In yet another sign inflation continues to spread throughout the economy, wholesale prices rose 0.4% in September, more than expected, the Bureau of Labor Statistics reported on Wednesday.
The increase compares to a 0.3% increase in August.
For the 12-month period, the producer price index rose 8.5%, compared to 8.7% in August.
Much of the increase in September came from a 0.4% rise in costs for services ranging from health care to travel, with accommodation in particular increasing 6.4% in the month.
On Friday, the government will issue the more commonly followed consumer price index, with expectations of an 8.1% annual rise compared to 8.3% in August. The two reports are being closely watched as the Federal Reserve continues its campaign of raising interest rates to combat inflation.
Political Cartoons on the Economy
Many Wall Street firms and economists expect the U.S. economy to dip into recession within the next six to 12 months, although President Joe Biden said he does not in a CNN interview Tuesday evening.
“I don’t think there will be a recession,” he said. “If it is, it will be a very slight recession. That is, we’ll move down slightly.”
“These are very, very serious things which I think are likely to push the U.S. and the world – I mean, Europe is already in recession – and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.
Both the stock and bond markets are signaling a downturn, with the S&P 500 down about 25% year to date and the yield on the 10-year Treasury pushing 4%.
“In a world of instability and surprises, it’s hard to know exactly how much higher interest rates will have to be, causing what Chairman (Jerome) Powell has warned will include pain along the way,” Bankrate senior economic analyst Mark Hamrick wrote on Tuesday.
“It’s already led to a bear market in stocks and a deep freeze for the housing market. That pain may yet coincide with a recession and surging unemployment rate, according to economists participating in our new Bankrate quarterly survey,” he added.
Indeed, Bankrate’s latest economic survey predicts employers will add just 97,000 jobs each month over the next year, an 80 percent slowdown from the prior 12-month average of 487,000.
“In our view, inflation will remain elevated for longer than the Federal Reserve expects, and interest rates will remain higher than investors expect, which suggests elevated stock market volatility over the next year,” said Ryan Belanger, founder and managing principal, Claro Advisors. “Sustained periods of lower inflation readings will be the only path towards tranquility in the stock market.”