Tag Archives: price increases

Business

Mustang Mach-E: Ford drops the price of its Tesla competitor

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CNN
 — 

Ford is boosting production of its popular Mustang Mach-E electric SUV and dropping its sticker price weeks after Tesla dropped prices of its vehicles. The move represents a substantial roll-back of price hikes Ford announced last summer on the 2023 models – but buyers may still be paying somewhat more than before the increases.

The Mustang Mach-E, a midsize electric family SUV, was the first serious electric effort for the Dearborn, Michigan-based automaker. Priced and aimed squarely at the Tesla Model Y, which has its own starting price of $53,490, the Mach-E is Ford’s bet to get new car buyers to dip their toes into the battery-powered future. it has since been joined in the electric Ford lineup by the workhorse Ford F-150 Lightning. But the company still considers the Mach-E a crucial step for the company’s electric-powered growth.

Late last year, Darren Palmer, Ford’s vice president of electric vehicle programs, told CNN Business that the Mach-E was completely sold out and the automaker was holding off on launching it in more global markets in order to catch up with US demand.

“We could sell it out at least two or three times over,” he said a the time.

The price cuts Ford announced Monday were biggest on the most expensive versions of the SUV, just as the increases had been biggest on those models. The base sticker of the Mustang Mach-E GT Extended Range, a high-performance version of the SUV, dropped to about $64,000 from $69,900 before, a decrease of $5,900. But that model had been about $62,000 before price increases last August.

When it announced those price bumps, Ford also said it was putting more standard features into the vehicles, including advanced driver assistance features.

The price of the least expensive Mach-E, the rear-wheel-drive standard range model, was cut $900, going from about $46,900 down to $46,000. The price of the extended range battery pack option, by itself, dropped from $8,600 down $7,000.

Tesla announced price cuts of as much as 20% on its electric vehicles earlier this month, after raising prices in 2022.

When Ford announced the price increases last summer, citing supply chain issues, the automakers indicated it would continue monitoring market conditions throughout the upcoming model year.

Ford announced last summer that it was increasing production of the Mach-E as it added capacity for more battery production. The automaker also announced in late August that it was reopening order banks for the Mach-E which had been closed as the company worked to meet existing orders.

Customers who complete the transaction for their Mach-E after today’s announcement will pay the new lower price, Ford said. Ford will reach out directly to Mach-E customers with a sale date after January 1, 2023 who already have their vehicles, the automaker said.

At least some versions of both models are currently eligible for federal electric vehicle tax credits, according to the Internal Revenue Service, but both are treated as cars, not SUVs, under the tax rules, unless equipped with a third row of seats.

That means that tax credits are available for the two-row only Mach-E and two-row Model Y only if the sticker price is below $55,000. For versions of the Model Y with a third row of seats, a $4,000 option, buyers may get tax credits with a sticker price up to $80,000. For the Mustang Mach-E, a third row of seats isn’t offered.

The final amount of the tax credit may depend on when the vehicle is actually delivered to the customer and, also, whether the customers themselves meet annual income requirements.

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Business

There’s beeen an increase in egg smuggling attempts across the border, says San Diego Customs

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CNN
 — 

High prices are driving an increase in attempts to bring eggs into the US from Mexico, according to border officials.

Officers at the San Diego Customs and Border Protection Office have seen an increase in the number of attempts to move eggs across the US-Mexico border, according to a tweet from director of field operations Jennifer De La O.

“The San Diego Field Office has recently noticed an increase in the number of eggs intercepted at our ports of entry,” wrote De La O in the Tuesday tweet. “As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000.”

Bringing uncooked eggs from Mexico into the US is illegal because of the risk of bird flu and Newcastle disease, a contagious virus that affects birds, according to Customs and Border Protection.

In a statement emailed to CNN, Customs and Border Protection public affairs specialist Gerrelaine Alcordo attributed the rise in attempted egg smuggling to the spiking cost of eggs in the US. A massive outbreak of deadly avian flu among American chicken flocks has caused egg prices to skyrocket, climbing 11.1% from November to December and 59.9% annually, according to the Bureau of Labor Statistics.

The increase has been reported at the Tijuana-San Diego crossing as well as “other southwest border locations,” Alcordo said.

For the most part, travelers bringing eggs have declared the eggs while crossing the border. “When that happens the person can abandon the product without consequence,” said Alcordo. “CBP agriculture specialists will collect and then then destroy the eggs (and other prohibited food/ag products) as is the routine course of action.”

In a few incidents, travelers did not declare their eggs and the products were discovered during inspection. In those cases, the eggs were seized and the travelers received a $300 penalties, Alcordo explained.

