U.S. Consumer Price Data for November
Consumer prices in the United States increased by 2.7% over the 12 months ending in November, according to a Labor Department report released on Thursday. This represents a moderation from the 3% annual inflation rate recorded for the 12 months ending in September. Between September and November, prices rose by 0.2%.
It was noted that the Labor Department did not provide an October comparison for consumer prices. This was attributed to a government shutdown that prevented workers from conducting standard price checks during that month. Omair Sharif of Inflation Insights has suggested that the absence of October rental data might have contributed to a lower November inflation figure.
Public Economic Sentiment and Affordability Concerns
A recent NPR/PBS News/Marist poll indicates that 36% of Americans approve of President Trump's economic management. This marks his lowest rating on the economy in six years of polling, aligning with former President Biden's low score in 2022. The poll also found that 71% of respondents reported their income either matched or fell short of their monthly expenses, highlighting widespread concerns about affordability.
Inflation data also showed that increases in the cost of rent and electricity over the past year were partly offset by price reductions in some food categories, such as eggs.
Wages and Labor Market Conditions
Workers' wages have, on average, continued to increase faster than prices. However, the pace of wage gains has slowed in recent months. With a softening job market, workers' leverage for demanding higher pay has decreased. Federal Reserve Governor Chris Waller commented on Wednesday at Yale University's CEO Summit, stating, "If you do that right now, they're going to show you the door."
Waller further noted that high-income households appear less affected by rising prices and maintain high spending levels. Conversely, he described low- and middle-income families as facing a significant "affordability problem." He suggested, "Either the wages have to start going back up, or we have to think about trying to get inflation to come down, so prices at least stop going up."
Federal Reserve Outlook on Inflation
Governor Waller, a potential candidate for the next Fed chair, expressed confidence that inflation will moderate in the coming year. However, not all Federal Reserve policymakers share the same optimistic outlook. Inflation has consistently exceeded the central bank's 2% target for over four years.
Raphael Bostic, the outgoing president of the Atlanta Federal Reserve Bank, emphasized his concern that prolonged elevated inflation could lead the public to expect continued rapid price increases. Bostic stated at the Gwinnett County Chamber of Commerce, "I get paid to worry. I don't want anyone to think I'm cavalier about our credibility" regarding inflation control.
Last week, the Federal Reserve voted to reduce its benchmark interest rate for the third time since September, a measure aimed at supporting the job market. Despite this, members of the rate-setting committee indicated a cautious approach to further rate cuts. The NPR poll revealed that 45% of respondents identified high prices as their primary economic concern, while 10% were most worried about job security.