News
Consumer confidence falls for the third consecutive month
Inflation will return to target in 2024, says White House advisor
April 30, 2024, 2:44 pm EDT
A White House chief economic adviser said he expects the inflation rate to gradually decline over the course of the year, although he warned that the path to recovery for the economy 2% inflation target it wouldn’t be easy.
The forces that lowered inflation in 2023 were “still in play,” White House Council of Economic Advisers Chairman Jared Bernstein said Tuesday. Due to these forces, he expects price pressures to ease later this year, after emerging in early 2024he said.
“The path back to the target should begin in the remaining quarters of this year and will be truly bumpy and non-linear,” Bernstein told the Economic Club of New York in statements today.
Bernstein said the 2023 disinflationary trend was primarily driven by a “untwisting” supply chains.
In his remarks, Bernstein also cited the strength of the economy, saying unemployment will likely remain low and wages will be in line with lower inflationary trends.
-Terry Lane
Consumer confidence falls for third month due to gas price concerns
April 30, 2024, 11:33 am EDT
People expressed more pessimism about the economy in April, with consumer confidence declining for the third consecutive month as high gas prices helped fuel concerns about inflation.
The Conference Board said its month Consumer Confidence Index fell more than six points to reach 97.0 in April. The council’s Current Situation Index fell nearly four points, while the Expectations Index fell to 66.4, where a reading below 80 could signal an imminent recession.
“Confidence fell further in April, reaching its lowest level since July 2022, as consumers became less positive about the current job market situation and more concerned about future business conditions, availability of employment and income,” said Dana Peterson, chief economist at the Conference Board. .
Consumers expected prices to rise 5.3% over the next 12 months, the same as last month. However, expectations of a recession during the same period also increased slightly, but these concerns were still lower than their May 2023 peak. Federal Reserve officials closely monitor consumer inflation expectationswhich could have an impact on price pressures.
Consumers’ dominant concerns were gas and food prices, the board’s report showed.
“The drop in the index could be due to heightened sensitivity to gas prices, which have increased over the past month, and continued high food prices, especially at restaurants,” said Navy Federal Credit Union economist Robert Frick. “Inflation it is the overwhelming trigger for the consumer spirit and likely overshadows the job market, which continues to offer strong employment opportunities and higher wages.”
And while the survey showed some declines in April, people’s overall sentiment toward the economy hasn’t changed much lately, the council said in its report.
“Despite these three months of weakness, the indicator continues to move sideways within a relatively narrow range that has remained stable for more than two years,” the Conference Board said in its report.
-Terry Lane
Higher employment costs raise new doubts about inflation progress
April 30, 2024, 10:29 am EDT
Total employee wages and benefits increased 1.2% in the first quarter of 2024, a jump in the Employment Cost Index (ICE) from the last quarter of 2023. The Bureau of Labor Statistics data was higher than 1. 0% expected by economists consulted by the Wall Street Journal and Dow Jones Newswire.
“Another quarter of strong pressures on wages and salaries – in the goods and services sectors – coupled with a faster increase in benefits kept headlines rising at a faster pace,” wrote Oren Klachkin, markets economist at Nationwide Financial.
Economists said the compensation report showed that inflation continues to be a challenge for Federal Reserve officials trying to bring it down from its current level. current levels around 2.7%. Higher salaries can has an impact on inflationwhere business owners increase the prices of goods and services to meet the higher costs of employment.
“We expect wage growth and inflation to slow as the year progresses, but the Fed will need several months of good news on wage growth and inflation before it regains some confidence that inflation is back on a sustainable path to 2%,” wrote Oxford. Nancy Vanden Houten, from Economics.
The Fed will meet this week and is expected to keep interest rates unchanged. Investors already lowered expectations of a cut in interest rates for later this year as Fed officials said they are closely watching data on wages, inflation and economic growth.
“The ICE acceleration supports the narrative that the latest decline in inflation will be slow and uneven and reinforces our call for the Fed to remain on hold until September,” wrote Jay Hawkins, senior economist at BMO Economics.
-Terry Lane
House prices continued to rise in February
April 30, 2024, 9:38 am EDT
House prices continued to rise in February as the “lock-in effect” caused by high mortgage rates maintained its grip on the housing market.
The S&P CoreLogic Case-Shiller national home price index hit a record high in February on a seasonally adjusted basis, S&P Dow Jones Indices reported Tuesday. The index has risen 6.4% over the past 12 months, the biggest annual increase since November 2022.
The report has been added to recent data showing the house prices rising despite high mortgage rates and the costs force many buyers out of the market. The few buyers who can make offers are competing for a small pool of listings as many homeowners are reluctant to sell and give up ultra-low fixed mortgage rates they secured when loans were cheaper, worsening the situation. long-standing housing shortage.
“Following last year’s decline, U.S. home prices are at or near all-time highs,” said Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a commentary. “Since the previous price peak in 2022, this marks the second time that house prices have risen in the face of economic uncertainty.”