Inflation forcing Americans to spend $709 a month more than they did 2 years ago: economist

Published

2 years ago

August 17, 2023

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Inflation is forcing Americans to spend $709 more per month on everyday goods and services than they did just two years ago, according to the chief economist at Moody’s Analytics.

“The high inflation of the past 2+ years has done lots of economic damage,” Mark Zandi tweeted on Friday following the release of the Consumer Price Index — a closely-watched measure of inflation that tracks changes in the costs of everyday goods and services.

The CPI rose moderately, to 3.2% in July versus a year earlier.

“Due to the high inflation, the typical household spent $202 more in a July than they did a year ago to buy the same goods and services. And they spent $709 more than they did 2 years ago,” Zandi added.

Zandi — who also co-founded Moody’s global economic analysis service, Economy.com — said he sees relief ahead, predicting that inflation is “set to moderate further” as the Federal Reserve approaches its 2% inflation goal.

“Vehicle prices will decline more, so too will electricity prices, and the growth in the cost of housing will slow further. The biggest worry is the jump in oil prices, which bears close watching,” he added in the thread posted to X, formerly known as Twitter.

To be sure, the high inflation of the past 2+ years has done lots of economic damage. Due to the high inflation, the typical household spent $202 more in a July than they did a year ago to buy the same goods and services. And they spent $709 more than they did 2 years ago.

Though gas prices hit an eight-month high late last month, energy unexpectedly rose a mere 0.1%, the latest CPI report showed.

However, over the past month, US West Texas Intermediate and Brent crude futures climbed nearly 10%, to $82.83 and $86.39, respectively.

Zandi concluded his analysis with: “The deeper I dig into last weeks inflation statistics, the more confident I am that inflation will be back to the Feds inflation target by this time next year. And this without more interest rate hikes, a recession, or even much of an increase in unemployment.”

Fed officials have said that they’re also no longer forecasting a recession, though the sentiment opposes that of ratings agency Fitch, which owngraded the US top-tier sovereign credit from AAA to AA+, citing the possibility that the economy will slip into a mild recession later this year.

Consumers, however, have continued to feel reprieve from the central bank’s aggressive tightening regime, with core CPI which excludes volatile food and energy prices only rising 0.2% from a month ago, matching the 0.2% increase in June.

“The trend lines look good,” Zandi said, noting that “the July CPI report was great,” especially when compared to June 2022, when inflation peaked at 9.1% to hit a four-decade high.

Rising housing costs were by far the largest contributor to Julys uptick in prices, accounting for 90% of the advance, the Bureau of Labor Statistics reported, though Zandi didn’t seem too concerned.

When The Post reached out to Moody’s for comment, the financial services firm pointed to commentary from another economist at the company, Bernard Yaros, who said that “the US consumer price index was fully in line with our and consensus expectations in July.”

“Moodys Analytics believes that the Federal Reserve is done with interest-rate hikes for the current tightening cycle, and the July CPI helps cement our near-term view on monetary policy,” he added.

The CPI report fueled questions about whether the Fed will continue to hike interest rates later this year after the Fed decided on a 25-basis-point rate hike in July, taking them to a 22-year high.

Fed Chairman Jerome Powell announced that the advance was a unanimous decision, raising the benchmark federal-funds rate to a range between 5.25% and 5.5%.

Economists were divided on the pending rate hikes following the release of the CPI report.

Greg Wilensky, head of US fixed income at Janus Henderson Investors, added: If economic conditions continue as expected, we believe we have seen the last hike for this cycle. This makes us more constructive on adding interest-rate risk, particularly at the front of curve.

Meanwhile, Raymond James Chief Economist Eugenio Aleman believes stubbornly-high shelter costs are slated to put pressure on headline inflation going forward.

No doubt the Fed will also look at the Labor Departments hiring report for July as it considers whether its done enough to snuff out inflation.

Last month, US employers added 187,000 jobs, the lowest number since COVID peaked in 2020, though unemployment remained little changed month-over-month, at 3.5%.

The labor market has showed surprising resiliency over the last couple of months, adding 209,000 jobs in June and a robust 339,000 jobs in May.

The US is currently enjoying a 30-month streak of monthly job gains.

US

Trump exempts Hungary from US sanctions on Russian energy after meeting Orban

Published

5 hours ago

November 8, 2025

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Trump exempts Hungary from US sanctions on Russian energy after meeting Orban

Hungary has been given a one-year exemption from US sanctions on using Russian energy, a White House official has said, after its Prime Minister Viktor Orban met with Donald Trump in the White House.

Mr Orban succeeded in convincing the US president to allow Hungary to continue importing Russian oil and gas without being subject to the sanctions Mr Trump‘s administration had placed on Russian fossil fuels.

Hungary has been under heavy pressure from the European Union to end its reliance on Russian energy.

The EU has mostly heavily cut or ceased its imports of Russian oil and gas.

On 22 October, Mr Trump imposed sanctions against Russia’s two biggest oil companies, in a major policy shift described by Vladimir Putin as an “unfriendly act”.

Mr Trump has also been pushing Europe to stop using Russian energy.

Ukraine war latest: Trump gives Hungary energy sanctions relief

Mr Orban, the country’s nationalist leader and a long-time ally of Mr Trump, has described access to Russian energy as a “vital” issue for his landlocked country.

He said he planned to discuss with Mr Trump the “consequences for the Hungarian people” if the sanctions came into effect.

