Perspectives: Concerns About Consumer Inflation

Headline Roundup May 17th, 2021

Rising consumer prices are spurring concerns and debates nationwide as the economic recovery from the COVID-19 pandemic continues. The consumer price index (CPI) rose 4.2 percent year over year in April, the fastest increase since September 2008. Prices have risen recently across many sectors, including energy, used automobiles, airlines and hotels. The National Federation of Independent Business (NFIB) reported that in April, the percentage of small-business owners who raised their average prices month over month increased 10 points to 36% in April, the highest point in 40 years. Federal Reserve officials have described the price hikes as a temporary effect of the quickening economic recovery.

Outlets on all sides have covered the recent inflation. Coverage from left-rated sources sometimes framed it as less concerning than right-rated sources did, describing the rising prices while also highlighting strategies consumers could use to spend less. Reports from right-rated sources typically painted inflation as more of a dire concern, and focused on the economic shutdown amid the pandemic as a potential cause for price rises. Other coverage highlighted economists who worry that President Joe Biden's ambitious spending plans could increase inflation; investor concerns were also a subject of reports throughout the spectrum.

Perspectives: Concerns About Consumer Inflation

From the Center
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ANALYSIS

The stock market is generally expected to benefit from inflation, but a long-predicted surge in U.S. prices rattled investors in the past week. A closer look at the historical record might indicate the source of concern, according to one Wall Street analyst.

For equities, there is “good” inflation and “bad” inflation, said Nicholas Colas, co-founder of DataTrek Research, in a Thursday note. Good inflation lifts corporate earnings as long as employment remains high; bad inflation causes recessions, undercutting corporate earnings.

“Markets are volatile because they’re not sure which sort of...

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From the Left
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ANALYSIS

This was the week of consumer angst. Inflation is pushing prices up, while the stock market started the week trending down.

“The economy is going through some dramatic adjustments as it opens up following the unprecedented circumstances associated with the pandemic last year,” said Mark Hamrick, senior economic analyst for Bankrate.

Then there’s the panic over gas.

“Top off your cars,” a friend texted this week. “Costco and BJ lines are extremely long this morning and smaller stations are running out of gas.”

It’s the toilet paper sellout all over...

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From the Right
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Although inflationary pressures keep building in the U.S. economy, economists believe the Federal Reserve officials are unlikely to tighten monetary policy before seeing significant improvement in labor market recovery.

From gas to groceries, Americans have started to see price increases in recent weeks as the economy reopens. Used car and truck prices, for example, surged 21 percent year-over-year, including a 10 percent increase in April alone.

Surveys also show that U.S. businesses are raising prices for their goods and services at a rate not seen since the late 1970s and...

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