In United States, bad inflation figures in August, cold shower for Wall Street and Joe Biden

Over one year, prices increased by 8.3 %, compared to 8.5 % in July. But behind this apparent slowdown, linked to the drop in the price of gasoline, hides the flight of the cost of food and housing. The scholarship has experienced its worst day since June 2020.


summer is over at Wall Street. Those who hoped that inflation had reached its peak this summer disillusioned on Tuesday September 13, when the price index of August, causing a brutal fall of Wall Street, which experienced its worst day Since June 2020.

The case is a serious disappointment for Joe Biden, who hoped that the subject would not dominate the mid-term elections in early November. “It will take more time and resolution to lower inflation,” said the Democratic president in a press release.

Over one year, prices have certainly increased “only” by 8.3 % against + 8.5 % in July and + 9.5 % in June. But this decline is due to the sharp drop in petroleum prices-the price of the gallon of gasoline has increased from more than $ 5 in mid-June to 3.70 dollars currently.

On the other hand, food continues to fly (+ 11.4 % over a year) just like inflation excluding energy and food (+ 6.3 % over one year, against+ 5.9 % in July). The accommodation, the first position of the index, continues its mad race with an annual increase of 6.2 % against + 5.7 the previous month.

All figures (over a year, a month in the month, with or without energy and food) are worse than expectations. Jason Furman, Harvard economist, was one of the few to have predicted him in a platform at the Wall Street Journal. Tuesday, he insisted on so-called median inflation, which excludes all goods having experienced high increases up or down: it reaches the “absolutely appalling” figure of 9.2 %, according to Mr. Furman , a record since this index is calculated. The conclusion is essential: inflation is everywhere, and it is not a drop in petroleum, a price for airline price or the end of the shortage of semiconductors that will solve the problem.

The price increase is combined with the right unemployment figures recorded in August: the United States has created 315,000 jobs this month and has definitively erased the pandemic job losses. This good news is not one, because it confirms that the labor market remains extremely tense, which reaches wages. Even if the increase in remuneration is lower than the rise in prices, the inflation-forest spiral is clearly installed, with remuneration annually increased by 6.7 % for three months according to the Fed of Atlanta.

Result, the American federal reserve (Fed, Central Bank), will have to adopt a hard line at its meeting on September 20. Before the publication of the index, the traders dreamed of an increase in rates limited to 0.5 %. This probability is now considered almost zero. Some even fear an increase in the rent of the money of one point (one in four chance) but the central scenario remains that of a third consecutive increase of 0.75 points. This decision would bear the short-term rates practiced by the Fed beyond 3 % (against zero until March 2022).

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/Media reports.