“Penalties can be higher for repeat offenders or commercial size imports,” he added.

Alcordo emphasized the importance of declaring all food and agricultural products when traveling.

“While many items may be permissible, it’s best to declare them to avoid possible fines and penalties if they are deemed prohibited,” he said. “If they are declared and deemed prohibited, they can be abandoned without consequence. If they are undeclared and then discovered during an exam the traveler will be subject to penalties.”



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Business

The steep plunge in used car prices — what it means, and what’s ahead

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New York
CNN
 — 

Tracking used car prices is enough to give anyone whiplash.

Since the start of the pandemic and the resulting disruptions to new car supply chains first sent prices soaring, used car prices posted their largest annual increase on record – up 45% in the 12 months ending in June 2021, according to the Consumer Price Index – before swinging to a 12-month drop of 8.8% in the most recent reading for December.

That was the biggest 12-month plunge in prices for used cars since June 2009, when General Motors and Chrysler were both in bankruptcy proceedings and the economy was hemorrhaging a half-million jobs a month.

“It was a completely wild ride,” said Ivan Drury, director of insights at Edmunds.com Inc., an online resources for inventory and information on cars.

Data from Edmunds shows the average price of a used car purchase in December at $29,533, down nearly $1,600 from the record high of $31,095 reached in April 2022. Today’s average used car price is about the same as the average new car price as recently as 2010.

While the prices of late model used cars are down only 5% off their peak according according to Edmunds, the price of older used cars, those five years or older, have fallen 15% or more from their peaks early in 2022.

Experts say reasons for the decline include higher interest rates that make it more expensive to finance a car purchase, limiting demand. CarMax

(KMX), the nation’s largest pure used car dealer, has warned that the combination of high prices and high interest rates is creating an affordability problem for many buyers, hurting overall demand.

But the leading reason for the drop in used car prices is the increased supply of new cars.

It was the lack of new car inventory that drove up prices. Parts shortages, especially for computer chips, had choked off production of new cars in much of 2022, causing the lowest level of full-year US new car sales since 2011.

The low supply of new cars caused an even bigger jump in the average price of used cars, as buyers who would otherwise buy new vehicles turned to the used car market.

“At one point it seemed that everyone who was going to buy new ended up buying used,” said Greg Markus, executive vice president of AutoLenders, parent company of New Jersey’s largest used car dealership chain.

That included rental car companies, which before the pandemic normally bought about 10% or more new cars per year. With limited inventory of cars to sell, automakers essentially stopped making lower-priced fleet sales, and even rental car companies were forced to turn to the used car market.

All that has started to change in recent months. Automakers are reporting more supplies of the chips they need, and are producing and selling more cars, including a return of fleet sales. Overall, sales were up 9% in the fourth quarter compared to a year ago, and nearly 6% higher than in the third quarter, according to Cox Automotive. And with more buyers finding the new cars they want, that means lower demand for used cars.

Experts say part of the decline in used car prices is that the price increases were not sustainable and were partly driven by buyers at used car auctions overpaying for the limited supply of used vehicles.

“There was nowhere for these prices to go but down,” said Markus.

There could be more declines in used car prices in the months ahead, as new car inventories continue to build. One thing that could put a floor under the used car prices: late model used cars will likely be in short supply given the reduced new car production over the last three years.

“The supply issue is still grim,” said Markus. Because of that, “I don’t think we’re getting down to 2019 levels,” he added.

The run-up in used car prices was a major driver in the nation’s overall inflation rate, adding about a full percentage point to the overall increase in consumer prices from April of 2021 through May of 2022. Now it’s a factor helping to bring down the pace of inflation, shaving more than a third of a point off the overall rate in December.

This is obviously good news for those wanting or needing to buy a used car, though it can have a negative effect on car buyers by reducing the value of vehicle they hope to trade in. Edmunds shows the average trade-in value in December down nearly $3,000, or 11%, to $22,605, from the record high hit in June of 2022.

That drop in the value of trade-ins could also be a headwind on car prices by reducing what buyers are able to pay.

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Business

PCE, the Fed’s preferred inflation gauge, shows prices cooling

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Minneapolis
CNN
 — 

The trend is clear: Inflation is cooling off in America.

The Federal Reserve’s preferred measurement of inflation showed price increases continued to moderate in November, providing yet another welcome indication that the period of painfully high prices has peaked.

The Personal Consumption Expenditures price index, or PCE, rose 5.5% in November from a year earlier, the Commerce Department reported Friday. That’s lower than in October, when prices rose 6.1% annually.

