Posts by Rick Newman

  • Inflation looks real this time

    Rick Newman at Yahoo Finance1 day ago

    Inflation may have arrived — the worrisome kind, not the manufactured kind.

    Since the Federal Reserve started “printing money” in 2008, inflation hawks have warned of runaway price increases that could overrun the economy. Those have largely been false alarms; annual inflation during the past six years has averaged just 1.6%, with a 2.1% rise in prices during the past 12 months. Many economists have even cautioned that deflation is a bigger risk than inflation.

    But new government data provide a genuine reason to worry. Labor costs rose by 0.7% in the second quarter, the biggest jump since right before the recession started in 2008. Economists had been expecting a more modest gain of 0.5%. Pay is hardly exploding, but if the value of pay and benefits continues to grow at a faster pace, it could cause the kind of inflation that tends to be lasting — and trigger the biggest change in Fed policy since the recession began.

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