Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The Consumer Price Index (CPI) Increased 0.8% in November
Posted Under: CPI • Data Watch • Employment • Government • Inflation • Markets • Fed Reserve • Interest Rates • Bonds • Stocks • COVID-19

 
Implications: Consumer prices continued to surge in November, rising 0.8% for the month, and pushing the 12-month increase to 6.8%, the largest in nearly 40 years. Like last month, inflation in November was broad-based, with gas, shelter, food, and vehicles all making significant contributions. Energy prices rose 3.5%, mostly due to higher prices for gasoline, which rose 6.1% for the second consecutive month. Meanwhile, housing rents rose 0.4% (rents for both actual tenants and the rental value of owner-occupied homes). Rents are important to watch now that a national eviction moratorium has ended and home prices are up a blistering 27% since February 2020. Rents make up more than 30% of the overall CPI, so we expect it to remain a source for persistently high inflation as we continue into 2022. In addition, vehicle prices continued to rise steeply for both new and used cars (1.1% and 2.5%, respectively), likely due to industry-wide material shortages, especially in semiconductors. Finally, food prices increased 0.7%, as the index for food at home increased 0.8%; for the third consecutive month, all six major grocery food groups rose in November. Stripping out the volatile food and energy components, "core" prices still rose 0.5% for the month and are up 4.9% in the past year, which is also a multi-decade high. It's important to recognize the inflation experienced today is not merely a rebound from the steep price declines in 2020 when COVID first hit the US; consumer prices are up at a 4.4% annual rate since February 2020 and core prices are up 3.5%. This inflation has never been transitory, and the Fed seems to have finally arrived at the same conclusion, with Jerome Powell suggesting to retire the word while testifying in front Congress last week. The current economic environment does not just warrant tapering, but rate hikes. And while inflation was a key factor pushing the Fed to announce the start of tapering asset purchases, what matters most for the economy – and markets – is when the Fed will lift the Federal Funds rates. Unfortunately, that is likely to be a long way off, but we do expect the Fed to announce a pickup in the pace of tapering at the next FOMC meeting on Wednesday and signal a willingness to increase short-term rates multiple times in 2022. In other news this morning, initial unemployment claims fell 43,000 to 184,000 last week, the lowest level since 1969. Continuing claims rose 38,000 to 1.992 million. These figures suggest strong job growth in December.

Click here for a PDF version
Posted on Friday, December 10, 2021 @ 12:47 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.