In November alone, prices rose just 0.1% from October.

Core PCE, which excludes the volatile food and energy categories, was up 4.7% annually and 0.2% on a monthly basis, matching expectations of economists polled by Refinitiv.

The annual increases for both PCE inflation indexes hit their lowest levels since October 2021 and follows continued declines in other inflation gauges, such as the Consumer Price Index and Producer Price Index.

PCE, specifically the core measurement, is the Fed’s favored inflation gauge, since it provides a more complete picture of costs for consumers.

Friday’s report also showed that spending continued to rise in November, but at a much slower pace than in previous months. Spending was up 0.1% in November as compared to 0.8% the month before. Personal income increased by 0.4% in November, down from 0.7% in October.

The November PCE report, the last major inflation gauge released in 2022, provided a snapshot of an economy in transition. Tasked with reining in the highest inflation since the early 1980s, the Fed has undertaken a series of blockbuster interest rate hikes to squelch demand.

In its seven meetings starting in March, the central bank’s policymaking arm raised its benchmark interest rate by a cumulative 4.25 percentage points. The sharp hike in rates has started to filter through the economy, its effects showing up first in areas such as real estate, where mortgage rates were 6.27% this week, more than double the rate seen last year at this time, according to Freddie Mac data.

“The economy is moving in the right direction from the Federal Reserve’s perspective at the end of 2022, but not quickly enough,” Gus Faucher, chief economist for PNC Financial Services, said in a statement. “Higher interest rates are weighing on consumer spending, particularly for durable goods, and inflation is slowing.”

Inflation has moderated in recent months, especially on items like goods as supply chain bottlenecks have eased and consumers focused more spending in areas like leisure and hospitality.

However, inflation within the services sector has been a little “sticky,” and not abating as quickly. Friday’s PCE report showed the services index posted a monthly increase of 0.4% – unchanged from October’s rate – and a year-over-year increase of more than 11%, Faucher noted.

While much of the services inflation is due to housing costs, which are rapidly reversing, the Fed is concerned that strong wage growth could fuel persistent increases in services prices and overall inflation, he added.

“The Federal Open Market Committee will continue to increase the fed funds rate in early 2023 until it becomes more apparent that the job market is cooling, and wage growth and services inflation are slowing to more sustainable paces,” he added.

The Fed’s latest economic projections that were released last week showed that board members were expecting inflation to remain slightly higher for longer than previously forecast. Fed board members now expect PCE inflation to end 2023 at 3.1% and core PCE to finish next year at 3.5%, above the central bank’s target rate of 2%.

A separate Commerce Department report released Friday showed that new orders for manufactured goods tumbled 2.1% in November, the biggest monthly drop since the onset of the pandemic.

Transportation equipment, specifically new orders for non-defense aircraft and parts, drove the decline, according to the report. Excluding transportation, new orders increase 0.2%.

Shipments increased 0.2% in November, which followed a 0.4% increase in October.

“Core durable goods orders slowed but did not contract, reflecting growing unease about the economy,” Diane Swonk, chief economist for KPMG, tweeted Friday after the report’s release. “Manufacturing activity has begun to contract and prelim reading for December suggests it will contract further at year end. A cold winter expected for the manufacturing sector.

Inflation’s slow march downward has been welcome news to consumers as well, helping to perk up their economic sentiments during December, according to new data released Friday by the University of Michigan.

The final December reading for the index of consumer sentiment came in at 59.7 in December, up slightly from a preliminary measurement of 59.1 and November’s final reading of 56.8, according to data from the university’s Surveys of Consumers.

“Consumers clearly welcomed the recent easing of inflation,” Joanne Hsu, director of the Surveys of Consumers, said in a statement. “While sentiment appears to have turned a corner from its all-time low from June, consumers have reserved judgment about whether the trends will continue.”

She added: “Their outlook for the economy may have improved, but it remains relatively weak. The sustainability of robust consumer spending is contingent on continued strength in incomes and labor markets in the quarters ahead.”

The report showed the biggest improvement in sentiment about business conditions, while inflation expectations also improved by falling to 4.4% in December, the lowest reading in 18 months, according to the university. This is a key data point for the Federal Reserve. If consumers believe prices will remain high, that could factor into increased wage demands, which could cause businesses to raise prices.

Earlier this week, the Conference Board’s consumer confidence index – another measure of how consumers are feeling about the economy – landed at its highest measurement since April 2022.



