A U.S. inflation target closely monitored by the Federal Reserve posted its biggest year-on-year jump since the 1990s last month, increasing pressure on President Joe Biden as his White House struggles to tame rising costs.
The Commerce Department’s core index of personal spending, which removes volatile food and energy costs, rose 4.1 percent in October from a year ago.
The jump represents a marked increase from the annual increase of 3.7 percent in September and was in line with the consensus forecasts.
When energy and food prices are included, the PCE price index rose 5 percent compared to October 2020, faster than the 4.4 percent increase in September. The figures were released as part of a report that also showed personal income rose 0.5 percent in October compared to the previous month, while consumption rose 1.3 percent.
The fight against high prices has become a key focus for Biden’s economic team after recent data showed that US consumer price growth jumped at the fastest pace in about three decades, confusing hopes that inflationary pressures would be short-lived.
This month, the Fed began winding down its $ 120 billion monthly asset buyback program. USD, whose pace suggests it could end in June 2022.
The minutes of the Fed’s Monetary Policy Committee meeting in November, also released on Wednesday, showed that officials “stressed that maintaining flexibility” was important as the program gradually eased, with some committee members advocating that the central bank tighten policy faster in the face of strong inflation.
Some policy makers said at the meeting that they believed a faster downsizing would put the committee “in a better position” to adjust policy in light of high inflation. However, the minutes did not at all indicate a committee oriented towards an acceleration in which “a number of participants” emphasized a “patient attitude”.
Inflation has accelerated this year along with a jump in wages, driven by several rounds of stimulus checks and employers competing for new workers. Revenue rose 0.5 percent last month, after falling 1 percent in September.
The latest data comes as applications for U.S. unemployment benefits on Wednesday fell to their lowest weekly level in more than five decades as applications slowed their way into the Thanksgiving holiday and with companies struggling to recruit staff due to labor shortages .
State unemployment offices received 199,000 first unemployment applications on a seasonally adjusted basis last week, down from 270,000 the previous week, according to the Department of Labor. It brought the unemployment rate to its lowest level since November 1969, compared to a previous low of 205,000 in February 2020.
Demands also fell more than economists had expected, with an average estimate of 260,000 for the week.
“It’s fair to say we did not see it coming,” said Mark Hamrick, senior economic analyst at Bankrate.
“Americans are entering the heart of the holiday season with a reasonable expectation that an already tight labor market will continue to tighten in the coming months,” he added.
Some economists warned against reading too much in the report, noting that last week’s unadjusted figures for initial requirements rose by 18,000.
There were 2 million. Americans who actively charged benefits per November 13, under the 2.1 million. persistent claims registered one week earlier. Continued claims remain above pre-pandemic levels of around DKK 1.7 million.
Redundancies have declined as employers struggle to hire staff and retain the workers they already have, with a record number of Americans resigning their jobs in a tight labor market.
Over the past four weeks, the United States has averaged about 252,000 initial claims per week, down from 345,000 in early October.
A separate report from the Census Bureau on Wednesday said new orders for long-lasting items such as cars and kitchen appliances fell 0.5 percent in October compared to the previous month, as factories continued to struggle with shortages of parts and labor. Incomplete durable goods orders rose 0.2 percent as a sign of strong demand.
The U.S. economy grew 2.1 percent annually in the third quarter, up from an initial estimate of 2 percent, according to an update from the Bureau of Economic Analysis. The revised figure again confirmed that growth slowed sharply during the quarter, pulled down by bottlenecks in the supply chain.
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