This increase, the worst since February 1982, marks a strong degradation compared to expectations. The Fed will probably have to increase its key rates and tighten credit valves.
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The number is worse than the expectations: the inflation reached 7.5% over one year in the United States, according to the published data, Thursday, February 10, by the Ministry of Labor. The news immediately caused the yield of state bonds to ten years, which crossed the 2%, its highest level since mid-2019, well before the pandemic – the operators require superior remuneration to lend their capital. Long-term rates have quadrupled since the lowest of summer 2020.
This increase, the worst since February 1982 when Paul Volker, the President of the US Federal Reserve (Fed), attempting to curb inflation after the two oil shocks of the 1970s, marks a strong degradation compared to expectations (7 , 2%) and at the December level (7%). Some details are spectacular. Annual inflation, excluding energy and food, reaches 6%. The rise in energy prices is 27%, that of feeding 7%. Inflation is 12.2% for new semiconductor shortage, 4.4% for housing. The latter data shows that inflation spreads to the entire economy.
The services soon concerned
“The degradation of the housing number, which represents one third of the index, is boring: it means that a rapid decline of inflation is less possible than before,” Loading Ramon de Oliveira, former president Equitable and AllianceBernstein. The increase in prices applies above all to the goods, concerned by bottlenecks (freight, raw materials, semiconductors, energy) and objects of an exceptional consumer demand, but it should diffuse into services with The end of the impact of the Omicron variant. “The inflation we have seen over the last two years has mainly concerned the durable goods. But that of the services begins to resume”, is also worried Jason Furman, economist in Harvard and former councilor of Barack Obama.
In a statement, President Joe Biden welcomed the increase in actual hourly wages that increased by 0.1 point: “Fortunately, we found a positive growth of actual wages last month [in January] ” This evolution is double-edged. It seems to end the rolling of wages by inflation – the actual hourly salaries are down 1.7% over one year, which is better than the 2% decline recognized in December. According to Atlanta Fed’s data, since the beginning of the pandemic, only the actual wages of the 25% less well paid Americans have increased, those of others have been reduced by inflation. But the rocking of which Mr. Biden rejoices has a risk, that of a spiral inflation salary.
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