We’ve been told for years that inflation has been too low. Now that it’s finally reached and surpassed the Federal Reserve’s 2% target, it looks as scary as the fast-growing carnivorous plant in Little Shop of Horrors.
Iron, copper, lumber, cotton, computer chips, and gasoline are jumping in price. The dollar has weakened, making imports more costly. Employers are having to raise wages to fill record openings; the federal government is spending heavily; and consumers emerging from the pandemic are in the mood to light some money on fire. On May 12 the U.S. Bureau of Labor Statistics reported that consumer prices rose 0.8% in April from March, four times the median expectation and the most since 2009. Excluding food and energy the increase was 0.9%, the most since 1982.
Stock indexes have retreated since May 7, when the S&P 500 hit a record. But jitters about the economic equivalent of an out-of-control, man-eating houseplant are more clearly evident in the bond market. Investor bets on the average inflation rate over the next 10 years have shot up from their Covid-19 low of less than 1% in 2020 to more than 2.5%, the highest since 2013.
The nervousness may get worse. “One always has to be careful not to overplay a few anecdotes and project that onto the broader economy,” Douglas Porter, chief economist at BMO Capital Markets, wrote in an April 30 report. “But as the anecdotes accumulate, they eventually become data.”
So how worried should we be? This package of stories tries to answer that question. It focuses mostly on the U.S. but also takes a look at China, where manufacturers are beginning to pass along their higher costs to customers around the world.
Continue reading your story on the app
Continue reading your story in the magazine
Young U.S. Jews Shift on Israel
Millennial and Gen Z progressives question American support of Israeli policies, a point of tension for the Democratic Party
A British tonic maker aims to conquer the U.S. with its premium mixers
Welcome to the Trump Coast
The former president’s strategic retreat to Mar-a-Lago has helped turn Florida into a new home base for Republicans
THE SEDITION HUNTERS
Amateur sleuths pore over photos and videos online to ID Capitol rioters
The FOMO Economy
From AMC to Dogecoin to houses, buying seems driven as much by anxiety as by hope
KING OF CARDS
Sports trading cards are having a moment. And no one promotes the industry like Ken Goldin
Pay Attention to the Man Behind the Curtain
Vladimir Putin’s tolerance for criminal hackers will be on the agenda when he meets with President Biden on June 16
It's TEQUILA O'CLOCK In NYC
Jimmy Buffett’s Margaritaville is a hit song, a chill state of mind, a billion-dollar marketing empire, and the new best worst attraction in Times Square
Is Streaming the Limit for Sky?
As its content providers start online services, the broadcaster pivots to create its own shows
China's Dangerous Diplomacy
Why the Wolf Warriors won’t change course