Fed’s rate path unlikely to change after CPI shows inflation cooling: Bill Baruch
Blue Line Capital president Bill Baruch reacts to stocks soaring after new CPI data shows inflation edging down, on ‘Varney & Co.’
The tightest labor market in decades is fueling rapid wage growth for millions of Americans, but painfully high inflation has quickly eroded those gains.
The U.S. Department of Labor reported on Thursday that average hourly earnings for all employees actually declined by 2.8% in October from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings dropped by 0.1% last month when accounting for the inflation spike.
By that measure, the typical U.S. worker is actually worse off today than a year ago, even though nominal wages are rising at the fastest pace in years.
That's because consumers are confronting scorching-hot inflation, which has quickly diminished their purchasing power.
INFLATION HOLDS GRIP ON US ECONOMY AS PRICES REMAIN STUBBORNLY HIGH
The government said Thursday that the Consumer Price Index, a broad measure of the prices of everyday goods, including gasoline, groceries and rents, rose by 0.4% in October from the previous month. Prices climbed by 7.7% on an annual basis.
Those figures were both lower than the 8% headline figure and the 0.5% monthly increase forecast by Refinitiv economists, a potentially reassuring sign for the Federal Reserve as it tries to tame runaway inflation with a series of aggressive interest rate hikes. It marked the slowest annual inflation rate since January.
In another sign that suggests underlying inflationary pressures in the economy are starting to slow, core prices — which strip out the more volatile measurements of food and energy — climbed by 0.3% in October from the previous month, down from 0.6% in September. From the same time last year, core prices jumped by 6.3%.
THE FED'S WAR ON INFLATION COULD COST 1M JOBS
But even with the slowdown in inflation, prices remain well above the Fed's 2% target.