TITLE: Inflation Cuts Deeply into Infrastructure Law’s Highway Funding
https://www.equipmentworld.com/roadbuilding/article/15670928/inflation-cutting-infrastructure-laws-highway-funding-impact
EXCERPT: Unprecedented inflation could cut into federal infrastructure law funding for highway construction by as much as 40%, a U.S. agency estimates.
If construction costs continue to rise at the rate they did between 2021 and 2022, the $379.3 billion allotted for highways would have real purchasing power of only $224.2 billion over the next five years, according to the U.S. Bureau of Transportation Statistics.
That’s a 40% reduction. BTS calls that its “High Inflation Scenario.”
Under its “Modest Inflation Scenario,” infrastructure buying power drops by 31% – to $260.5 billion – over five years.
The record-level inflation comes from a 26% increase in highway construction costs in 2022, which beats the previous record of 20% set in 2005. According to BTS, the inflation continued for highway construction costs into third quarter 2023, the most recent data available, at 25% higher from the first quarter of 2022.
Causes of increased constructions costs include a 594% increase in the price of crude oil, which is used to make asphalt, between April 2020 and June 2022. The supply chain disruption caused by the pandemic also contributed by reducing the availability of highway construction materials.
TITLE: Biden running out of time to turn voters’ perceptions on inflation: strategists
https://in.investing.com/news/biden-running-out-of-time-to-turn-voters-perceptions-on-inflation-strategists-4197834
EXCERPT: Research firm Strategas released data showing that their own inflation indicator grew at a rate of 3.8% year-over-year. The "Common Man CPI" measure focuses on items that people must buy regularly – food, energy, shelter, clothing, utilities, and insurance.
This marks the ninth consecutive month where the Common Man CPI has surpassed the headline inflation figure. Throughout President Biden's term, the index has exceeded the headline inflation number in 34 out of 40 months.
Strategas suggests that this persistent trend may pose a challenge for President Biden as election issues come to the forefront.
"President Biden may be running out of time to turn voters’ perceptions of things around," the firm said.
In a related note, BCA Research acknowledged the accumulating difficulties faced by the Biden administration.
They indicated that a change in their election outlook might be considered during the summer if current trends continue.
BCA Research's quantitative models still show a slight preference for Democrats in the White House and Republicans in the Senate, aligning with their qualitative analysis.
They also noted that, although the economy does not show signs of an imminent recession, vulnerabilities are beginning to show due to sustained high interest rates.
Moreover, foreign policy setbacks represent another potential risk to President Biden.
"The neck-and-neck US election should lead to higher political risk and policy uncertainty, which should weigh on investor sentiment in the middle of the year," BCA said.
TITLE: The Fed will need more time to gather data before cutting rates, Mester says
https://seekingalpha.com/news/4107581-the-fed-will-need-more-time-to-gather-data-before-cutting-rates-mester-says
EXCERPT: Further progress in getting U.S. inflation to the Federal Reserve’s 2% target “will depend more on moderating demand,” than on supply-side healing, which was responsible for the reduced rate of inflation last year, Cleveland Fed President Loretta Mester said on Thursday.
In addition, “the lack of progress on inflation so far this year has been disappointing,” she said in prepared remarks for a speech at the Wayne, Ohio, Economic Development Council.
That means it will take longer than she had previously thought to get to the 2% inflation goal.
“The recent readings have not inspired greater confidence in me, and we will need to accumulate further data over the coming months to have a clearer picture of the inflation outlook,” said Mester, who is a voting member of the Federal Open Market Committee this year.
Meanwhile, the economy is strong enough to give the Fed time to gather more data, “without concern that monetary policy is overly restrictive,” she said.
Labor market conditions are also strong, with “remarkably resilient” payroll growth. While the labor market has come into better balance since the pandemic, the unemployment rate remains low at 3.9%.
She’s watching to see if wage growth adds to price pressures. “Based on current estimates of trend productivity growth, which lie in the 1 to 1-1/2 percent range, wage growth is still above the level consistent with 2 percent inflation,” Mester said.
Updated at 12:24 PM ET: "Once the FOMC gains confidence that inflation is moving sustainably back to 2%, it will be in a position to begin to gradually normalize policy back to a neutral level as the economy returns to price stability and maximum employment," Mester said.
TITLE: Dow Jones Industrial Average hits 40,000 amid renewed hopes for U.S. economy
https://www.nbcnews.com/business/markets/dow-jones-record-us-economy-inflation-rcna152551
EXCERPT: The Federal Reserve continues to target an inflation rate of 2%. If the central bank believes price growth is slowing toward that figure, it may consider cutting its key interest rate from the nearly 5.5% level it's been at for about a year.
If interest rates move down, it would help lower monthly payments faced by businesses and consumers alike throughout the economy.
Of course, the stock market is also tied to company earnings — and right now, publicly traded firms are reporting robust profits. In the first quarter of the year, about three-quarters of all firms beat their earnings estimates, a higher rate than the historical average.
Early Thursday, Walmart joined their ranks when it reported earnings above analysts' expectations.
“A bad economy? Publicly traded American companies aren’t seeing it, as corporate earnings expectations move steadily higher," Bankrate analyst James Royal said in a statement. "Strong current earnings and increased earnings expectations are pushing the S&P 500 to new all-time highs.”
A stronger stock market should also provide a windfall to the many Americans watching their 401(k) balances. A Bank of America Institute report on retirement savings showed the average account balance increasing from $78,883 in March of last year to $92,142 in March of this year, a nearly 17% jump.
But for many consumers, especially lower incomes ones, the U.S. economy still does not feel great. The latest University of Michigan consumer sentiment survey has fallen to its lowest level in six months. The New York Federal Reserve's latest survey of consumer expectations showed Americans expecting inflation to actually worsen in the short term, though the report came about before this week's inflation report.