NAM: Consumer Prices Rise 7.5% In One Year, Highest Rate Since 1982 The Consumer Price Index (CPI) has risen 7.5 percent over the past year, up from 7.1 percent in December and the fastest year-over-year pace since February 1982, accord- ing to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manufacturers (NAM). At the same time, core inflation (which excludes food and energy) in- creased 6.0 percent year-over-year in January, up from 5.5 percent in the prior release and the biggest increase since August 1982. Consumer prices rose 0.6 percent in January. Food and energy prices both soared 0.9 percent in January, but with gasoline costs down 0.8 percent. Excluding food and en- ergy, core consumer prices increased 0.6 percent in Janu- ary, also matching the rate in December.
Overall, prices are predicted to continue growing by more than consumers have become accustomed to in re- cent years. Even with some deceleration over the course of this year, core consumer inflation should still be rising around 3.5 percent year-over-year by the end of 2022. For its part, these data will put continued pressure on the Federal Reserve to tackle inflation. The Federal Open Market Committee has already said that it will end all asset purchases by early March, and it will likely start reducing its balance sheet over the summer. In addition, the FOMC will almost certainly increase short-term rates at its March 15–16 meeting, perhaps by 50 basis points. The Index of Consumer Sentiment declined from 67.2 in January to 61.7 in February, the lowest reading since Oc- tober 2011, according to preliminary data. Americans felt more pessimistic about both current and future economic conditions, largely on inflation worries. The National Federation of Independent Business re-
ported that the Small Business Optimism In- dex declined to 97.1 in January, an 11-month low. Supply chain disruptions, workforce shortages, inflation and COVID-19 continue to challenge small business owners. Re- spondents cited difficulties in finding work- ers as the top “single most important prob- lem,” followed by inflation. In the NFIB survey, the net percentage of respondents reporting higher prices today than three months ago rose from 57 per- cent to 61 percent, the highest rate since the fourth quarter of 1974. At the same time, the net percentage of respondents saying they had increased compensation in the past three months rose from 48 percent to 50 percent, a new record. The U.S. trade deficit rose to $80.73 bil- lion in December, which was just shy of the all-time high of $80.81 billion recorded in September. The U.S. trade deficit reached an all-time high of $859.13 billion in 2021, up from $676.68 billion in 2020. The goods trade deficit increased to $101.43 billion in December, a record high, with goods imports jumping to $259.70 bil- lion, also an all-time high. Goods exports rose to $158.27 billion, which was not far from October’s record pace ($159.01 bil- lion). At the same time, the service-sector trade surplus improved to $20.70 billion, the strongest reading since May. U.S.-manufactured goods exports to- taled $1,133.25 billion in 2021, using non-seasonally adjusted data, soaring 18.91 percent from $953.02 billion in 2020. Like- wise, manufactured goods imports grew 19.08 percent from $2,068.29 billion in 2020 to $2,463.03 billion in 2021.
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