Egg prices rose 60% in 2022

One farm group claims it’s a ‘collusive scheme’ by suppliers

Egg prices soared to historically high levels in 2022 — and one group is alleging the trend is due to something more nefarious than simple economics.

Across all egg types, consumers saw average prices jump 60% last year — among the largest percentage increases of any U.S. good or service, according to the consumer price index, an inflation measure. Large, Grade A eggs cost $4.25 a dozen in December, on average — a 138% increase from $1.79 a year earlier, according to U.S. Bureau of Labor Statistics data.

The industry narrative has largely focused on a historic outbreak of avian influenza — which has killed tens of millions of egg-laying hens — as the primary driver of those higher prices. But Farm Action, a farmer-led advocacy group, claims the “real culprit” is a “collusive scheme” among major egg producers to fix and gouge prices, the organization said in a letter to the Federal Trade Commission. Doing so has helped producers “extract egregious profits reaching as high as 40%,” according to the letter, issued Thursday, which asks FTC Chair Lina Khan to investigate for potential profiteering and “foul play.”

Goldman Now Says the Euro Area Will Avoid a Recession

Inflation easing to 3.25%

Economists at Goldman Sachs no longer predict a euro-zone recession after the economy proved more resilient at the end of 2022, natural gas prices fell sharply and China abandoned Covid-19 restrictions earlier than anticipated.

Gross domestic product is now expected to increase 0.6% this year, compared with an earlier forecast for a contraction of 0.1%. While growth will still be weak during the winter due to the energy crisis, the first quarter of 2023 will likely see expansion of 0.1%, according to economists led by Jari Stehn.

They also see inflation easing faster than thought — to about 3.25% by end-2023.

Housing Markets Certainly Face Further Drop of 10%

Why US home prices will fall another 10 percent, according to Harvard economist Kenneth Rogoff 

Pain across the US housing market that began last year is likely just getting started if interest rates remain high, star economist Ken Rogoff warned on Tuesday. Rogoff, a professor at Harvard University and former top economist at the International Monetary Fund, said home prices in both the US market aboard will fall “certainly another 10%” over the “couple of years.”

The economist cited the restrictive policy stances taken by the Federal Reserve and other central banks, which have caused a spike in mortgage rates and cooled demand among buyers.

“If, as I think, interest rates are going to stay high for some time to come, I think there’s still a lot of downward adjustments in the housing markets globally, not just in the United States,” Rogoff told Bloomberg Television during an appearance at the World Economic Forum in Davos, Switzerland.

The Federal Reserve is expected to implement more interest rate hikes early this year after a string of seven straight supercharged interests in 2022. Fed Chair Jerome Powell has signaled that rates will rise and then hover in restrictive territory until policymakers have clear evidence that inflation has cooled.

Federal Reserve raises interest rate by 0.50 percentage point to curb inflation

FED predicts a higher peak

The Fed raised its key short-term interest rate by half a percentage point Wednesday, dialing back from recent outsize hikes as it draws up an end game in its aggressive campaign to tame soaring inflation.

But the central bank forecast another three-quarter point in rate increases next year, more than it previously estimated. Fed officials are thus signaling they believe inflation is still too high and aren’t backing off their hard-nosed battle to subdue it despite growing recession risks.

In a statement after a two-day meeting, the Fed reiterated that “ongoing (rate) increases…will be appropriate” to bring down yearly inflation to the Fed’s 2% goal. Some economists reckoned the Fed instead would say “additional increases” would be needed, signaling the Fed is close to winding down the hiking cycle.

Treasury Sec. Janet Yellen said she’s hopeful prices will substantially decrease next year.

Yellen is an economist with over 50 years of experience 

As inflation hovers at a 40-year high, the pandemic lingers, and the war in Ukraine rages, a growing number of economists and CEO’s are saying the U.S. is headed for a recession.

The secretary of the treasury, Janet Yellen, essentially the nation’s chief financial officer, says she’s doing everything in her power to avoid one. Yellen is an economist with over 50 years of experience and the former chair of the Federal Reserve, the U.S. Central Bank in charge of setting American interest rates. She knows better than most about the delicate balance of trying to engineer an economy that keeps inflation at bay without causing widespread layoffs and a downturn. “So I believe inflation will be lower. I am very hopeful that the labor market will– remain quite healthy– so that people can feel good about their finances and their personal economic situation”, said Janet Yellen.