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Business

Key inflation measure shows price pressures cooled off in November, but remain high

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New York
CNN
 — 

Another key inflation measure shows price pressures cooled off but remained stubbornly high in November, despite the Federal Reserve’s monthslong efforts to fight inflation through higher interest rates.

The Producer Price Index, which measures prices paid for goods and services by businesses before they reach consumers, rose 7.4% in November compared to a year earlier, the Bureau of Labor Statistics reported Friday. That’s down from the revised 8.1% gain reported for October.

US stocks fell immediately after the report, as economists surveyed by Refinitiv had expected wholesales prices to have risen just 7.2%, annually. The higher-than-expected inflation readings raised concerns about whether the Fed will be able to slow the pace of rate hikes.

But futures for the Fed funds rate still show a strong likelihood of a half-point increase at the central bank’s policymaking meeting next week, rather than the three-quarter point hike instituted at the last four meetings.

The PPI report generally gets less attention that the corresponding Consumer Price Index, which measures prices paid by US consumers for goods and services. But this is a rare month in which the PPI report came out before the CPI report, which is due out Tuesday.

That and the Fed meeting scheduled for Tuesday and Wednesday next week is making this inflation report of particular importance to investors.

“Next Tuesday’s CPI release will be more important than today’s data, but with traders on edge, any indication that prices remain elevated and that inflation is more sticky than currently believed is a negative for markets,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

Overall prices rose a seasonally adjusted 0.3% compared to October — the same monthly increase as was reported in both September and October — but were slightly higher than the 0.2% rise forecast by economists.

Stripping out volatile food and energy prices, core PPI rose 6.2% for the year ending in November, down from the revised 6.8% increase the previous month. Economists had forecast only a 5.9% increase.

Core PPI posted a 0.4% increase from October, a far bigger rise than the revised 0.1% month-over-month rise in that previous month, and twice as big as the 0.2% rise forecast by economists.

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Business

‘It’s like living in an igloo.’ People are turning off their heat as prices surge

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As the first frigid weather of autumn chills the Northeast, many people are faced with a tough decision: deal with the surging costs of heating their homes or live without it.

Home heating prices are skyrocketing yet again this winter, up 18% nationwide on top of last year’s 17% spike, according to the National Energy Assistance Directors Association (NEADA).

Charmaine Johnson works in the call center at Philadelphia’s Heater Hotline, part of a non-profit that assists low-income families with their heating systems and bills. Johnson, 63, can relate to the concerns she’s hearing all day. She, too, is struggling to afford her heating bills.

With help from her son, Johnson just paid more than $1,000 to fill part of her oil tank, which she hopes will last her most of the winter.

Johnson says she doesn’t qualify for government assistance with her heating bills. As inflation also pushes up her food budget and other expenses, she is bundling up and keeping the heat turned down, hoping to stretch that oil for as long as possible.

“It’s miserable,” she said. “It’s like living in an igloo.”

Several factors are driving hikes in home heating prices, including the war in Ukraine, OPEC+ cuts, a surge in energy exports, lower energy inventories, and a high demand for natural gas in the US electric power sector, according to the Energy Information Administration (EIA).

EIA projects heating a home with natural gas will cost an extra 25% this winter, and heating with electric will run 11% higher. The steepest hike will be on heating oil, which is expected to be 45% more expensive than last winter, squeezing roughly 5 million households, mostly in the Northeast.

Tim Wiseley is keeping the heat off at his home outside Philadelphia, even as temperatures dip toward freezing. He wants his heating oil to last as long as possible and filling his tank costs roughly $1,500.

“It’s 50 or 55 degrees in here. To me that’s not unbearable yet,” Wiseley said, adding that he’ll turn the heat on when his “teeth chatter.”

The 67-year-old is retired, living month-to-month on Social Security benefits. He lost his wife last year, and his medical bills are adding to the long list of expenses.

“You can’t go food shopping and get oil. It’s one or the other,” he said.

Wiseley believes he’ll run out of heating oil at some point this winter. He’s not sure what he’ll do when that happens.

“It’s a horrible feeling,” he said. “It’s a feeling I wouldn’t wish on anyone.”

This winter, the Biden administration is distributing $4.5 billion in federal assistance to help families pay their heating bills.

The funds for the Low Income Home Energy Assistance Program, known as LIHEAP, stem from regular appropriations by Congress, additional emergency funding lawmakers included in September’s continuing resolution and $100 million from the bipartisan infrastructure law that passed last year, according to the Department of Health and Human Services.

Annette Thomas, 53, and her husband received $500 from that program to help them heat their home near Philadelphia, she said. But it was only enough to fill roughly one third of their oil tank, which Thomas thinks will last just two to three weeks.

