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Inflation is spreading to other parts of the US economy

However, on a monthly basis, prices rose 0.5% in July, a significant slowdown from the 0.9% growth in June and the slowest pace since February.

But dig into the data. While some of the main drivers of previous spikes, such as used car prices, eased last month, the cost of other goods, including medical supplies, housing, and groceries in grocery stores and restaurants, rose.

“Annual inflation seems to have peaked, but the details show an expansion in price pressure,” ING’s chief international economist James Knightley wrote in a customer statement. “This suggests that inflation is likely to be more persistent and ubiquitous than the Federal Reserve predicts.”

Investors remain confident for the time being. That S&P 500 (SPX) and Dow (DJX) hit new all-time highs on Wednesday and 10-year US Treasury bond yields fell as traders bet that inflation data will put pressure on the Fed to hike rates and curb bond purchases earlier than expected.

Economics 101: The latest inflation data doesn’t change the fact that America’s “stimulus-driven economy is booming,” Knightley said. “Demand outstrips the economy’s capacity to supply given the scars the pandemic has caused, which is evident in production bottlenecks and labor shortages,” he said.

The competition for labor is putting upward pressure on wages, while record lows in raw material supplies, order backlogs and extended delivery times put additional strains on supply chains.

“Costs are rising across the economy, and the strong demand means companies are feeling more pricing power [than] they have experienced for years, “added Knightley.

See here: Data from the National Federation of Independent Businesses shows that the proportion of companies that are raising prices and expecting further price increases in the coming months is at a 40-year high. “Therefore, any major declines in inflation ahead seem unlikely,” concluded Knightley.

The White House also fears rising prices. On Wednesday, US security advisor Jake Sullivan urged OPEC + to increase oil production to curb high gasoline costs.

“President Biden has made it clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” Sullivan said in a statement, adding that the US government “spoke to relevant OPEC + members about the Determine the importance of competitive markets in prices. “

Next topic: With a growing number of senior Fed officials advocating withdrawals from bond purchases, all eyes will be on the Economic Policy Symposium in Jackson Hole, Wyoming, later this month.

Airlines are not out of the woods yet

Air travel has increased in the United States and Europe following the introduction of vaccines, but risks remain elevated for ailing airlines desperate to recover from the pandemic.

The newest: Southwest Airlines (LUV) warned on Wednesday that the delta variant of Covid-19 would make it difficult to make profits in the third quarter. In a government filing, the airline said customers booked fewer flights in August and canceled trips that had already been booked.

The development marks a blatant turn for Southwest, reports my CNN business colleague Jordan Valinsky. Just a few weeks ago, the company had forecast that it would be profitable in the third and fourth quarters due to strong bookings for vacation travel.

Southwest Airlines warns that the Delta variant is damaging businessBut things can change quickly in the pandemic economy. In early July, domestic air traffic, as measured by tickets issued by US travel agencies and online booking companies, was only 3% below 2019 levels. A few weeks later, on July 23, it was more than a fifth, according to the CNN Business Economic Recovery Dashboard below the same value of 2019.

Delta blues: As the latest sign of how the delta variant is hurting the recovery, the International Energy Agency on Thursday downgraded its outlook for oil demand for the remainder of the year, in part due to “the worsening pandemic.”

After global oil demand rose to almost three times the seasonal norm in June due to increased mobility in North America and Europe, it “abruptly reversed” in July, the Paris committee said in a report.

Art auction will test appetite for alternatives

Investors looking for more creative places to park their money than the stock market will soon have the opportunity to spend some serious money.

Auction alert: Eleven works of art by Pablo Picasso with a combined maximum estimate of over 100 million US dollars will reach the auction block this October, reports my CNN colleague Jacqui Palumbo.Picasso artwork on display in a Las Vegas restaurant could fetch over $ 100 million

The pieces are part of MGM Resorts’ sizable art collection and have been on display in Las Vegas for over two decades in a Michelin-starred French and Spanish restaurant called Picasso in the Bellagio.

Sotheby’s is organizing the sale as part of MGM’s attempts to reposition the gambling mecca as a “broader arts destination,” said Brooke Lampley, chairwoman of the auction house.

Investor Insights: Wealthy individuals who saved huge sums of money during the pandemic have hidden their money in some unusual investments like high-end liquor and trading cards. The Picasso auction will provide even more insight into investor appetite for alternative investments.

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Income from TUI (TUIFF), Baidu (START), Palantir Technologies and Utz Brands will be available before the US markets open. Airbnb, DoorDash, Disney (DIS) and request report after completion.
Today as well:

  • US unemployment claims.
  • US producer price index for July.

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