US inflation rose 3.7% in September — higher than economists predicted

Published

1 year ago

October 13, 2023

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US inflation rose 3.7% in September, more than economists expected and still well above the Federal Reserve’s 2% target, as the central bank weighs whether to hike interest rates again by year’s end.

The reading for the Consumer Price Index a closely watched measure of inflation that tracks changes in the costs of everyday goods and services matches the reading in August, and is slightly above the 3.6% advance that economists expected, according to data by the Bureau of Labor Statistics released Thursday.

On a monthly basis, inflation slowed to 0.4% from 0.6% in August, partly because of lower pressure from energy prices.

However, core CPI a number that excludes volatile food and energy prices and serves as a closely watched gauge among policymakers for long-term trends held steady at 0.3% month to month and rose 4.1% from a year ago, in line with expectations.

Though September’s CPI is also a cooldown from inflation’s 9.1% peak in June 2022, it still remains well above the Fed’s 2% goal. Stock futures dropped ahead of the market opening as traders increased their bets of another rate hike to around 50%, up from 30% earlier this week.

“The bigger picture is that the trend is still quite encouraging, but the fight continues,” said Olu Sonola, head of US regional economics at Fitch Ratings in New York. “They [Fed officials] may now want to extend the pause to December, given the recent increase in long-term rates.”

The gasoline index’s 2.1% advance was also a large contributor to the CPI, the data showed, though the federal agency said shelter’s 0.2% increase accounted for over half of the increase.

Gasoline experienced an eye-watering 10.6% increase last month, when AAA figures showed that the average price for a gallon of gas was $3.85.

As of Thursday, a gallon of gas in the US averages $3.65, according to AAA.

While many investors had been willing to look past the volatile energy numbers, a surprisingly resilient labor market has some worried that inflation could be more stubborn.

September’s employment report revealed that the US economy added a whopping 336,000 jobs last month — an unexpected surge that contradicts the notion the Fed may tamp down its aggressive tightening regime.

The blowout number was nearly double the 170,000 jobs economists had expected, and also sharply higher than an upwardly revised 227,000 jobs added in August, according to fresh data released by the Bureau of Labor Statistics last week.

The news sent yields on US Treasury bonds to their highest levels in 16 years and sent the Dow Jones Industrial Average into the red for 2023.

Since inflation hit a four-decade peak last summer, the central bank has worked to bring the stubborn figure down by hiking rates another 25 basis points to a 22-year high in August in hopes of an economic slowdown.

The benchmark federal funds rate currently sits between 5.25% and 5.5%. Last month, Fed officials unanimously decided to hold the record-high rate steady for the second time in six policy meetings so far this year.

But thanks to a strong labor market, the US economy has avoided a downturn, and even the Fed has said its no longer predicting the economy will slip into a recession by the end of the year.

“We must wait for more data to see if this is just a blip or if there is something more fundamental driving the increase such as higher rent increases in larger cities offsetting softer increases in smaller cities,” said US Bank of America Securities economist Stephen Juneau.

“When deciding whether to raise rates one last time this year, the FOMC will be asking whether inflation needs another nudge or if its getting to 2% on its own. Its increasingly looking like the latter,” NerdWallet data analyst Elizabeth Renter told The Post.

“The Fed, astheyreall too happy to remind us, is laser focused on getting inflation down to 2%.”

Fed Chair Jerome Powell has said central bankers will be taking a data-dependent approach moving forward, leaving more interest rate hikes before years end up in the air.

Markets were spooked ahead of the jobs report, falling more than 1% when the Labor Department released its Job Openings and Labor Turnover Summary, which showed job openings increased to 9.61 million in August up from 8.9 million in July.

With Post wires.

Politics

Starmer says decision to increase defence spending was ‘accelerated’ by Trump taking office

Published

3 hours ago

February 25, 2025

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Starmer says decision to increase defence spending was 'accelerated' by Trump taking office

Sir Keir Starmer has admitted his decision to increase defence spending was “accelerated” by Donald Trump taking office.

The prime minister said today’s announcement was “three years in the making” after Russia invaded Ukraine – but a “very changed context” pushed him forward.

Politics Live: PM warns ‘everything has changed’ after announcing defence spending boost

In a surprise Commons statement on Tuesday morning, Sir Keir said defence spending will increase to 2.5% of GDP by 2027, funded by a cut in the foreign aid budget.

While this honours a Labour manifesto commitment, ministers have previously been tight-lipped about when the new target would be reached – with today’s decision coming ahead of a meeting between Sir Keir and Mr Trump in Washington on Thursday.

Asked by Sky News political editor Beth Rigby if Mr Trump had “bounced” him into setting out a timeline, given he has long called for European countries to boost defence spending, the prime minister said: “I think in our heart of hearts, we’ve all known that this decision has been coming for three years, since the beginning of the conflict in Ukraine.

“The last few weeks have accelerated my thinking on when we needed to make this announcement.”

Analysis: Starmer has put Britain on a war footing ahead of key Trump meeting

However, he denied Mr Trump was effectively setting UK government policy, saying the defence spending increase is “very much my decision” and he has been “arguing for some time” that Europe and the UK “needed to do more”.

He said talks of “possible peace” and what that would mean for Europe’s security – with the potential for UK peacekeeping troops to be put on the ground – “has brought our response into sharp focus”.

“I have pushed our system to move this date forward because I think it’s vital that we take the decision now, that we rise to the occasion and we show the leadership that’s needed across Europe, in response to a very changed context,” he said.

The UK currently spends 2.3% of GDP on defence, with the jump to 2.5% meaning £13.4bn more will be spent annually on defence from 2027.

