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Home Prices Are Soaring. Is That the Fed’s Problem?

Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, has been nervously eyeing the housing market as he ponders the path ahead for monetary policy. Home prices are rising at a double-digit pace this year. The typical house in and around the city he calls home sold for $306,031 in June of this year, Zillow estimates, up from $261,710 a year earlier.Several of Mr. Kaplan’s colleagues harbor similar concerns. They are worried that the housing boom could end up looking like a bubble, one that threatens financial stability. And some fret that the central bank’s big …

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The Fed’s Favorite Price Index Rose 4 Percent. What Comes Next?

The Federal Reserve’s preferred measure of inflation climbed by 4 percent in June compared with a year earlier, as a rebounding economy and strong demand for goods and services helped to push prices higher.The gains in the Personal Consumption Expenditures inflation index were the fastest since 2008, but in line with economists’ expectations. That rapid pace is not expected to last — and how much and how quickly it will fade is the economic question of the moment.Inflation has been surprisingly quick this year. Economists knew prices would post strong increases as they were measured against weak figures from 2020, when …

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Virus Headwinds Hit Wall St. After Months of Smooth Sailing

On Monday, investors behaved as they had during the pandemic’s early days, pouring money into so-called stay-at-home stocks, whose business models appear almost tailor-made to thrive despite lockdowns. Shares of Peloton climbed more than 7 percent. Stock in Etsy, which soared last year as consumers sought out homemade masks, jumped 3.2 percent.Daily Business BriefingUpdated July 19, 2021, 5:11 p.m. ETInvestors also bought shares of Clorox, the grocery chain Kroger, Campbell Soup and the toilet tissue maker Kimberly-Clark. Such consumer staples companies fared extraordinarily well during the worst period of last year’s pandemic panic, as consumers stockpiled essentials.The pain was especially pronounced …

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Inflation Rose in June With C.P.I. Up 5.4 Percent

The Fed targets 2 percent annual price gains on average over time, a goal it defines using a different index. Still, the C.P.I. is closely watched because it comes out more rapidly than the Fed’s preferred gauge and it feeds into the favored number, which has also accelerated.Republicans have pointed to rapid price gains as a sign of the Biden administration’s economic mismanagement, and an argument against the kind of additional spending that President Biden has called for as part of his $4 trillion economic agenda, including investments to fight climate change, bolster education and improve child …

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The Bond Market Is Telling Us to Worry About Growth, Not Inflation

“The overriding concern being reflected in the bond market is that peak growth has been reached, and the benefits from fiscal policy are starting to fade,” said Sophie Griffiths, a market analyst with the foreign exchange brokerage Oanda, in a research note.The evidence of a more measured growth path was evident, for example, in a report from the Institute for Supply Management this week. It showed the service sector was continuing to expand rapidly in June, but considerably less rapidly than it had in May. Anecdotes included in the report supported the idea that supply problems were holding back …

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Gas Price Increase Poses Challenge to U.S. Economy

Policymakers at the Federal Reserve have said they expect the increase in inflation to be short-lived, and they are unlikely to change that view based on an increase in energy prices, which are often volatile even in normal times, said Jay Bryson, chief economist at Wells Fargo.But if rising oil prices lead consumers and businesses to believe that faster inflation will continue, that could be a harder problem for the Fed. Economic research suggests that prices of things that consumers buy often, such as food and gasoline, weigh particularly heavily on their expectations for inflation. With public opinion surveys …

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Top U.S. Officials Consulted With BlackRock as Markets Melted Down

As Federal Reserve Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin scrambled to save faltering markets at the start of the pandemic last year, America’s top economic officials were in near-constant contact with a Wall Street executive whose firm stood to benefit financially from the rescue.Laurence D. Fink, the chief executive of BlackRock, the world’s largest asset manager, was in frequent touch with Mr. Mnuchin and Mr. Powell in the days before and after many of the Fed’s emergency rescue programs were announced in late March. Emails obtained by The New York Times through a …

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As Lumber Prices Fall, the Threat of Inflation Loses Its Bite

In the meantime, while the price declines filter into the consumer market, demand has cooled down.“The do-it-yourself sector, it’s not as robust as it was a year ago when homeowners were locked down and using stimulus and travel money to do a lot of home improvement,” said Shawn Church, editor of Fastmarkets Random Lengths, a trade publication that covers the industry.The professional homebuilding industry, the largest source of demand for lumber, is also decelerating from a breakneck pace, with some builders citing high prices for wood as a reason to hold off on construction.Those decisions by …

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Stocks Drop as Wall Street’s Unease Stretches to a Fourth Day

Stocks headed for their biggest daily decline in a month on Friday, capping a week of turbulence on Wall Street as investors struggled to calibrate their expectations for inflation and interest rates.The S&P 500 was down as much as 1 percent before midday. A drop of that size is relatively ordinary by historical standards, but it stood out on Friday because the index had made only small moves over the past month. It also would be the fourth consecutive decline for the index.Investors have been focused this week on the Federal Reserve and the potential for it to increase …

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Federal Reserve Expects to Raise Interest Rates in 2023

Federal Reserve officials signaled on Wednesday that they expected to raise interest rates from rock bottom sooner than they had previously forecast and that they were taking baby steps toward reducing their vast bond purchases — tweaks that, together, demonstrated their increasing confidence that the economy would rebound robustly from the pandemic.Fed policymakers expect to make two interest rate increases by the end of 2023, the central bank’s updated summary of economic projections showed Wednesday. Previously, more than half of officials had anticipated that rates would stay near zero, where they have been since March 2020, into at least 2024. Officials now …

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