Matt Orton, chief market strategist at Raymond James Investment Management, looks ahead to the earnings report, the future of the AI sector, and the Fed’s interest rate trends.
Inflation is falling faster than most economists expected, according to the Treasury secretary, but Americans who were expecting a broad decline in prices may be disappointed. Janet Yellen.
In testimony before the Senate Banking Committee on Thursday, Yellen acknowledged that prices for most items are unlikely to return to the levels they were in before the inflation crisis began in 2021.
“I don’t expect price levels to go down. Some prices are higher than they were before the pandemic and will continue to be,” Yellen said in a controversial exchange with Sen. John Kennedy (R-La.). It will remain high,” he said. “However, wages have risen significantly and the pace of price increases has slowed over the past six months.”
Prices for everything from groceries to new cars to health insurance soared in 2021 and 2022 due in part to disruptions to global supply chains caused by the pandemic, an extremely tight labor market, and, in part, This was the result of rampant inflation caused by increased consumer demand. Stimulating cash.
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Treasury Secretary Janet Yellen testifies before the House Financial Services Committee on February 6, 2024 in Washington, DC. (Aaron Schwartz/NurPhoto via/Getty Images)
But even though the pace of inflation has slowed sharply in recent months, prices for most goods have not yet fallen and are unlikely to do so, Yellen said.
“Wages are rising, so there’s no need to lower prices,” she says.
Chairman of the Federal Reserve System Jerome Powell He expressed similar sentiments in an interview on “60 Minutes” that aired on Sunday.
“Prices of some things will fall, prices of other things will rise, but we don’t expect a decline in the overall price level,” Powell said. That won’t happen,” he said.
Inflation has fallen significantly from its peak of 9.1% in June 2022, but remains above the Federal Reserve’s 2% target. And just before that, compared to January 2021, the inflation crisis has begunprices rose by a whopping 17.6%.
The number of well-paying jobs is decreasing
Vacation Supply Company window display in Miami Beach, Florida. (Jeffrey Greenberg/Universal Images Group via Getty Images)
caused by high inflation severe financial pressure Most American households are being forced to pay more for everyday necessities like food and rent. Food prices have increased 33.7% since the beginning of 2021, and shelter costs have increased 18.7%, according to FOX Business calculations. Meanwhile, energy prices have increased by 32.8%.
The burden falls disproportionately on low-income Americans, whose already maxed-out paychecks are heavily affected by price fluctuations.
The typical American household had to pay $211 more per month in December to buy the same goods and services as they did a year ago. Inflation remains high, according to new calculations from Moody’s Analytics. Americans are paying an average of $1,020 more each month than they did during the same period two years ago.
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Yellen’s appearance on Capitol Hill comes amid growing pessimism among American households about the financial situation under the Biden administration.
a recent research According to a study published by Bankrate, 50% of Americans say their financial situation has worsened since the financial crisis. 2020 Presidential Election. By comparison, only 21% believe that their financial situation has improved, while 26% believe that the situation has not changed.
“The economic plight of the next 12 months may help determine whether President Biden was wise to promote his brand of Bidenomics,” said Mark Hamrick, senior economic analyst at Bankrate. No,” he said.
