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Small business optimism rises for first time in 2024
Small business optimism rises for first time in 2024
6 hours and 13 minutes ago
Small business optimism grew for the first time this year, but inflation continues to be one of the main concerns of business owners, data from the National Federation of Independent Business (NFIB) showed.
The NFIB Small Business Optimism Index jumped more than a point to 89.7 in April, although remained below the average of 50 years for the research. Inflation continues to be the biggest problem for business owners, although the 22% who cited inflation as their most important problem were three percentage points lower than last month.
“Cost pressures continue to be the main issue for small business owners, including historically high levels of owners increasing compensation to retain and attract employees,” said NFIB Chief Economist Bill Dunkelberg.
Fewer entrepreneurs said they had increased prices in April, while the 26% who planned to make price increases during the month fell to the lowest figure in a year.
“Inflation is still a challenge, but a drop in the proportion of companies raising prices is a welcome sign that price pressures for small businesses are not intensifying,” Wells Fargo economists wrote. Charlie Dougherty, Jackie Benson and Patrick Barley.
-Terry Lane
Powell Hammers Home ‘Patience’ Message on Rate Cuts
10 hours and 4 minutes ago
If Federal Reserve Chairman Jerome Powell’s comments are anything to go by, the federal funds rate will likely remain where it is, neither higher nor lower, for quite some time.
On Tuesday, Powell joined the chorus of Fed officials saying with inflation running warmer than expected at the beginning of the yearthe central bank will have to maintain its higher policy rate for longer than authorities predicted a few months ago.
“We need to be patient and let the restrictive policy do its work,” Powell said in a panel discussion at the Foreign Bankers Association in Amsterdam.
He too, Not for the first timedownplayed the possibility of raising the interest rate, saying it is already restrictive – meaning high rates have made borrowing expensive enough to hurt inflation and the broader economy.
“I don’t think it’s likely, based on the data we have, that the next move we’re going to make is a rate hike,” Powell said. “I think it’s more likely that we’ll get to a point where we keep the policy rate where it is.”
Powell’s comments shed some light on how Fed officials are assessing their fight against inflation.
After consumer prices began to rise in late 2021 as the economy reopened following the pandemic, the Fed began raising its key interest rate starting in March 2022, eventually reaching its highest level since 2001 in July 2023. Inflation has fallen from its peak of 9.1% annual rate in June 2022, as measured by the Consumer Price Index, but hovered around 3.5% at the start of the year, still above the target of 2% from the Fed.
Notably, Powell did not offer a timeline for when the central bank might cut the federal funds rate. Earlier in the year, when inflation appeared to be on a firmer downward path, Powell predicted a rate cut sometime in 2024.
Financial markets await the next government report on inflation on Wednesday, which will show whether the trend changed in April.
Wholesale inflation jumps ahead of tomorrow’s consumer inflation report
10 hours and 57 minutes ago
Wholesale inflation jumped higher than expected in April, raising concerns that consumer inflation data released this week will be too hot.
The Producer Price Index rose 0.5% compared to the previous month, the Bureau of Labor Statistics reported. Common year after year base, the PPI increased to 2.2%, the biggest jump in the annual reading in a year.
“This week is important for markets because they are worried about inflation and this morning’s Producer Price Index (PPI) did nothing to assuage those fears,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
The measurement of price changes at the wholesale level was higher than expected, with economists consulted by the Wall Street Journal and Dow Jones Newswire predicting a more modest monthly increase of 0.3%.
Fuel costs were a factor driving the rise in wholesale prices, with almost three-quarters of the rise in goods prices linked to a 5.4% rise in gas prices.
Economists also saw the PPI core inflation reading growing at a faster rate than the previous month. Excluding volatile food and fuel prices from the measurement, the PPI registered a monthly growth of 0.4%. That was above the 0.2% increase economists expected and the 0.2% growth the previous month.
The wholesale inflation report comes before the tomorrow’s release of the Consumer Price Indexa closely watched measure of changes in consumer prices.
“Today’s PPI bodes poorly for tomorrow’s CPI number – although the relationship between the two is somewhat complicated – and if the market is spooked by today’s higher-than-expected PPI number, then it will be even more upset for a higher value than expected. -expected CPI number tomorrow”, said Zaccarelli.
-Terry Lane