Stocks sink after high inflation report
The Dow Jones Industrial Average dropped more than 200 points on Wednesday after the U.S. Labor Department reported the highest inflation rate since 1990. Inflation rose by 6.2 percent in October compared to a year before, and consumer prices jumped 0.9 percent from the previous month. Consumer prices surged in food, gas, and housing. Although employers have boosted wages and salaries to fill worker shortages, they have also had to raise prices, which negated any gains. Investors dropped tech stocks on Wednesday and flocked to bank bonds.
How long will it last? The Federal Reserve and economists have said for months that inflation is temporary. Last week, Fed Chairman Jerome Powell said the high prices might persist through next summer. President Joe Biden said Wednesday that reversing inflation is a top priority. The Energy Information Administration warned that Americans will likely spend 30 percent more on natural gas for heating this winter. Grocery prices have risen 5.4 percent from last year, and food banks are struggling to prepare for the holiday season. The Labor Department report said Americans now spend roughly 15 percent more on goods than they did before the pandemic.
Dig deeper: Listen to Nick Eicher and David Bahnsen discuss the factors weighing down the U.S. economy on The World and Everything in It podcast.
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