Inflation probably came back hot in July. Here’s what to do


Used car prices skyrocketed, while chip shortages delayed new car production.
Credit…A Rong Xu for The New York Times

Consumer prices likely climbed quickly in July, another month. unusually fast gains This could offend Federal Reserve officials and create political liability for the Biden White House.

The Bureau of Labor Statistics will release the Consumer Price Index at 8:30 a.m. Wednesday. According to economists polled by Bloomberg, the measure of inflation was likely up 5.3 percent last month from the previous year and 0.5 percent from June.

Represents a moderation in growth rate – CPI increased by 5.4 percent 0.9 percent year-on-year in June and 0.9 percent in June from May – but still a fast annual and monthly increase compared to typical.

Economists largely expected this price increases will increase this year after the drop in 2020, but the size of the jump came as a surprise. Annual price increases will almost certainly moderate in the coming months (more on that later) as a data quirk that helps exaggerate them dwindles.

Monthly earnings are expected to continue to cool as businesses find ways to cope with short-term disruptions to their supply chains. used car prices rose sharply and led to much of the 2021 pop.

But the key question for the Fed and the White House is how quickly that will happen. Temporary price hikes are tolerable for the Fed, which is tasked with keeping price increases low and steady over time. But if consumer and business patterns change, price gains can remain consistently high, which becomes a problem. For the White House, the rising costs have become a political headache as Republicans use them to argue that the Biden administration is mismanaging the economy.

Here’s what you need to know as you review Wednesday’s report.

  • The CPI is not the Fed’s target measure. The central bank targets an average of 2 percent inflation over time and sets this target using the Personal Consumption Expenditures index. has risen this year but not as sharp as the measure announced on Wednesday. The CPI is more timely and its data feeds into the Fed’s metric, which follows it very closely.

  • increase immortality it’s all about this foundation. The so-called base effect played a large part in gains earlier this year. Airfare and restaurant meal prices dropped last year when the economy was in lockdown, so when today’s prices are measured by those numbers, the increase looks huge.

    But the base effect is now waning, as prices have turned a corner when the economy reopens after May 2020. This may vary slightly depending on how it is calculated, but roughly 0.7 percentage point of the expected 5.3 percent increase in July prices is most likely attributed to the base effect. About 1 percent of previous months’ gain and 1.4 percent of May’s gain can be attributed to the base effect.

  • The increase is related to the pandemic. something The White House tends to point out Most of the rise in prices comes from a few categories that suffer from the unusual quirks associated with reopening. For example, used car prices skyrocketed as chip shortages delayed new car production. TD Securities analysts expect this trend to calm down as of this month’s report.

    flight ticket and hotel prices it also climbed after falling during the regression and is still returning to normal.

  • The jump wasn’t that wide. While several categories of goods and services are going crazy, it’s certainly not that everything is getting more expensive. Dallas Federal Reserve Bank, “cropped averageA measure of inflation that eliminates the categories with the largest increases or decreases each month. After eliminating outliers, this indicator shows that inflation is still running at around 2 percent.

    People are watching to see if measures of major and persistent categories of inflation begin to rise more harmoniously. for example, if housing related costs contraction in house prices is reflected in rents, which may keep inflation higher.

  • Rapid inflation will become a real problem if it continues. “The question is more – what will be the inflation outlook next year, 2022, 2023,” Charles Evans, chairman of the Chicago Federal Reserve Bank, told reporters in a phone call Tuesday.

    Fed officials watching wage increases and inflation expectations For a signal whether the current reopening-induced inflation boom will linger. If the salary is constantly rising, employers may find they need to charge more to cover their costs. Similarly, if consumers and businesses begin to expect rapid price increases, they may be more willing to accept higher prices, creating a self-fulfilling prophecy.

    Authorities do not expect this to happen for now.

    “My best guess is that this is something that will pass,” Fed Chairman Jerome H. Powell said recently. News Conference. “It’s really a shock to the economy that will pass.”

Ben Casselman contributing reporting.

Kentucky Senator Rand Paul has been banned from posting on YouTube for a week after he posted a video that spread Covid-19 misinformation.
Credit…Anna Makes Money/Getty Images

YouTube on Tuesday removed a video of Kentucky Senator Rand Paul for the second time and suspended it for a week after posting a video discussing the effectiveness of wearing masks to limit the spread of the coronavirus.

A YouTube spokesperson said the Republican senator’s allegations in the three-minute video violated the company’s Covid-19 medical misinformation policy. company policy It bans videos that spread a wide variety of misinformation, including “claims that masks do not play a role in preventing the contraction or transmission of Covid-19.”

“We enforce our policies consistently across the platform, regardless of speaker or political views, and we make exceptions for videos that have additional context, such as compensating for the views of local health officials,” the spokesperson said in a statement.

In the video, Mr. Paul says: “Many of the masks you get over the prescription don’t work. They don’t prevent infection.” Later in the video, he adds, “Trying to shape human behavior is not the same as following real science that tells us cloth masks don’t work.”

Actually, masks work, by almost unanimous recommendations of public health experts.

on Twitter on Tuesday Removed Representative Marjorie Taylor Greene, for seven days after the Georgia Republican declared that the Food and Drug Administration should not give full approval to coronavirus vaccines and that the vaccines “failed.”

from twitterMr. Paul described the suspension as “a badge of honor” and blamed “leftist idiots on YouTube” when linking to an alternative site to watch the video.

The senator said in a statement that private companies have the right to block him, but YouTube’s decision is “a continuation of their commitment to act with the government.”

“I think this kind of censorship is very dangerous, incredibly anti-free speech, and against the real advancement of science that involves skepticism and argumentation to get the truth,” he said.

Last week, YouTube removed an eight-minute Newsmax interview from its channel, in which the senator said wearing a mask was “no value”. Under YouTube policy, the company issues a warning for a first offense, followed by a one-week suspension, as part of a “first strike” response to a second offense.

The strike will be removed from your account after 90 days if there are no further violations. A second strike within 90 days will result in a two-week suspension and after a third strike the account will be permanently banned.

Credit…Tony Luong for The New York Times
Credit…Tony Luong for The New York Times

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Marcus Rashford kneels in support of the Black Lives Matter movement before a Manchester United game in March.  He called
Credit…via Reuters Peter Powell/The Pool

Instagram is rolling out new features Wednesday to make racist material harder to view, according to an internal document obtained by The New York Times.

One of them will allow users to hide potentially abusive comments and messages from accounts that don’t follow them or have followed them recently. Ryan Mac and Tariq Panja cover for The Times.

The actions follow a more than two-year-long campaign by English football to pressure Facebook and other social media companies to rein in online hate speech against their players.

Football officials have met with the platforms multiple times since then, sending an open letter calling for change and organizing social media boycotts. Facebook employees joined in, demanding that it do more to stop the harassment.

“The unfortunate truth is that tackling racism on social media is just as complex as tackling racism in society,” said Karina Newton, head of global public policy at Instagram. “We have made significant strides, many of which have been driven by discussions with abused groups such as the UK football community.”

However, Facebook executives privately admit that racist rhetoric against English footballers will continue. “No one can solve this challenge overnight,” wrote Steve Hatch, Facebook’s director of Britain and Ireland, in an internal note reviewed by The Times last month.


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