Inflation is battering the economy
If there’s one word I’d choose to describe our economic reality, it would be “weird.”
Nothing really seems to be making sense these days. Let’s start with the fact that inflation in September ran unexpectedly hot, with the core CPI rising 6.6% to a 40-year high. Inflation will not budge even as the Federal Reserve continues to raise rates. I don’t get it.
That means you should expect another 75-basis-point hike in November, and at least 50 bps in December’s meeting. Markets plunged. Here are a few more takeaways from Thursday’s inflation report:
- Shelter, aka housing, was a big contributor to inflation, along with food and medical bills.
- Rent inflation has risen in 18 of the past 19 months.
- Grocery bills continue to be a big issue, posting another large increase.
- Thursday’s was the final inflation report ahead of the Nov. 8 midterm election.
Is all of this bad news? Well, it’s complicated.
Unemployment remains very low. And this week, Joe Biden downplayed the risk of a recession, saying any downturn would be “very slight.” But even before the CPI numbers hit Thursday, there was plenty of news that points toward a gloomy outlook for the economy.
