(Bloomberg) — The U.S. economy is set for a strong 2021 as the pandemic recedes that will push up prices, but there’s no sign yet that this will deliver unwanted inflation, said Federal Reserve Bank of Richmond President Thomas Barkin.
“We are going to see an extremely strong year and I think that strong year is going to lead to price pressures.,” Barkin said Sunday in an interview on Bloomberg Television with Kathleen Hays. “I want to emphasize inflation is not a one-year phenomenon it’s a multi-year phenomenon.”
He said for unwanted inflation to take hold, expectations for future price rises would have to really move and begin to get factored into business decisions and wage bargaining. “We certainly haven’t seen that yet,” he said. Barkin is a voter this year on the policy-setting Federal Open Market Committee.
Fed officials left their benchmark lending rate unchanged last week and projected it would remain around zero for the next three years, even as inflation moves up and unemployment is forecast to falls to pre-pandemic lows by 2023.
Inflation Bump
The Fed expects that a bump in inflation this year will be short-lived. Officials saw their preferred measure of price pressures slowing to 2% next year following a spike to 2.4% in 2021, according to the projections. Excluding food and energy, inflation is forecast to hit 2.2% this year and fall to 2% in 2022.
“Our guidance suggests we would be raising rates were inflation to spike past our targets,” Barkin said.
Massive fiscal support and widening Covid-19 vaccinations that will help reopen the economy have buoyed investor expectations for rate increases and inflation, propelling Treasury yields higher as the central bank and federal government keep adding stimulus.
Barkin said part of the reason that yields were moving up was because of the brightening outlook for the pandemic and the economy.
“Many of the days where there have been movements have been days where you’ve had really good news on the vaccines or really good news on fiscal stimulus,” he said. “To the extent that yields are responding to the economy, I think that’s what you want them to do.”
(Updates with more Barkin comments from sixth paragraph.)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
