the surge in COVID cases. Mark Zandi, chief economist at Moody’s Analytics, said he had downgraded its forecast for annual GDP growth this quarter from 8.4% to 6.5%. But he predicted that GDP will expand at a strong 6.4% annual rate in the final three months of the year.wftv.com
EXPLAINER: Suez Canal block could hit product supply chains
This satellite image from Cnes2021, Distribution Airbus DS, shows the cargo ship MV Ever Given stuck in the Suez Canal near Suez, Egypt, Thursday, March 25, 2021. Lloyd’s says more than 50 ships traverse the canal on an average day, carrying 1.2 billion tons of cargo. The Suez situation could compound issues for a supply chain already under pressure from the pandemic and a surge in buying. AdJim Burkhard, who heads crude oil research at IHS Markit, said the impact on the global oil market will be limited if the canal is cleared soon. Wood Mackenzie analyst Lucas Schmitt said only a few LNG shipments were near the canal when the blockage occurred.
Government revises 4th quarter GDP up slightly to 4.3%
GDP in the October-December quarter rose from an estimated rate last month of 4.1%, the Commerce Department reported Thursday. AdEconomists believe all the government relief measures will boost GDP in the current January-March quarter to 5% or higher. Boussour forecast GDP growth for the full year of 7% with annualized growth rates close to 10% in the spring and summer. GDP fell at an annual rate of 5% in the first quarter of 2020, as the COVID-19 pandemic ended the country's record-long economic expansion, which was in its 11th year. GDP plunged by a record 31.4% rate in the April-June quarter and then rebounded by a record rate of 33.4% in the third quarter before slowing to the 4.3% gain in the fourth quarter.
Investors haven't fully grasped inflation is 'dead ahead,' economist Mark Zandi warns
"I don't think there's any shelter here." As a consequence, he warns investors will have to get accustomed to wild market swings that last longer than two weeks. According to Zandi, not even stocks tied to the economic recovery will offer investors a safe haven. "These are broad, macroeconomic forces that are going to affect all parts of the market equally," said Zandi. The bottom line: A three year time horizon may not be a long enough for investors in this environment.cnbc.com
Retail sales expected to be strong in January, helped by stimulus checks
Economists expect retail sales rose by 1.2% after a surprise 0.7% decline in December, according to Dow Jones. The January retail sales report is to be released at 8:30 a.m. ET Wednesday, and it is also expected to show sales rose 1% when excluding vehicles. Cortera said the level is an increase of 5% above December levels, suggesting retail sales will also increase. "The credit card and debit card data suggest retail sales were fairly strong," said Diane Swonk, chief economist at Grant Thornton.cnbc.com
US economy shrank in 2020 for first time since Great Recession
That gain had followed a record-shattering 31.4% annual plunge in the April-June quarter, when the economy sank into a free-fall. Even as the economy shrank last year, the stock market managed to rise sharply, with the S&P 500 index gaining 16%. Housing grew at a sizzling 33.5% annual rate, business investment at a 13.8% rate. That was the deepest annual setback since the economy shrank 11.6% in 1946, when the economy was demobilizing after World War II. That was lower than the 1.6% annual GDP gains during the Obama administration, a period that also included a recession.
Rental assistance in new Covid relief plan is not enough, experts warn
According to summaries issued by lawmakers, it will provide $25 billion in rental assistance to states and local governments through the Coronavirus Relief Fund. The funds can be used for payment of rent, rent arrears, utilities and home energy costs, as well those arrears. The eviction moratorium, however, is more troubling, she said, adding that she has had unpleasant interactions with renters. The question now is how quickly the new relief funds will get to those in need. The eviction moratorium will likely be extended under the incoming administration, especially as there is now new evidence that evictions have proved fatal, according to research.cnbc.com
Biden's plan to forgive student debt could have limited economic benefits, and carry risks
Leah Millis | ReutersIf President-elect Joe Biden follows through on his campaign promise to forgive student loans to many borrowers, he'll be checking off an important box for his political constituency. What to do about the burgeoning $1.6 trillion in education debt has been a nagging question for government officials. "There is growing evidence that student loan debt does have macroeconomic consequences," said Mark Zandi, chief economist at Moody's Analytics. "Outside of mortgage debt, it's the largest amount of household debt outstanding, and it's still growing rapidly." "How I would provide relief to hard-pressed student loan borrowers, I think I'd focus more on income-based repayment plans," he said.cnbc.com
There are 'pretty high' risks of the U.S. economy backtracking, Moody's economist warns
The International Monetary Fund said last month the U.S. economy is projected to shrink 4.3% this year. That's much better than its previous forecast for a 8% contraction as the global economy showed signs of a faster recovery, said the IMF. "I think the risks are pretty high here that the economy backtracks," he told CNBC's "Squawk Box Asia" on Friday. The U.S. recorded more than 100,000 daily confirmed coronavirus cases for the first time on Wednesday, data compiled by Johns Hopkins University showed. Cumulatively, the U.S. has recorded over 9.6 million Covid-19 infections so far — the highest number globally, Hopkins data showed.cnbc.com
Fed confronts a shaky US economy that likely needs more help
Fed officials themselves, including Chair Jerome Powell, have sounded a similar message. In mid-March, when the virus first hit hard, the Fed accelerated its bond purchases to try to ease disruptions in the Treasury bond market resulting from the outbreak. The central bank later modified the rationale for its bond purchases by saying they would help support the economy — the same reason it gave during earlier bond purchases that it engineered to bolster the weak recovery from the 2008 financial crisis. In the past, critics have asserted that the Fed's aggressive bond buying risked destabilizing financial markets and triggering runaway inflation. “Fed officials have made it pretty clear they need help from Congress at this point.”