U.S. Drivers Could Get Under $3 Gasoline For Christmas

The decline is  helping to stem the rise in inflation

Drivers in the United States could be getting the gift of even lower gasoline prices this Christmas, according to GasBuddy’s head of petroleum analysis, Patrick De Haan, who has noted the third straight week of gasoline price declines in the United States.

U.S. national gasoline prices fell 12.4 cents from a week ago to $3.52 on Monday, according to GasBuddy data. This is down 22.7 cents from a month ago, although still 14.1 cents per gallon higher than a year ago.

The low prices come as China’s zealous Covid lockdowns and city shutdowns erupt in unprecedented protests, comingling with a seasonal demand sluff off in the United States. GasBuddy demand data showed that U.S. retail gasoline demand fell last week by 5%, in part due to pre-Thanksgiving fill ups. The biggest drop off in retail gasoline demand was seen in Padd 3, with a 7.6% dip.

Retail sales jump in October

U.S. economic strength 

Sales at retailers jumped 1.3% in October, signaling U.S. consumers are still spending plenty of money despite efforts by the Federal Reserve to slow the economy.

Retail sales were forecast to rise 1.2% last month, according to economists polled by The Wall Street Journal. That’s the biggest increase in eight months. Receipts rose a robust 0.9% if auto dealers and gas stations are excluded. Auto and gasoline purchases can exaggerate the ups and downs in overall retail spending.

Retail sales are a big part of consumer spending and offer clues on the strength of the economy. Sales rose in almost ever major retail segment in October. Yet a big part of the increase in spending over the past year is due to inflation. Sales have risen 8.3% in the last 12 months vs. a 7.7% increase in the cost of living. Auto and parts sales rose 1.3% last month, partly because of car owners replacing vehicles destroyed or damaged by Hurricane Ian.

Inflation Dips Below 8% Annual Rate in October

The drop will not deter the Federal Reserve from its campaign of higher interest rates

Inflation rose at a 7.7% annual rate in October, better than expected but still well above the Federal Reserve’s desired level, the Bureau of Labor Statistics reported on Thursday.

Economists had forecast an annual rate of 7.9%. The monthly increase was 0.4%, the same as in September. The core consumer price index, leaving out often volatile food and energy prices, came in at 6.3% annually, compared to 6.6% in October, and 0.3% following last month’s 0.6% rise. Overall, inflation has trended down since it hit 9.1% in June, when energy prices were spiking in the wake of Russia’s February invasion of Ukraine and disruptions in global supply chains.

June’s number sparked a more aggressive move from the Fed to tame inflation, with four consecutive increases of 75 basis points in the federal funds rate, a trigger for many other interest rates that have driven borrowing costs to their highest levels in years. The average rate on a 30-year fixed rate mortgage, for example, is now above 7% compared to the 3% range a year ago.

Inflation cut in half?

Moody’s Analytics’ Mark Zandi sees major relief within six months

The U.S. will see inflation cut in half within six months, according to Mark Zandi of Moody’s Analytics. His call, which comes on the cusp of another key inflation report, hinges on oil prices staying at current levels, supply chain problems continuing to ease and vehicle prices starting to roll over. Everything else, Zandi believes, can stay the same.

“CPI, the consumer price inflation, will go from something that’s now about a low of over 8% year-over-year to something close to half that of 4%,” the firm’s chief economist told CNBC’s “Fast Money” on Wednesday. The Bureau of Labor Statistics releases its September consumer price index on Thursday. Dow Jones is looking for a 0.3% month-over-month gain, up 8.1% year-over-year.

“The real hard part is going to go from 4% back to down to the Fed’s target. And on CPI, the high end of that target is probably 2.5%,” Zandi said. “So, that last 150 basis points — 1.5 percentage points — that’s going to take a while because that goes to the inflation for services which goes back to wages and the labor market. That has to cool off, and that’s going to take some time.”

US Core Inflation Seen Returning to 40-Year High as Rents Rise

Fed on path to big November rate hike

A key US inflation measure due Thursday is set to return to a four-decade high, underscoring broad and elevated price pressures that are pushing the Federal Reserve toward yet another large interest-rate hike next month.

The so-called core consumer price index that excludes food and energy is projected to rise 0.4% in September from the prior month and 6.5% from a year earlier, matching the rate seen in March that was the highest since 1982. But about a third of economists in a Bloomberg survey expect a print of 6.6% or more.  The overall CPI, however, is expected to decelerate to a still-rapid 8.1% annual pace, restrained by a decline in gasoline prices, based on the median estimate.

