WASHINGTON – Americans are paying more for food and gas, a trend that threatens to slow the economy at a crucial time.
So far, the spike in such necessities hasn't stopped businesses from stepping up hiring or slowed factory production, which rose in March for the ninth straight month. Still, higher gas prices have led some economists to lower their forecasts for growth for the January-March quarter.
Consumer prices rose 0.5 percent last month, the Labor Department said Friday. Nearly all of the gains came from pricier gas and food.
When taking out those two volatile categories, core inflation was relatively flat. But at the same time, employees are only seeing small, if any, pay increases.
"People have less money to spend on goods other than food and energy and that is going to cause the expansion to slow," said economist Joel Naroff of Naroff Economic Advisors.
The spike in prices is hitting most Americans just as the economy is gaining momentum. Businesses added more than 200,000 jobs in March and February, the best two-month hiring stretch in four years. And the unemployment rate has fallen to a two-year low of 8.8 percent.
Consumers also have a little more money to spend this year, thanks to a one-year cut in Social Security taxes.
But most of the extra $1,000 to $2,000 per person is filling the gas tank. The national average for a gallon was $3.82 on Friday — nearly $1 more than a year ago. In five states, the average price is exceeding $4 a gallon.
How big the economic impact will be is the critical question. Many analysts expect food prices will come down and oil prices will stabilize by summer. If companies continue to create jobs, consumer spending will rise faster. That would give the economy a boost by fall.
U.S. manufacturers are seeing more business, according to a separate report on Friday from the Federal Reserve. Factory output rose in March, bolstered in part by a jump in auto production.
One concern is automakers are bracing for some disruptions in the supply of parts from Japan, which is recovering from a 9.0-magnitude earthquake and tsunami that caused widespread damage.
Nigel Gault, chief U.S. economist at IHS Global Insight, predicts the economy will grow only 1.8 percent in the January-March period, down from an earlier estimate of above 3 percent. Rising inflation will likely cut consumer spending growth to half its pace in the previous quarter.
Still, rising exports and business purchases of computers and other equipment should keep factories humming, even if consumers pull back. And companies will likely keep hiring. For those reasons, Gault expects economic growth to pick up a little in the April-June quarter, and then rebound to nearly 4 percent in the second half of the year.
Even so, some department stores are not taking chances. Many are cutting their fall orders, concerned that consumers will have less to spend. Kohl's Inc. is trimming them by more than 10 percent, according to Citigroup Global Markets analyst Deborah Weinswig.
Clothing prices fell 0.5 percent in March, the second straight monthly decline. But prices are expected to rise in the coming months to offset higher labor costs in China and higher cotton costs.
"I think the biggest challenge is not just the price of our...apparel products," said Blake Jorgensen, chief financial officer of Levi Strauss & Co. during an address to analysts on Tuesday. "It's trying to understand consumers' reaction to (all) price increases.... No one's quite sure as to what the ultimate impact (on) the consumer will be."
Stagnant wages and salaries make it harder for consumers to pay higher prices, a key reason that Federal Reserve officials think the spike in gas and food will have only a modest and temporary impact on inflation.
According to a separate report Friday, average hourly earnings for all employees, adjusted for inflation, dropped 1 percent in the past 12 months.
Many retailers and other businesses simply can't pass all their higher costs to their customers.
"The only good news for consumers is that there is terrifically fierce competition among the major discounters like Costco, Target and Wal-Mart," said Craig Johnson, president of Customer Growth Partners.
Joe Olivo, who owns Perfect Printing Inc., based in Moorestown, N.J., says his suppliers are raising the cost of ink and other items 10 percent this month, the biggest monthly increase he can remember in the 23 years he's been in business. He's also paying more for shipping due to fuel surcharges. But so far, he estimates he can only pass on about a third of the higher costs to his clients.
Suppliers "are hinting that there may be more (price increases) down the road," he said. "That's really my big concern."
AP Business Writers Anne D'Innocenzio in New York and Daniel Wagner contributed from Washington to this report.
Keywords clouds text link http://alonhatro.com/
Dịch vụ seo, Dịch vụ seo nhanh , Thiết kế website , máy sấy thịt bò mỹ thành lập doanh nghiệp
Visunhome, gương trang trí nội thất cửa kính cường lực Vinhomes Grand Park lắp camera Song Phát thiết kế nhà thegioinhaxuong.net/
|aviatorsgame.com ban nhạc||confirmationbiased.com|
|mariankihogo.com ốp lưng||Giường ngủ triệu gia Ku bet ku casino|
mặt nạ mặt nạ ngủ Mặt nạ môi mặt nạ bùn mặt nạ kem mặt nạ bột mặt nạ tẩy tế bào chết mặt nạ đất sét mặt nạ giấy mặt nạ dưỡng mặt nạ đắp mặt mặt nạ trị mụn
mặt nạ tế bào gốc mặt nạ trị nám tem chống giả
© 2020 US News. All Rights Reserved.