Can we believe the delayed Federal inflation report?
Novato, California – On Friday, nine days late, the government will release September’s consumer price index report. That could determine if interest rates continue their slow, downward glide, level off, or go back up.
The remarkably resilient economy is appearing to be a bit threadbare. That’s due to confusion over which way it’s really going.
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Shoppers are wary and weary of prices and debt.
“We’re watching them kind of escalating again, prices continue to, so yeah, I’m dismayed,” said Tony Lord of Novato. “I’m a minimum-wage employee in college though, definitely; definitely pretty high,” said college student Olivia.
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Big purchases are out of the question.
“I thought about replacing my car. It’s due for a change, but I wouldn’t even do it now,” said Mr. Lord. “My dream is to move back to the Bay Area. That’s never gonna happen for me ever. It’s not possible,” said Olivia.
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The interest-rate-setting Federal Reserve meets next week as prices rise and the job market weakens. If the late-arriving data shows the economy is too hot, the Federal Reserve might stop rate cuts for now. If the job market continues to waver, rates might continue to go down.
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A Dow Jones survey of economists reveals that Consumer Price Index projects inflation will rise to 3.1%, the highest yearly rate in nine months. Professor and economist Jim Wilcox of UC Berkeley’s Haas School of Business.
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“Inflation, instead of inflation tracking down towards the Fed’s avowed target of two percent, may well have ticked up a little bit more,” said Wilcox.
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But, various economics sectors may be in for a hard ride, says Terry Connelly, former Golden Gate University Business School Dean and Wall Street Investment Banker. “Do you care about the price of shelter? Do you care about the price of used cars? Do you care about the price of electricity and energy?” said Dean Connelly.
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Any poor-performing industry would likely result in turmoil in its stock value, reputation and loss of consumer confidence in its products.
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“You could get an outsized reaction,” said Connelly.
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That’s why the delayed government data is so critical. But are these coming numbers even believable?
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“For very short time periods, it doesn’t make an enormous amount of difference,” said Wilcox.
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Thanks to instantaneous worldwide online communications, much of this data can be approximated from other sources in the short term but not long term.
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“I think the longer it’s delayed, the more people will become somewhat skeptical about the validity of the data,” said Wilcox.
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If that happens, investors, stock markets and even the Fed will be more wary and confused about what may come later, stifling normal business, investing and hiring.
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