Only in the best scenarios does it look like America can escape from the inflationary mire without many people losing their jobs
Save time by listening to our audio articles as you multitaskInvestors are focused on core inflation because of big swings in energy prices. The price of crude oil is down a quarter from its peak in early June. In a breakdown of the August price data, energy lowered the month-on-month inflation rate by nearly half a percentage point. Other components—Were August’s rate of core inflation sustained for a full year, it would mean a 7.
The median projection of the Fed’s rate-setting committee is that the unemployment rate will only need to tick up slightly to 4.1% in 2024, from the current level of 3.7%. But a recent paper by Laurence Ball of Johns Hopkins University and Daniel Leigh and Prachi Mishra of theargues that a 4.1% level of unemployment would be consistent with core inflation of between 2.7% and 8.8% in 2024.
Nevertheless, the divergence between core and headline inflation poses an intriguing question. As far as consumers are concerned, there is no such distinction. All prices matter, and indeed prices at the petrol pump do more to capture the attention of Americans than prices anywhere else. Surveys of consumers show that their expectations for future inflation have come down sharply since June, undoubtedly thanks to the decline in oil prices.
As Mr Ball and his co-authors argue, a failure to account for the pass-through from energy prices into core inflation was one reason why economists were wrong-footed by inflationary pressure over the past year. The hope now is that the plunge in energy prices can continue, and that the pass-through into weaker core inflation will again wrong-foot many economists. For now, however, America’s inflation problem shows little sign of going away.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Wages in Lancs fell by 2.8 per cent in August as cost of living crisis worsensWages in Lancashire fell by 2.8 per cent in August as cost of living crisis worsens
Read more »
SAP user group criticizes support fee increaseUnbundling of products, cloud shift, support for older ERP products make customers query inflation-based rise
Read more »
Harrogate bonfire scrapped over costs and environmental impactOrganisers in Harrogate say they are also having difficulties getting enough wood for the bonfire.
Read more »
Michelin-star chef's £100k fundraiser to complete new restaurantUnexpected costs include having to have a new roof
Read more »
Catastrophic Floods Highlight Period Poverty in PakistanMany of the more than 8 million women of reproductive age affected by Pakistan’s unprecedented floods have been turning to desperate measures to manage their periods
Read more »
How to tell if your hangover anxiety could be a problemHere's why you experience hangover anxiety after drinking.
Read more »