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

Published

2 years ago

August 16, 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.

Politics

Why Boris’s best mate is off to Reform

Published

2 hours ago

July 10, 2025

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👉Listen to Politics at Sam and Anne’s on your podcast app👈       

Former Conservative chairman and friend of Boris Johnson – Sir Jake Berry – is defecting to Reform UK, causing more problems for Tory leader Kemi Badenoch.

On today’s episode, Sky News’ Sam Coates and Politico’s Anne McElvoy discuss if his defection will divide parts of Reform policy.

Elsewhere, the Anglo-French summit gets under way, with Prime Minister Sir Keir Starmer hoping to announce a migration deal with French President Emmanuel Macron to deter small boat crossings.

Plus, chatter around Whitehall that No10 are considering a pre-summer reshuffle, but will it have any value?

US

Donald Trump praises Liberian president’s English – the country’s official language

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2 hours ago

July 10, 2025

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Donald Trump praises Liberian president's English - the country's official language

Donald Trump has praised the Liberian president’s command of English – the West African country’s official language.

The US president reacted with visible surprise to Joseph Boakai’s English-speaking skills during a White House meeting with leaders from the region on Wednesday.

After the Liberian president finished his brief remarks, Mr Trump told him he speaks “such good English” and asked: “Where did you learn to speak so beautifully?”

Mr Trump seemed surprised when Mr Boakai laughed and responded he learned in Liberia.

The US president said: “It’s beautiful English.

“I have people at this table who can’t speak nearly as well.”

Mr Boakai did not tell Mr Trump that English is the official language of Liberia.

The country was founded in 1822 with the aim of relocating freed African slaves and freeborn black citizens from the US.

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Mr Trump promised the leaders of Liberia, Senegal, Gabon, Mauritania and Guinea-Bissau a pivot from aid to trade at the surprise meeting.

He described the countries as “all very vibrant places with very valuable land, great minerals, and great oil deposits, and wonderful people”.

Later asked by a reporter if he’ll visit the continent, Mr Trump said, “At some point, I would like to go to Africa.”

But he added that he’d “have to see what the schedule looks like”.

Trump’s predecessor, President Joe Biden, promised to go to Africa in 2023, but only fulfilled the commitment by visiting Angola in December 2024, just weeks before he left office.

US

Gaza permanent ceasefire ‘questionable’, says Israeli government

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2 hours ago

July 10, 2025

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Gaza permanent ceasefire 'questionable', says Israeli government

The Israeli government believes the chances of achieving a permanent ceasefire in Gaza are “questionable”.

The pessimistic assessment, in a top-level Israeli government briefing given to Sky News, comes as the Israeli Prime Minister prepares to leave Washington DC after a four-day visit which had begun with the expectation of a ceasefire announcement.

Benjamin Netanyahu will leave the US later today with the prospect of even a temporary 60-day ceasefire looking extremely unlikely this week.

Within “a week, two weeks – not a day” is how it was framed in the background briefing late on Wednesday.

Crucially, though, on the chances of the ceasefire lasting beyond 60 days, the framing from the briefing was even less optimistic: “We will begin negotiations on a permanent settlement. But we achieve it? It’s questionable, but Hamas will not be there.”

Sky News has spoken to several Israeli officials at the top level of the government. None will be drawn on any of the details of the negotiations over concerns that public disclosure could jeopardise their chances of success.

But I have been given a very clear understanding of Mr Netanyahu’s thinking.

The Israeli position is that a permanent ceasefire (beyond the initial 60 days, which itself is yet to be agreed) is only possible if Hamas lays down its arms. “If they don’t, we’ll proceed [with the war],” said a source.

The major sticking point in the talks between Hamas and Israel is the status of the Israel Defence Forces (IDF) inside Gaza during the 60-day ceasefire and beyond, should it last longer.

The latest Israeli proposal, passed to Hamas last week, included a map showing the proposed IDF presence inside Gaza during the ceasefire.

This was rejected by Hamas and by Trump’s Middle East envoy, Steve Witkoff, who reportedly told the Israelis that the redeployment map “looks like a Smotrich plan”, a reference to the extreme-right Israeli finance minister, Bezalel Smotrich.

My briefing of Mr Netanyahu’s position is that he has not shifted in terms of Israel’s central stated war aims. The return of the hostages and eliminating Hamas are the key objectives.

But in a hint of how hard it will be to reconcile the differences, it was clear from my briefing that no permanent ceasefire is possible in the Israeli government’s view without the complete removal of Hamas as a political and military entity.

Hamas is not likely to negotiate its way to oblivion.

On the status of the Israeli military inside Gaza, a senior Israeli official told Sky News: “We would want IDF in every square metre of Gaza, and then hand it over to someone.”

It was clear to me that Mr Netanyahu wants his stated position to be that his government has no territorial ambition for Gaza.

One quote to come from my briefing, which I am only able to attribute to a senior Israeli official, says: “[We] don’t want to govern Gaza… don’t want to govern, but the first thing is, you have to defeat Hamas.”

Another clear indication of Mr Netanyahu’s position – a quote from the briefing, attributable only to a senior Israeli official: “You cannot have victory if you don’t clear out all the fighting forces.

“You have to go into every square inch unless you are not serious about victory. I am. We are going to defeat them. Those who do not disarm will die. Those who disarm will have a life.”

On the future of Gaza, it’s clear from my briefings that Mr Netanyahu continues to rule out the possibility of a two-state solution “for the foreseeable future”.

The Israeli government assessment is that the Palestinians are not going to have a state “as long as they cling to that idea of destroying our state”.

On the most controversial aspect of the Gaza conflict – the movement of the population – the briefing revealed that Mr Netanyahu’s view is that 60% of Palestinians would “choose to leave” but that Israel would allow them to return once Hamas had been eliminated.

“It’s not forcible eviction, it’s not permanent eviction,” a senior Israeli official said.

Critics of Israel’s war in Gaza say that any removal of Palestinians from Gaza, even if given the appearance of being “voluntary”, is in fact anything but, because the strip has been so comprehensively flattened.

Reacting to Israeli Defence Minister Katz’s recent statement revealing a plan to move Palestinians into a “humanitarian city” in southern Gaza, and not let them out of that area, the official wouldn’t be drawn, except to say: “As a permanent arrangement? Of course not.”