The light at the end of the tunnel

Under control, for now

February’s CPI reading indicated consumer prices (aka inflation) have increased 1.7% over the last year, which is up from the 1.4% figure reported just last month. Excluding energy and food, the core index only increased 1.3% for the year, which is actually slightly below last month’s reading at 1.4%. PPI, which measures inflation from the producer’s perspective, indicated prices were up 2.8% over the last year. This is the largest increase in the index we’ve seen since October 2018. 

Moral of the story: A big part of the increase across both price indices last month was driven by the increase in gasoline prices (you’ve likely noticed gasoline prices increasing in the last few weeks). Core consumer prices are still under control, which was received quite well by the market, and core producer prices were in line with expectations. So as of now, at least, it seems like the market has stopped being spooked about inflation, but tbd if that remains once we see the impact of the Roaring Twenties 2.0 coming through these indices in the summer. 

Moving in the right direction 

Weekly jobless claims came in at 712k last week, slightly below expectations for 725k. Though this is still well above pre-COVID levels, it represents a pandemic-low. Continuing claims also fell to a pandemic low of 4.1m. 

Moral of the story: This is a continuation of the same story told by the February jobs report – we’re slowly starting to bring things back online as vaccine distribution accelerates and the weather improves. 

I can finally see it 

After making it through Congress, a $1.9T COVID-relief package was finally signed into effect by President Biden this week. The package includes $1.4k direct payments to consumers that are expected to start hitting bank accounts as soon as this weekend. The package also includes an extension of the federal unemployment benefits of $300/week through September. In addition, $20B in funds are earmarked for COVID vaccines and the package includes another boost of aid for restaurants, small businesses, and state and local governments. 

Moral of the story: In tandem with signing this bill, President Biden made an announcement asking all states to make all adults eligible for the vaccine by May 1. Obviously, that doesn’t mean that everyone will be vaccinated by May 1, but you’ll be able to sign up by that date. As of now, about 13% of adults in the country have been vaccinated and I am definitely counting down until it’s my turn. DO YOU SEE THE LIGHT AT THE END OF THE TUNNEL GUYS?!

Sign up for the weekly digest