“That’s why we’re holding off,” she said. “We haven’t turned our heat on yet. And it’s chilly now.”

They’re trying to pay off their electric bill in the coming days to avoid a shutoff. Plus, their other bills and expenses are way up. So they’re using space heaters and electric blankets to stay warm, hoping to save their heating oil for when their kids come home for Thanksgiving.

“These aren’t luxuries, they’re necessities, and it is a struggle,” Thomas said. “So yes, it’s upsetting. It is.”

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Business

Home sales drop for 9th month

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Home sales in the United States declined for the ninth month in a row in October as surging mortgage rates and high prices pushed buyers out of the market.

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — were down 28.4% in October from a year ago and down 5.9% from September, according to a National Association of Realtors report released Friday. All regions of the United States saw month-over-month and year-over-year declines.

That continues a slowing trend that began in February and marks the longest streak of declining sales on record, going back to 1999.

Sales in October were at their weakest level since May 2020, when the real estate market was at a standstill during the pandemic lockdowns. Beyond that, sales last month were the weakest they have been since December 2011.

Still, home prices continued to climb last month. The median home price was $379,100 in October, up 6.6% from one year ago, according to the report. But that’s down from the record high of $413,800 in June. The price increase marks more than a decade of year-over-year monthly gains.

“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” said Lawrence Yun, NAR’s chief economist. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”

Many homeowners who recently bought or refinanced into ultra-low mortgage rates are reluctant to sell. That has kept inventory painfully low.

At the end of October there were 1.22 million units for sale, down less than 1% from both last month and last year, according to the report. At the current sales pace, it would take 3.3 months to get through the existing inventory, up from 3.1 months in September and 2.4 months last year. But that’s still historically low: A balanced market is a 4 to 6 month supply.

“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added.

While nearly a quarter of homes in October sold over the asking price, homes sitting on the market for more than 120 days saw prices reduced by about 16%.

With fewer buyers shopping for homes, the average time a home stays on the market is getting longer.

Properties were typically on the market for 21 days in October, up from 19 days in September. Pre-pandemic, homes typically sat on the market closer to 30 days. Over half the homes sold in October were on the market for less than a month.

While prices are still climbing year over year nationally, the increase is smaller than it has been over the past couple years with annual home price appreciation peaking at 24% in May 2021.

And some markets are even seeing prices drop, especially areas that saw a huge increase in home price appreciation during the pandemic, Yun said.

Half the country can expect to see prices decline year over year in the months ahead, Yun said, most will be by a modest amount, while other areas will see bigger drops. But the other half will likely see a modest increase.

“Affordable areas will hold on, places like Indianapolis, where there is job growth,” he said.

Still, Yun said, nationally, home prices are 40% higher than in October 2019, prior to the pandemic.

“Household incomes have not risen by 40%,” he said.

Those struggling to buy their first home continued to be shut out, making up only 28% of transactions last month.

“First-time buyers are really struggling with high prices, the high bar to get into the market and high mortgage rates.”

Once the hurdle to homeownership improves a bit for buyers — either with falling prices or lower mortgage rates — we could again face a housing shortage, Yun said, because the number of fresh listings coming to market is lower now than a year ago.

Current homeowners aren’t selling and homebuilders are slowing home construction, too.

October housing starts, a measure of new home construction, dropped 4.2% from September, and were down 8.8% from a year ago, according to the US Census Bureau and the US Department of Housing and Urban Development.

“This is why more new home construction is needed, as well as more rehabilitation of disused buildings into residential units,” said Yun, noting that while construction of apartment buildings remains robust, single-family starts are below one year ago and well below historical averages.

“In the meantime, mortgage rates are falling from the peak levels of last month and the gate is opening for more homebuyers to qualify for a mortgage.”

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Business

Key inflation report indicates the Fed’s rate hikes may be starting to cool prices

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Minneapolis
CNN Business
 — 

A key measure of inflation, wholesale prices, rose by 8% in October from a year before, according to the latest report from the Bureau of Labor Statistics.

While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. It’s the second inflation report this month to show signs of cooling in the rising prices that have plagued the economy.

Economists expected the Producer Price Index, which measures prices paid for goods and services before they reach consumers, to show an annual increase of 8.3%, down from September’s revised 8.4%.

On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.

Year-over-year, core PPI — which excludes food and energy, components whose pricing is more prone to market volatility — measured 6.7%, down from September’s revised annual increase of 7.1%.

Month-over-month, core PPI prices were flat, the lowest monthly reading since November 2020. In September, core PPI increased by a revised 0.2% from the month before.