Powell Signals Recession May Be Price to Pay for Crushing Inflation

50 basis point hike possible for May

Federal Reserve Chairman Jerome Powell affirmed the central bank’s determination to bring down inflation and said Thursday that aggressive rate hikes are possible as soon as next month.

“It is appropriate in my view to be moving a little more quickly” to raise interest rates, Powell said while part of an International Monetary Fund panel. “I also think there is something to be said for front-end loading any accommodation one thinks is appropriate. … I would say 50 basis points will be on the table for the May meeting.”

Powell’s statements essentially meet market expectations that the Fed will depart from its usual 25 basis point hikes and move more quickly to tame inflation that is running at its fastest pace in more than 40 years. A basis point equals 0.01 percentage point. However, as Powell spoke, market pricing for rate increases got somewhat more aggressive.

Expectations for a 50 basis point move in May rose to 97.6%, according to the CME Group’s FedWatch Tool. Traders also priced in an additional hike equivalent through year’s end that would take the fed funds rate, which sets the overnight borrowing level for banks but also is tied to many consumer debt instruments, to 2.75%.

Fed hikes interest rates by 0.75 percentage point

Objective: to tamp down runaway inflation without creating a recession

The Federal Reserve on Wednesday enacted its second consecutive 0.75 percentage point interest rate increase as it seeks to tamp down runaway inflation without creating a recession.

In taking the benchmark overnight borrowing rate up to a range of 2.25%-2.5%, the moves in June and July represent the most stringent consecutive action since the Fed began using the overnight funds rate as the principal tool of monetary policy in the early 1990s. While the fed funds rate most directly impacts what banks charge each other for short-term loans, it feeds into a multitude of consumer products such as adjustable mortgages, auto loans and credit cards. The increase takes the funds rate to its highest level since December 2018.

Markets largely expected the move after Fed officials telegraphed the increase in a series of statements since the June meeting. Stocks hit their highs after Fed Chair Jerome Powell left the door open about its next move at the September meeting, saying it would depend on the data. Central bankers have emphasized the importance of bringing down inflation even if it means slowing the economy.

Oil prices fall

U.S. inflation still hot

Oil prices declined on Tuesday, driven by a hotter-than-expected U.S. inflation report. The West Texas Intermediate for October delivery decreased 47 cents, or 0.5 percent, to settle at 87.31 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for November delivery lost 83 cents, or 0.9 percent, to settle at 93.17 dollars a barrel on the London ICE Futures Exchange.

The above market reactions came as high U.S. inflation increased the likelihood for another big rate hike from the Federal Reserve, which could subdue demand for energy.

The U.S. Labor Department reported Tuesday that the country’s consumer price index (CPI) rose 0.1 percent in August for an 8.3 percent year-on-year increase. The core CPI, which excludes food and energy, rose 0.6 percent for a 6.3 percent year-on-year increase. The readings were higher than market expectations.

India likely recorded strong double-digit economic growth in the last quarter

 India remains the fastest-growing major economy

India likely recorded strong double-digit economic growth in the last quarter but economists polled by Reuters expected the pace to more than halve this quarter and slow further toward the end of the year as interest rates rise.

Asia’s third-largest economy is grappling with persistently high unemployment and inflation, which has been running above the top of the Reserve Bank of India’s tolerance band all year and is set to do so for the rest of 2022.

Growth this quarter is predicted to slow sharply to an annual 6.2% from a median forecast of 15.2% in Q2, supported mainly by statistical comparisons with a year ago rather than new momentum, before decelerating further to 4.5% in October-December.

The median expectation for 2022 growth was 7.2%, according to an Aug. 22-26 Reuters poll, but economists said that the solid growth rate masks how rapidly the economy was expected to slow in coming months.

Inflation: FED Chairman warns of ‘some pain’ ahead

The Fed will fight to bring down inflation

Federal Reserve Chairman Jerome Powell delivered a stern commitment Friday to halting inflation, warning that he expects the central bank to continue raising interest rates in a way that will cause “some pain” to the U.S. economy.

In his much-anticipated annual policy speech at Jackson Hole, Wyoming, Powell affirmed that the Fed will “use our tools forcefully” to attack inflation that is still running near its highest level in more than 40 years. Even with a series of four consecutive interest rate increases totaling 2.25 percentage points, Powell said this is “no place to stop or pause” even though benchmark rates are probably around an area considered neither stimulative nor restrictive to growth. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said in prepared remarks. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”