Speaking at a news conference after his talks with Mr Trump, Mr Orban said Hungary had “been granted a complete exemption from sanctions” affecting Russian gas delivered to Hungary from the TurkStream pipeline and oil from the Druzhba pipeline.

“We asked the president to lift the sanctions,” Mr Orban said. “We agreed and the president decided, and he said that the sanctions will not be applied to these two pipelines.”

Mr Trump appeared to be sympathetic to Mr Orban’s pleas.

“We’re looking at it, because it’s very different for him to get the oil and gas from other areas,” he said.

“As you know, they don’t have … the advantage of having sea. It’s a great country, it’s a big country, but they don’t have sea. They don’t have the ports.”

He added: “But many European countries are buying oil and gas from Russia, and they have been for years. And I said, ‘What’s that all about?'”

Orban says ‘miracle can happen’ in Ukraine war

Mr Trump and Mr Orban also discussed the war in Ukraine, with the US president saying: “The basic dispute is they just don’t want to stop yet. And I think they will.”

The president asked Mr Orban if he thought Ukraine could win the war, with the prime minister saying a “miracle can happen”.

Hungary reliant on Russian gas and oil

As part of the discussions, Hungary agreed to buy US liquefied natural gas (LNG), the US state department said, noting contracts were expected to be worth around $600m (£455m).

The two nations also agreed to work together on nuclear energy, including small modular reactors.

Mr Orban also said Hungary will also purchase nuclear fuel from the US-based Westinghouse Electric Company to power its Paks nuclear plant, which has until now relied on Russian-supplied nuclear fuel.

International Monetary Fund figures show Hungary relied on Russia for 74% of its gas and 86% of its oil last year. It warned an EU-wide cutoff of Russian natural gas could result in output losses in Hungary exceeding 4% of its GDP.

US

Why US may soon have a real energy emergency

Published

5 hours ago

November 8, 2025

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Why US may soon have a real energy emergency

Donald Trump declared a questionable “national energy emergency” when he entered the White House. Soon, he may have one for real.

The president promised his America would “drill, baby drill” to new levels of prosperity by making the most of its reserves of oil and gas.

Mr Trump has now axed hundreds of billions in tax breaks and grants for low-carbon power and clean energy research and given them instead to fossil fuel investments.

There’s no better example than Revolution Wind, one of the largest offshore renewable energy projects in America.

Nearly 80% complete, the White House ordered an immediate halt.

When we visited, the massive 200m-wide turbines were going round – a temporary injunction has allowed construction to continue – but they’re not yet connected to the grid.

As long as Mr Trump is in power, it’s not certain they’ll ever be.

The future of other major wind and solar developments is also in doubt, as is more than $100bn (£75bn) in clean energy investment.

There’s less doubt about the fossil fuel business however. The industry is getting what it asked for after backing Mr Trump’s re-election.

US energy secretary Chris Wright and many key White House staff and advisers are former fossil fuel industry insiders.

Analysis for Sky News, by Global Witness, reveals that since the Paris Agreement was signed in 2015, US oil and gas production has grown five times faster than the average of the world’s next largest producers.

An increase that really took off during Mr Trump’s first presidency.

The analysis of company data goes on to reveal how US oil and gas production is now forecast to continue growing – by 2035 to double that of its next closest rival, Russia.

“Instead of reducing investment in dirty oil and gas, the principal drivers of climate breakdown, the US has doubled down on fossil fuels, ramping up production,” said Patrick Galey, of Global Witness.

A fact that would probably be music to the president’s ears and to many conservative Americans who voted for him.

Mr Trump’s “energy emergency” was perhaps a predictable response to the “climate emergency” invoked by his political rivals.

The only problem is, apart from accelerating global warming, his energy plan is on course to make America worse off.

‘US energy demand to grow 25%’

For the first time in years, US electricity demand has been going up. It is driven in part by a race to build power-hungry data centres – further encouraged by Mr Trump’s aim for American supremacy in AI.

Demand is rising and renewable energy is the quickest, cheapest way to meet it.

President Trump has championed supremacy in AI – backing investments in and clearing red tape for massive energy-hungry data centres.

After declining, then remaining stable for years, US energy demand is now forecast to grow 25% by 2030, according to analysis by ICF International.

But where will all the electricity come from?

We went to Mitsubishi Power, which makes state-of- the-art gas turbines for power stations at its factory outside Savannah, Georgia.

Demand for new turbines has never been greater, according to Bill Newsom, the US CEO. Wait times for new turbines is now double what it was just two years ago.

And while America will need gas to meet rising demand – it’s twice as clean as coal and provides “baseload” power that renewable energy grids can’t yet match – it can’t be built fast enough.

American businesses, including AI, will likely suffer because they can’t get the power they need.

US consumers – who Mr Trump promised lower bills – will end up paying more because he also made renewable energy more expensive.

And that’s to say nothing of the impact on carbon emissions.

The speed of transition being called for to meet the 1.5C Paris target was always going to be very expensive, as countries like the UK are finding out.

But by fighting one “emergency” with another, Mr Trump risks making Americans – and the climate – worse off.

Science

Dark Matter and Dark Energy Might Not Exist After All, New Study Suggests

Published

7 hours ago

November 8, 2025

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A new theory suggests dark matter and dark energy may not exist. Physicist Rajendra Gupta’s model proposes that the universe’s forces weaken over time, naturally explaining cosmic expansion and galactic motion without unseen matter or energy.