Economists had expected annual and monthly core PPI to measure 7.2% and 0.3%, respectively, according to estimates on Refinitiv.

President Joe Biden heralded October’s PPI report Tuesday calling it “more good news for our economy this morning, and more indications that we are starting to see inflation moderate.”

“Today’s news – that prices paid by businesses moderated last month – comes a week after news that prices paid by consumers have also moderated,” Biden wrote Tuesday. “And, today’s report also showed that food inflation slowed – a welcome sign for family’s grocery bills as we head into the holidays.”

For much of this year, the Federal Reserve has sought to tamp down decades-high inflation by tightening monetary policy, including issuing an unprecedented four consecutive rate hikes of 75 basis points, or three-quarters of a percentage point.

The better-than-expected PPI data reflects an economy that has slowed, with supply moving more into balance, said Jeffrey Roach, chief economist for LPL Financial.

Costs associated with transportation and warehousing, for example, declined for the fourth consecutive month, a likely result of the improved global shipping climate, he said. Producer costs for new cars fell the most since May 2017, he added.

“Barring geopolitical or financial crises, inflation should continue its deceleration into 2023,” he said in a statement.

Since PPI captures price changes happening further upstream, the report is considered by some to be a leading indicator for broader inflationary trends and a predictor of what consumers will eventually see at the store level.

“The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend,” Mike Loewengart, Morgan Stanley’s head of model portfolio construction, said in a statement.

Last week’s Consumer Price Index showed inflation slowed to 7.7% from 8.2% year-over-year for consumer goods, surprising investors and giving Wall Street its biggest boost since 2020.

The CPI data was “reassuring,” Fed vice chair Lael Brainard said on Monday, signaling that the rate hikes appear to be taking hold, and if the economic data continues to show inflation on the decline, then the central bank could scale back the extent of its future rate hikes.

“When you look at the inflation numbers, there’s some evidence that we’ve peaked, but are we coming down quickly?” Steven Ricchiuto, chief economist for Mizuho Americas told CNN Business.

Ricchiuto noted that the October figures are only a couple steps lower than what was seen in September.

“These aren’t the types of things that tell the Fed to stop tightening rates,” he said. However, “they may tell you [that] you don’t need 75 basis points.”

CNN’s DJ Judd and Matt Egan contributed to this report.

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US

Obama tells Midwestern voters worried about inflation that GOP is ‘not interested in solving problems’

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CNN
 — 

Former President Barack Obama on Saturday sought to sway voters who are worried about inflation, warning in two key Midwestern states that Republicans seeking control of Congress have no plans to rein in prices and could target social safety net programs.

Campaigning alongside Michigan Gov. Gretchen Whitmer in Detroit, and later Wisconsin Gov. Tony Evers and Democratic Senate nominee Mandela Barnes in Milwaukee, Obama acknowledged the economic realities Americans face. But he said handing power on Capitol Hill to the GOP would do little to solve those problems.

“In your gut, you should have a sense: Who cares about you?” he said in Wisconsin.

In a moment that rapidly spread across social media, Obama lambasted Barnes’ opponent, Republican Sen. Ron Johnson, who is seeking a third term. He cited Johnson’s past comments comparing the management of Social Security to a “Ponzi scheme” and criticized Johnson’s vote for the 2017 GOP-led tax overhaul.

“Some of you here are on Social Security. Some of your parents are on Social Security. Some of your grandparents are on Social Security. You know why they have Social Security?” Obama said. “Because they worked for it. They worked hard jobs for it. They have chapped hands for it. They had long hours and sore backs and bad knees to get that Social Security.”

“And if Ron Johnson does not understand that – if he understands giving tax breaks for private planes more than he understands making sure that seniors who’ve worked all their lives are able to retire with dignity and respect – he’s not the person who’s thinking about you and knows you and sees you, and he should not be your senator from Wisconsin,” the former President said.

Obama is traveling to some of the most important midterm battlegrounds in the days before the November 8 midterm elections. In addition to the stops in Michigan and Wisconsin, Obama also held an event Friday in Georgia. He will visit Nevada on Tuesday and then hold multiple events in Pennsylvania alongside President Joe Biden on Saturday.

All five states feature hotly contested governor’s races, and all but Michigan also have Senate contests that will play a role in determining which party controls the evenly divided chamber.

The former President on Saturday portrayed the modern GOP as unserious and uncompromising, describing the party – with few exceptions – as beholden to former President Donald Trump’s whims.

“Own the libs and getting Donald Trump’s approval. That’s their agenda,” Obama said in Milwaukee.

