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Inflation Soars To 8.6% In May, Highest Since 1981

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Joe Biden

The inflation crisis continued to worsen in May, with prices rising 8.6% from the year before, according to a new report from the Bureau of Labor Statistics.

As noted by the report, the 8.6% increase was the “largest 12-month increase since the period ending December 1981.”

Soaring energy prices greatly contributed to the worsening inflation rate. The Bureau of Labor Statistics wrote, “The energy index rose 34.6 percent over the past 12 months. The gasoline index increased 48.7 percent over the span. The index for fuel oil more than doubled, rising 106.7 percent; this represents the largest increase in the history of the series, which dates to 1935. The index for electricity rose 12.0 percent, the largest 12-month increase since the period ending August 2006. The index for natural gas increased 30.2 percent over the last 12 months, the largest such increase since the period ending July 2008.”

The record high inflation rate was even worse than economists projected. As reported by CNBC, the “consumer price index, a wide-ranging measure of goods and services prices, increased even more than the 8.3% Dow Jones estimate. Excluding volatile food and energy prices, so-called core CPI was up 6%, slightly higher than the 5.9% estimate.”

“On a monthly basis, headline CPI was up 1% while core rose 0.6%, compared with respective estimates of 0.7% and 0.5%,” CNBC added.

“It’s hard to look at May’s inflation data and not be disappointed,” said Morning Consult’s chief economist, John Leer. “We’re just not yet seeing any signs that we’re in the clear.”

“Obviously, nothing is good in this report,” said Julian Brigden, president of the global macroeconomic research firm MI2 Partners. “There is nothing in there that’s going to give the Fed any cheer. … I struggle to see how the Fed can back off.”

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3 Comments

3 Comments

  1. Jim

    June 11, 2022 at 11:04 am

    The REAL INFLATION IS ABOUT 13.8% NOT 8.6%, WAKE UP AND TELL THE TRUTH, 8.6% IS A LYING JOKE.

  2. Joan Haefeli

    June 12, 2022 at 3:37 pm

    Biden is taking a page from Obama’s playbook. Blame anyone, everyone, Trump, Putin, whatever in news that is derogatory. but never take responsibility yourself. Build Back Better is more aptly Bludgeoned By Biden.

  3. J J

    June 14, 2022 at 1:51 am

    Put a 3 before the 8 and you will have inflation about right. Joe Biden you are the biggest liar that has ever grace this earth.

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Economy

Atlanta Fed’s GDP Tracker Shows United States May Be In A Recession

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Joe Biden

The United States has likely entered a recession, according to the Federal Reserve’s key gauge for measuring economic activity.

The Atlanta Fed’s GDPNow measure, which tracks economic data in real time and continuously adjusts projections, says that the United States economy will shrink by 2.1% in the second quarter. A 2.1% contraction in the second quarter paired with the first quarter’s decline of 1.6% would meet the definition of a recession.

“GDPNow has a strong track record, and the closer we get to July 28th’s release [of the initial Q2 GDP estimate] the more accurate it becomes,” wrote Nicholas Colas, co-founder of DataTrek Research.

The tracker fell dramatically last week from an estimate of 0.3% after data “showing further weakness in consumer spending and inflation-adjusted domestic investment prompted the cut that put the April-through-June period into negative territory,” CNBC reported.

“One big change in the quarter has been rising interest rates,” CNBC added. “In an effort to curb surging inflation, the Fed has jacked up its benchmark borrowing rate by 1.5 percentage points since March, with more increases likely to come through the remainder of the year and perhaps into 2023.”

Last week, Federal Reserve Chairman Jerome Powell warned that the decision to fight inflation by increasing interest rates was “highly likely” to cause pain to Americans.

During the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?”

“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” Powell responded.

“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” he added.

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Economy

Biden’s Fed Chairman: Solving Inflation ‘Highly Likely To Involve Some Pain’ For Americans

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On Wednesday, Federal Reserve Chairman Jerome Powell said that solving the inflation crisis is “highly likely” to cause pain to Americans but that it would be less painful than not addressing inflation.

During the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?

“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” he responded.

“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” Powell added.

Powell’s comments come as inflation has reached the highest rate in more than 40 years with prices rising 8.6% from May 2021 to May 2022, according to a new report from the Bureau of Labor Statistics.

In order to bring down inflation, the Federal Reserve increased the interest rate by 0.75% earlier this month – the highest increase since 1994 – and warned of additional increases in the interest rate in the future.

“The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%. The federal funds rate dictates what it costs for banks to borrow money from each other. And, generally, higher interest rates mean it’s more expensive for consumers to get a mortgage, obtain a loan to buy a vehicle and to carry a balance on a credit card,” NBC News reported. “The expected effect of these changes is that consumers will spend less and the heightened demand for goods — one of the drivers of inflation — will slow down.”

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