Okay, well, we did get that fresh economic data this morning. March.
Consumer prices hitting the tape
showing us inflation jumped 8.5% in March from the same time a year ago.
The fastest pace of price games since december of 1981.
The rise in prices driven by strong consumer demand,
major supply chain disruptions and spiking energy costs
related to Russia's continuing invasion of Ukraine.
Joining me now is Dana Peterson, chief economist at the conference board,
a nonprofit research group.
Dana, thanks so much for joining. What is your reaction to the print this morning?
Well,
certainly this morning's print reflected the pandemic
as well as the war in Ukraine.
Food and energy prices
expanded very aggressively in the month.
Um, again,
the global shocks are related to the pandemic
in terms of supply chain disruptions as well
as to disruptions in food and energy and
also metals exports out of Russia and Ukraine,
you know,
8.5% is a print that we haven't seen
since the stagflation days of the late seventies,
early eighties.
Of course,
there's a lot of free money that flooded the system stimulus when many
americans needed it at the onset of the coronavirus trillions of dollars.
And our consumers still showing that they do have appetite for some of these sectors
At higher prices.
I think we have a full screen and shelter costs at
5% in March from the same time a year ago.
Food up nearly 9%. Energy costs of 32%. Transportation of 8%
and airline fares viking 24% in March
from the same time a year ago. Certainly that energy sector amid
Russia's invasion Absolutely through the roof.
Are there any signs any hopeful signs dana
that inflation might be peaking at these levels?
Sure. I mean there's still upside for headline inflation.
Certainly food and energy prices can rise even further
if the,
the punishments for Russia include embargoes on oil and also
for example of Ukraine is not able to uh,
plant this year in the spring.
But certainly prices for goods maybe uh, being a little bit or even following,
we saw that new car rather use car vehicles,
used car prices were down as people are transitioning away from
just wanting to buy goods now they can get out there.
They can buy services such as going to the movies,
going to restaurants or even travel.
I mean, airfares are up pretty significantly.
That's a service and that reflects the fact that people are kind of
over the pandemic and really looking to get back out there and engage.
And of course,
unfortunately the wage gains that we've seen throughout this pandemic
in many ways erased for most americans by the gain
that we see in inflation. Is there any indication
that yes consumers, they might still have demand for services,
entertainment after being cooped up in their homes for a few years,
but that the consumer might start to pull back of course, because price hikes are
outpacing
new wage benefits.
We absolutely anticipate that that prices are going to influence consumption.
In our own forecast, we've cut consumption expectations for this year.
We did it a month ago,
cut it a little bit more this month
um simply because consumers are concerned about inflation,
our own consumer confidence measure shows
that inflation expectations one year out
or add the highest ever.
Um and also consumers are kind of pulling back on on desire to buy big ticket items.
Certainly as interest rates are rising,
big ticket items like cars and appliances and things that require financing.
So we do anticipate that inflation plus rising interest
rates and even concerns about the war and financial markets
will probably cause consumers to pull back and we'll see slower growth this year,
relative to last year, potentially by the end of this year.
Um growth at 1.7% 4th quarter, fourth quarter and fourth quarter.
Well yeah, I know growing concerns about a possible recession to
technically that's two straight quarters of economic contraction.
So we'll see if we get
to that point.
Dana Peterson, chief economist at the conference board,
a nonprofit research group.
Dana. Thank you