“They’re not interested in solving problems. They’re interested in making you angry, and then finding somebody to blame,” he said. “And they’re hoping that’ll distract you from the fact that they don’t have any answers of their own.”

Obama’s message mirrored Biden’s insistence that Republicans have not offered proposals to rein in inflation and his warnings that GOP congressional majorities would target popular safety net programs like Social Security and Medicare.

It also echoed what former President Bill Clinton said at a campaign stop for Democratic Rep. Sean Patrick Maloney in New York on Saturday. Clinton said that the GOP’s midterm slogan should be: “This is a real problem. Let’s vote for somebody who will make it worse.”

The difference is location: Obama is hitting the campaign trail in places other Democrats can’t visit without provoking costly political backlash. Biden, whose approval rating is underwater in CNN polls conducted by SSRS across key midterm states, is largely limiting his role to fundraisers, though he will travel to Pennsylvania – his state of birth – in the election’s closing weekend. Other figures, such as Vermont Sen. Bernie Sanders, can energize progressives but have limited appeal beyond core supporters. Obama, though, remains a national Democratic figure who can motivate the party’s base while also appealing to moderate voters.

Obama described inflation as a global challenge that resulted from a coronavirus pandemic that “threw off supply and demand,” as well as Russia’s war in Ukraine, which he said has driven up gas prices.

“When gas prices go up, when grocery prices go up, that takes a bite out of people’s paycheck. That hurts,” Obama said. “But the question you should be asking is: Who’s going to do something about it? Republicans are having a field day running ads talking about it, but what is their actual solution to it?”

“I’ll tell you: They want to gut Social Security, then Medicare, and then give some more tax breaks to the wealthy,” he said. “And the reason I know that’s their agenda is, listen, that’s their answer to everything.”

That theme – that Republicans have lost interest in compromising, keeping the government running or even acknowledging basic realities, including the outcome of the 2020 presidential election – echoed through Obama’s remarks in Michigan and Wisconsin.

Gone were the days of former first lady Michelle Obama’s insistence that “when they go low, we go high.” Obama acknowledged Saturday that his wife is discouraged by today’s political landscape. “I’m usually a little more optimistic,” he said in Michigan.

He contrasted the moment the United States now faces with the early stages of his own political career.

He described losing a 2000 effort to unseat incumbent Rep. Bobby Rush in a Democratic primary – the only time Obama was defeated at the ballot box.

“You know what I didn’t do, though? I didn’t claim the election was rigged. I didn’t try to stop votes from being counted. I didn’t incite a mob to storm the Capitol,” Obama said in Detroit. “I took my lumps. I figured out why my campaign hadn’t connected, and I tried to run a better race the next time, because that’s how our democracy is supposed to work.”

Obama described driving around Illinois as a Senate candidate in 2004, meeting people at diners in conservative areas of the state and having cordial conversations.

He pointed to the example of the late Arizona Sen. John McCain, who delivered a gracious concession speech after losing the 2008 presidential election to Obama. And he said that while he didn’t like the outcome of the 2016 presidential race, he stayed up until 3 a.m. to call Trump and congratulate him, and proceed with a peaceful transfer of power.

In Milwaukee, Obama even joked about birtherism – the racist conspiracy theory fueled by Trump that Obama was not born in the United States.

Obama compared himself to Barnes, saying the Senate nominee, who is also Wisconsin lieutenant governor, faces a barrage of Republican ads portraying him as out of touch with the state’s values “just because Mandela’s named Mandela; just because he’s a Democrat with a funny name.”

“It sounds pretty familiar, doesn’t it? So Mandela,” Obama said, turning to Barnes onstage, “get ready to dig up that birth certificate.”

“Remember when that was the craziest thing people said? That wasn’t that long ago. People were like, ‘Wow, that was some crazy stuff,’” Obama said. “Now, it doesn’t even make the top 10 list of crazy.”

Obama saved his sharpest criticism for Johnson, saying the GOP senator had a “gold medal” in trafficking conspiracy theories about the 2020 election.

In remarks earlier this month, Johnson appeared to downplay the violence from the January 6, 2021, insurrection at the US Capitol and noted that the rioters “did teach us how you can use flagpoles, that kind of stuff, as weapons.” A campaign spokesperson later said the senator’s comments were meant to compare the methods used by racial justice protesters in the summer of 2020 with the January 6 rioters.

In a debate with Barnes in October, Johnson said, “I immediately and forcefully and repeatedly condemned the violence on January 6.”

