July saw a rise to 3.3% in inflation, as per the Fed’s preferred gauge.
Inflation Rises to 3.3%: A Challenge for the Economy
Inflation has ticked up to a 3.3% annual rate in July, according to the gauge favored by the Federal Reserve. This increase, reported by the Bureau of Economic Analysis, aligns with other indicators that show a slight uptick in inflation last month, despite the Fed’s efforts to slow it down by raising interest rates.
This latest report reveals that inflation remains above the central bank’s target of 2% annual price growth. This is concerning news for both the economy and the Biden administration, which has been highlighting positive economic developments as evidence of the success of their “Bidenomics” agenda.
Core PCE Inflation at 4.2%
When we look at the core personal consumption expenditures (PCE) price index, which excludes energy and food prices and is considered less volatile, we see an even higher inflation rate of 4.2% year-over-year.
June’s inflation reports showed more significant declines than anticipated by economists, making this latest PCE news even more noteworthy.
While PCE is the Fed’s preferred inflation gauge, the consumer price index (CPI) is the more commonly cited headline number. According to the CPI, inflation stood at 3.2% in July.
Despite the central bank’s efforts to tighten monetary policy and curb inflation, other economic indicators have surprisingly held up well. For example, gross domestic product (GDP) growth remained positive, even though rate hikes typically dampen GDP growth.
The government’s latest GDP estimates reveal a 2.1% annual growth rate in the second quarter of this year, following a first quarter with 2% expansion. This is undoubtedly good news for the economy.
Labor Market Strength and Signs of Slowdown
The labor market has also shown resilience, with 187,000 jobs added in July and an unemployment rate of just 3.5%, an impressively low figure.
However, the Job Openings and Labor Turnover Survey released this week indicates a decrease in the number of job openings, reaching the lowest level in over two years at 8.8 million. This suggests a potential slowdown in the labor market.
Despite these challenges, it is crucial to closely monitor inflation and its impact on the economy. To stay informed on this topic and more, click here to read more from The Washington Examiner.
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