Americans are paying more for virtually everything. So, if you’re tired of shelling out more dollars to pay for food, gas, and other basic needs, you’re not alone. As inflation continues to rise, so does the debate among economists and policymakers over whether these higher prices are here to stay. While Fed Chair Jerome Powell maintains his stance that inflation is only temporary, Michael Hartnett, Bank of America’s top strategist, estimates that above-trend inflation could persist for years, adding that it is being driven in part by heavy federal spending. In global news, analysts are waving a red flag when it comes to China’s recent aggressive behavior on the global stage. They say China’s aggression, coupled with the rise of its military, could result in a “military accident, even a military clash.”
CBS News/Kate Gibson
Americans are paying more for pretty much everything. Is inflation here to stay?
As inflation continues to rise — with Americans paying more for food, gas and other basics — so too does the debate among economists and policy makers over whether higher prices are a short-term blip or are here to stay.
The Commerce Department reported on Friday that its personal consumption expenditure price index — the Federal Reserve’s preferred measure of inflation — climbed 0.4% in May. The index is up 3.9% over the last 12 months, nearly double the Fed’s annual target of 2%.
The latest figures echo other government data showing that inflation is increasing at its fastest clip since 2008. Consumer prices rose 0.6% last month, pushing the annual inflation rate to 5% over the last 12 months, the Labor Department said this month.
Although prices have turned up more sharply than expected, price increases will ultimately abate, according to Fed Chair Jerome Powell, who told a congressional hearing on Tuesday that he expects the rise to be temporary.
Powell’s view is hardly unanimous. Other policy makers and economists expect inflation to persist for months and possibly even years.
While Powell stuck to the script in his congressional appearance, “Other Fed officials sounded less convinced,” Paul Ashworth, chief North American economist at Capital Economics, said Friday in a client note.
You can read the full story, here.
CNBC/Yen Nee Lee
China’s aggressive behavior on the global stage is an ‘immense danger,’ says analyst
As the Chinese Communist Party celebrates the 100th year since its founding this week, an analyst has warned of the “immense danger” from Beijing’s increasing aggression on the global stage.
Orville Schell, the Arthur Ross director of Asia Society’s Center on U.S.-China Relations, said China’s aggression — coupled with the rise of its military — could result in a “military accident, even a military clash.”
“If that comes to pass, that could spell the end of China’s dream, it could end the global market system, it could be the upending of many, many things as we know it today,” Schell told CNBC’s “Squawk Box Asia” on Monday.
“And that’s why this is such an immense danger, that China’s wolf warrior diplomacy — its aggressiveness which seems bent on doing what it wants to do regardless of what anyone else thinks — is such a danger,” he added.
China has been flexing its geopolitical muscles over the past year, when much of the world was grappling with the Covid-19 pandemic. That has caused its relationships with several countries to deteriorate.
Among other things, China slapped trade sanctions on Australia, had a military clash with India along the border the two countries share, and has effectively taken control of parts of the disputed South China Sea, where China and several Southeast Asian countries have overlapping territorial claims.
Keep reading, here.
The Wall Street Journal via Fox Business
During COVID-19, most Americans got richer – especially the rich
The coronavirus pandemic plunged Americans into recession. Instead of emerging poorer, many came out ahead.
U.S. households added $13.5 trillion in wealth last year, according to the Federal Reserve, the biggest increase in records going back three decades. Many Americans of all stripes paid off credit-card debt, saved more and refinanced into cheaper mortgages. That challenged the conventions of previous economic downturns. In 2008, for example, U.S. households lost $8 trillion.
In some ways, the singularity of the Covid-19 recession—and the recovery—shouldn’t surprise. The scope of the pandemic was unprecedented in the modern era.
So was the government’s financial response. The U. S. borrowed lent and spent trillions of dollars to keep the economy from plunging further than it did.
These actions were at the center of the unusual nature of both the recession and the recovery. They have also powered much of the stock market’s unexpected boom. Rock-bottom interest rates lured more investors into stocks; workers stuck at home tried their hand at trading and tech giants gained even more ground during the shutdown.
The stock market, in turn, became the driver of the household wealth gain, accounting for nearly half the total increase.
That has produced a lopsided distribution of the wealth gains, since well-off households are more likely to own stocks. More than 70% of the increase in household wealth went to the top 20% of income earners. About a third went to the top 1%.
Read the full story, here.