Surge in virus threatens to reverse global economic rebounds
Even with that surge, the world’s largest economy has yet to fully rebound from its plunge in spring when the virus first erupted. Already, in the United and Europe, some governments are re-imposing restrictions to help stem the spread of the virus. Gregory Daco, chief U.S. economist at Oxford Economics, noted that the record-high third quarter growth in the nation’s gross domestic product “tells us little, if anything, about momentum heading into” the current quarter. But for the U.S. economy as a whole, the prospect that the virus could roar back is a growing fear. Without additional aid, Federal Reserve Chair Jerome Powell has warned, those dynamics could re-emerge.
Trump's suggestion to eliminate payroll tax doesn't add up
Well be paying into Social Security through the general fund.But aides to the president on Thursday sought to walk back Trumps comments. In comments Wednesday to reporters, Trump said at least four times that he would end the payroll tax. The 12.4% payroll tax split between employers and workers funds Social Security. It is highly unlikely that economic growth would be enough to offset the loss of the payroll tax. Payroll tax cuts are among the least effective ways to promote growth during a recession, said Mark Zandi, chief economist at Moody Analytics.
US is expected to report a record-breaking economic plunge
That would be more than triple the previous worst quarterly economic fall, a 10% drop set in 1958. On Thursday, the government will issue its first of three estimates of economic activity, as measured by the gross domestic product, for the April-June quarter. Sohn noted that the economy needed 6 years to regain the ground it had lost in the 2007-2009 Great Recession. Were trying to do everything we can, day by day, to keep the health of our business, Farish said. ___AP Business Writer Joyce M. Rosenberg in New York contributed to this report.
Mnuchin, Pelosi talk virus relief; GOP slashes jobless aid
While Senate Republicans struggled to roll out their own $1 trillion proposal, Pelosi implored the White House and GOP lawmakers to stop the infighting and come to the negotiating table with Democrats. Our priority, our objective, should be restarting the economy.As bipartisan talks unfold, the White House is now suggesting a narrower relief package may be all that's possible with Friday's approaching deadlines. Pelosi has resisted tackling a relief package in piecemeal fashion, arguing that broader aid is needed for Americans. She panned the Trump administrations desire to reduce the $600 weekly unemployment aid to ensure no more than 70% of prepandemic wages. Friday is also the end of a federal eviction moratorium on millions of rental units that the White House said it wants to extend in some fashion.
By the numbers: Trump reads economic boom into jobs data
CHICAGO President Donald Trump has always been a big numbers guy. )The presidents premature claim to economic victory reflects an artful relationship with numbers that Trump has long displayed. Left unsaid by the president was that African American unemployment inched up to 16.8% last month, the highest its been in more than a decade. Asian American workers' unemployment rate also rose from 14.5% to 15%. Trump scoffed at an African American reporter who noted the disconnect between Trumps comments and what minority workers are enduring.
Survey: 2.76 million layoffs in May, far fewer than expected
BALTIMORE U.S. businesses shed 2.8 million jobs in May, significantly less than the 9.3 million job losses that were expected. The payroll company ADP reported Wednesday that businesses have let go of a combined 22.6 million jobs since March, with the bulk of the layoffs occurring in April. Other sectors that suffered as part of April's 19.6 million job losses saw their layoffs slow sharply. The leisure and hospitality industrywhich includes hotels and restaurantsshed 105,000 jobs last month, down from a revised 7.7 million losses in April. Economists expect the Friday report will show 8 million job losses in May as the unemployment rate approaches 20%.
Coronavirus poses tough challenge for economic policymakers
It’s also bedeviling policymakers and central bankers who are struggling to assess the economic damage from an outbreak that's reached 37 countries and territories, infected 80,000 people and killed 2,700 worldwide. Yet if they respond too slowly or timidly, they risk having the economic damage deepen and spread. When the virus began grabbing headlines last month, most economists were relatively sanguine about the economic damage it could cause. What happens in China carries far greater economic weight than it did 17 years ago. But he said it's "still too soon to even speculate about either the size or the persistence" of the coronavirus' effects.