Sir Keir said he wants that figure to reach 3% of gross domestic product during the next parliament, but that would depend on Labour winning the next election.

Farage ‘fawning over Putin’

Asked if he is “Nigel Farage is disguise”, given the Reform UK leader has previously vowed to increase defence spending but cut the foreign aid budget, Sir Keir said: “Nigel Farage didn’t even turn up to the debate in parliament today. Nigel Farage is fawning over Putin. That’s not patriotism.

“What I’ve done is take the duty of the prime minister seriously, which is to ensure that our citizens are safe and secure.”

Mr Farage has previously faced criticism for saying the West provoked Russia’s invasion of Ukraine with NATO and the EU’s expansions, and for saying he admired Vladimir Putin as a statesman.

Sir Keir’s announcement comes as Europe reels from a shift in US foreign policy, with the White House making clear it is no longer prepared to bankroll the defence of other NATO members.

Last week also saw an exchange of words between Mr Trump and Ukrainian President Volodymyr Zelenskyy, after officials from Washington and Moscow held peace talks without anyone from Kyiv or Europe present.

‘Desertion of leadership’

Sir Keir announced the government would cut back on foreign aid to fund the increase, reducing current spending from 0.5% of GDP to 0.3% – in a move that has angered some charities.

Conservative leader Kemi Badenoch welcomed the measure and said she had written to the prime minister over the weekend to suggest how he could redirect money from the overseas development budget.

But former Tory defence secretary Ben Wallace said an extra 0.2% was “a staggering desertion of leadership”.

“Tone deaf to dangers of the world and demands of the United States,” he wrote on X.

“Such a weak commitment to our security and nation puts us all at risk.”

Technology

Tesla’s market cap sinks below $1 trillion as stock slumps more than 9%

Published

3 hours ago

February 25, 2025

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Tesla's market cap sinks below trillion as stock slumps more than 9%

Elon Musk, chief executive officer of Tesla Inc., in the Oval Office of the White House in Washington on Tuesday, Feb. 11, 2025.

Aaron Schwartz | Bloomberg | Getty Images

Tesla’s post-election pop has almost disappeared.

Shares of the electric vehicle maker plunged by more than 9% on Tuesday, pushing the company’s market cap below $1 trillion and to its lowest since Nov. 7, which was two days after President Donald Trump’s election victory.

The stock has plummeted 25% to start the year, while the Nasdaq is down just 1.3%, and has slid 35% from its record close on Dec. 16. CEO Elon Musk has lost more than $100 billion in net worth over that stretch, though he’s still the world’s richest person, with a fortune valued at about $380 billion.

The latest slide followed a report from Reuters on Monday that Tesla’s long-awaited upgrade to its partially automated driving systems left owners disappointed. Many users told the publication that Tesla’s “navigate on city streets” feature in China fell short of Musk’s promises for self-driving technology.

Other EV makers in China, including BYD, offer their partially automated driving systems for free or a much lower cost. Xiaomi’s popular model SU7 includes the company’s equivalent technology as a standard option for free.

The report out of China added to anxiety amongst Tesla shareholders. Some of the concern has to do with the company’s performance and some is specific to Musk, who is spending much of his time in Washington, DC., leading President Trump’s so-called Department of Government Efficiency (DOGE).

Musk, along with his team in Washington, has gained unparalleled access to government computer systems and taxpayer data, and the president has enabled the billionaire to lead mass firings of workers in agencies tasked with oversight of his companies, including Tesla.

Musk’s extremist political rhetoric and activism has led opponents in various markets to organize protests, including at Tesla stores and service centers. Tesla’s stock dropped earlier this month on Trump’s announced plans for extensive tariffs on goods from Canada, Mexico and China, which came alongside a decline in Tesla vehicle registrations across Europe in January and February.

For the fourth quarter, Tesla reported earnings and sales that missed analysts’ estimates, with automotive revenue dropping 8% from a year earlier and operating income plummeting 23%. In the late January report, the company cited reduced average selling prices across its aging lineup of Model 3, Model Y, Model S and Model X vehicles as a major reason for the decline.

According to the California New Car Dealers Association, Tesla sales dropped 11.6% in the fourth quarter of 2024 in the state, which had been Tesla’s biggest market domestically.

Tesla shares are now about 19% above where they were trading prior to Trump’s victory. Most of what remains of the rally is due to the stock’s 15% jump the day after the election. Musk was a major backer of Trump’s presidential effort, contributing $290 million to Republican candidates and causes in 2024, most of that directed at returning Trump to the White House.

Musk and Tesla didn’t immediately respond to requests for comment.

WATCH: Tesla stock hinges on new vehicles being introduced

Tesla stock hinges on new vehicles being introduced, says Canaccord's George Gianarikas

Technology

Super Micro shares fall ahead of filing deadline

Published

3 hours ago

February 25, 2025

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Super Micro shares fall ahead of filing deadline

The Super Micro Computer Inc. headquarters in San Jose, California, US, on Tuesday, Dec. 3, 2024.

David Paul Morris | Bloomberg | Getty Images

Super Micro Computer shares fell as much as 10% during trading on Tuesday as the company nears a deadline to file audited financial reports or be delisted from the Nasdaq exchange.

Earlier this month, Super Micro CEO Charles Liang told investors he was “confident” that the company could file those reports to the U.S. Securities and Exchange Commission by Feb. 25, a deadline set by Nasdaq. The company must file its audited annual report for fiscal 2024 and the first two quarters of fiscal 2025.

If Super Micro fails to file the reports, its stock could be delisted from Nasdaq. It could also ask for another extension of up to 180 days.

Super Micro representatives did not respond to CNBC’s request for comment.