In Michigan, Obama warned that a “dangerous climate” was developing as a result of incendiary rhetoric in the United States – “when we don’t just disagree with people, but we start demonizing them making wild crazy allegations about them.”

“If elected officials don’t do more to explicitly reject that kind of rhetoric, if they tacitly support or encourage their supporters to stand up outside voting places armed with guns dressed in tactical gear, more people can get hurt,” Obama said.

In a moment Obama used as an exclamation point for his comments about the direction of the GOP, a protester in the audience interrupted him by shouting. That prompted the former President to respond, “So, this is this is what I’m saying.”

“There is a process that we set up in our democracy right now. I’m talking, you’ll have a chance to talk sometime,” he said to the protester. “And this is part of the point that I want to make: Just basic civility and courtesy works, and that’s what we want to try to encourage.”

The protester was quickly drowned out by chants of “Obama!” from the crowd.

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Business

Inflation data shows US prices were still uncomfortably high last month

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Minneapolis
CNN Business
 — 

A new batch of inflation data released Friday showed that while prices remained uncomfortably high in September, a slowdown in wage growth indicates some relief may be in sight. That’s an encouraging development for the Federal Reserve, which is battling to bring down the highest inflation in 40 years.

The Personal Consumption Expenditures Index, which measures prices paid by consumers for goods and services, climbed by 0.3% from August to September but remained unchanged at 6.2% for the year, according to the latest report from the Bureau of Economic Analysis.

Core PCE, which strips out volatile food and energy prices and is the Fed’s preferred measure of inflation, climbed by 5.1% on an annual basis, higher than the August rate of 4.9% but below the consensus estimate of 5.2%, per Refinitiv.

From August to September, the core index rose by 0.5%, matching estimates. The prior month’s jump was revised down to 0.5% from 0.6%.

Separately, the Bureau of Labor Statistics released its latest Employment Cost Index, which shows a slowdown in wage and salary growth in quarterly labor costs. The central bank keeps a close eye on the ECI report to monitor the extent to which skyrocketing inflation is boosting wages — and fueling inflation.

The latest numbers come just days before the Fed meets to discuss another rate hike — and as Americans hit the polls to vote in midterm elections.

“These data confirm the Federal Reserve has more work to do to cool demand and reduce inflation and keep policymakers on track to raise the federal funds rate by another 75 basis points at the FOMC meeting next week,” Gregory Daco, senior economist at EY Parthenon, said in a statement.

But some of the underlying metrics that indicate a slowdown is on the horizon could mean that next week’s rate increase — which is expected to be the fourth-consecutive 75 basis-point hike — may be that last one of that size, said Mark Zandi, chief economist for Moody’s Analytics.

“There are a lot of moving parts, a lot of assumptions, but I think the most likely scenario is that we’re at the worst of the inflation, and it should be back close within spitting distance of the Fed’s [2%] target by spring of 2024,” he said.

Consumers have been struggling for months with prices that have remained firmly stuck at levels not seen since the 1980s. Despite a series of jumbo rate hikes from the Fed in its bid to tame inflation, the most recent Consumer Price Index — which measures the cost of everything from eggs to plane tickets — showed that price increases continue to surge and that inflation even spread from goods into the services sector in September.

The latest PCE report showed that Americans continued to spend beyond their means — consumer spending increased 0.6% in September from August and income grew 0.4%, while savings levels fell.

Even accounting for inflation, expenditures outpaced income.

“Monetary policy acts with a lag, but at this early stage, consumers’ spending is more or less unfazed by high inflation and the rate hikes intended to get prices under control,” Wells Fargo economists Tim Quinlan and Shannon Seery said in a note Friday.

Consumers, however, aren’t necessarily bullish about the economy and its future prospects.

The University of Michigan’s consumer sentiment index for October came in at 59.9, according to updated survey data released Friday. That’s only 10 index points above the all-time low reached in June.

“This month, buying conditions for durables surged 23% on the basis of easing prices and supply constraints; however, year-ahead expected business conditions worsened 19%,” said Joanne Hsu, surveys director. “These divergent patterns reflect substantial uncertainty over inflation, policy responses, and developments worldwide, and consumer views are consistent with a recession ahead in the economy.”

Beyond the consumer sector, the broader economic picture is darkening, Daco said.

“Rapidly rising interest rates, persistently high inflation, and elevated global uncertainty are eroding business sentiment and prompting companies to make more cautious hiring and investment decisions.”

And while the housing market is already buckling under the weight of surging mortgage rates, the full economic impact of the Fed’s policy tightening has yet to be felt, he said.

CNN Business’ Tami Luhby contributed to this report.

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