January Posed Setback in the Fight Against Inflation

The Federal Reserve’s Preferred Inflation Gauge Shows Prices Grew In January

1 hr 6 min ago

Inflation grew in January, according to the Federal Reserve’s preferred measure, revealing bumps in what many predict is still a soft landing.

The Personal Consumption Expenditures price index increased 0.3% from December and 2.4% from the prior year. That’s exactly what economists expected and up from December’s 0.1%. The core index, which excludes volatile food and energy prices, grew even more at 0.4%.

This report echoed January’s Consumer Price Index numbers that showed inflation remained stubbornly sticky. Since then, Federal Reserve officials have said there isn’t evidence that inflation is moving in the wrong direction, rather just a temporary setback in the fight against inflation.

However, Thursday’s report may push back the timeline in which Fed officials feel confident that inflation is on a sustainable path, allowing them to cut the influential fed funds rate.

Read more about what the accelerated inflation in January means here.

The Economy Historically Grows More In Leap Years, BMO Says

1 hr 31 min ago

Leap years are good for the economy historically.

When there’s an extra day in the year, gross domestic product growth is better than in years there isn’t, according to analysis by BMO. From 1948 to 2019, the average GDP growth in leap years is 3.60% compared to the 3.06% in the rest of the years.

The reason for that extra growth is simple, BMO thinks. Because there is an extra day, businesses and people often use that time working, adding 0.38% of work to the year. That’s similar to the additional GDP in leap years.