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CPI inflation October 2024:

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Inflation perked up in October though pretty much in line with Wall Street expectations, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, which measures costs across a spectrum of goods and services, increased 0.2% for the month. That took the 12-month inflation rate to 2.6%, up 0.2 percentage point from September.

The readings were both in line with the Dow Jones estimates.

Excluding food and energy, the move was even more pronounced. Core CPI accelerated 0.3% for the month and was at 3.3% annually, also meeting forecasts.

Stock market futures nudged higher following the release while Treasury yields fell.

Energy costs, which had been declining in recent months, were flat in October while the food index increased 0.2%. On a year-over-year basis, energy was off 4.9% while food was up 2.1%.

Despite signs of moderating elsewhere, shelter prices continued to be a major contributor to the CPI move. The shelter index, which carries about a one-third weighting in the broader index, climbed another 0.4% in October, double its September move and up 4.9% on an annual basis. The category was responsible for more than half the gain in the all-items CPI measure, according to the BLS.

The readings took inflation further away from the Federal Reserve’s 2% goal and could complicate the central bank’s monetary policy strategy going forward, particularly with a new administration taking over the White House in January.

President-elect Donald Trump’s plans to implement more tariffs and government spending have the potential both to boost growth and aggravate inflation, which remains a substantial problem for U.S. households despite easing off its meteoric peak in mid-2022.

Consequently, traders in recent days have scaled back their anticipation for Fed rate cuts ahead. The central bank already has lopped off 0.75 percentage point from its key borrowing rate and had been expected to move aggressively ahead.

However, traders now expect just another three-quarters of a point in cuts through the end of 2025, about half a point less than priced in prior to the presidential election.

This is breaking news. Please check back for updates.

Economics

Following Trump’s pardons, the Proud Boys are back in the game

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THIS IS A big one,” Donald Trump said as he signed a clemency order for nearly 1,600 January 6th rioters just hours after being sworn into office. By evening Enrique Tarrio, the leader of the Proud Boys, a far-right group, who had served three years of a 22-year sentence in federal prison for choreographing the attack on the Capitol, was in a holding cell in Louisiana awaiting release. Back in Miami, Mr Tarrio says that a full pardon was what he expected “from day one after the election”.

The plans that he made for life after liberation won’t start just yet. His first day home is “a moment of zen” before he figures out what is next for him and for the Proud Boys. To those who say that the pardons represent a whitewashing of what happened on January 6th Mr Tarrio replies that his imprisonment in the first place was an injustice. “I understand their game, you take the opponents’ pieces off the board,” he says. “And I’m down to play that game, right? But we’re not at that point yet.” He is not “calling for it”, but he means that his team too can lock people up.

Mr Trump’s amnesty was more sweeping than its beneficiaries had anticipated. “This is leaps and bounds better than I could have hoped,” says John Kinsman, a Proud Boy who served four years in prison. “Never in a million years” did he think that Mr Trump would set every January 6th “hostage” free. All but 14 leaders of the Proud Boys and Oath Keepers, a militia, who breached the Capitol building, were granted full pardons. Their pardons lift penalties that typically arise from felony convictions, such as restrictions on buying guns, visiting certain foreign countries and, in some states, voting. Those who weren’t pardoned had their sentences commuted. In those cases, Mr Trump said, his team needed to do “further research”.

The outcome seemed surprising because just last week J.D. Vance, now the vice-president, told viewers on Fox News that “if you committed violence on that day obviously you shouldn’t be pardoned.” Yet many who had were. Pam Bondi, Mr Trump’s nominee to lead the Department of Justice (DoJ), echoed Mr Vance’s restraint. The fact that Mr Trump overruled them suggests that the scope of his final decision was his own idea. Mr Trump said those imprisoned had served enough time.

To some career DoJ lawyers who brought the cases, Mr Trump’s actions only reinforce their belief that he sought on January 6th to goad his supporters to sack the Capitol. “This is one of the most candid acknowledgments that what happened that day is what he intended,” says a senior DoJ lawyer. It is indeed reasonable to see the pardons as an endorsement of the mob violence that took place. In the summary of his now-dismissed case published on January 7th, Jack Smith, the special counsel who investigated Mr Trump’s role, wrote that his office had sufficient evidence to “obtain and sustain a conviction”. But Mr Trump has now made sure that the meaning of the January 6th assault will be long contested. To many of the president’s supporters, the pardons rectify an injustice arising from overreach by Mr Trump’s foes.

It is unarguable that soon hundreds of people who punched police, smashed windows and broke through barricades will be home. Though many of them are ordinary doctors and businessmen, at least 200 have pledged allegiance to a militia-like group. In interviews Proud Boys across America say that jail time has subdued their movement—and watch-dog groups like Miami Against Fascism agree that their power has been “severely diminished”.

Nonetheless political violence, both on the left and the right, has increased since 2021; there were two lone-wolf attempts on Mr Trump’s life during the campaign. According to an analysis by Robert Pape of the University of Chicago, the DoJ prosecuted 26 threats against members of Congress between 2022 and 2023. Yet Mr Trump’s administration may not pursue domestic radicals as forcefully as Joe Biden’s administration did. 

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Economics

Donald Trump has again rewritten the history of January 6th

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“THIS IS A big one,” Donald Trump said as he signed a clemency order for nearly 1,600 January 6th rioters just hours after being sworn into office. By evening Enrique Tarrio, the leader of the Proud Boys, a far-right group, who had been serving a 22-year sentence in federal prison for choreographing the attack on the Capitol, was in a holding cell in Louisiana awaiting release. In a phone call with The Economist that night his mother exulted that her boy would be home in Miami within days.

The amnesty proved to be even more sweeping than its beneficiaries had anticipated. “This is leaps and bounds better than I could have hoped,” says John Kinsman, a Proud Boy who served four years in prison. “Never in a million years” did he think that Mr Trump would set every January 6th “hostage” free. All but 14 leaders of the Proud Boys and Oath Keepers, a militia, who breached the Capitol building, were granted full pardons. Their pardons lift penalties that typically arise from felony convictions, such as restrictions on buying guns, visiting certain foreign countries and, in some states, voting. Those who weren’t pardoned had their sentences commuted. In those cases, Mr Trump said, his team needed to do “further research”.

The outcome seemed surprising because just last week J.D. Vance, now the vice-president, told viewers on Fox News that “if you committed violence on that day obviously you shouldn’t be pardoned.” Yet many who had were. Pam Bondi, Mr Trump’s nominee to lead the Department of Justice (DoJ), echoed Mr Vance’s restraint, saying that she planned to look at the January 6th offenders on a “case-by-case” basis. The fact that Mr Trump overruled them suggests that the scope of his final decision was his own idea. Asked why he had ignored Mr Vance’s advice, Mr Trump said that those imprisoned had served enough time and had had their lives upended.

To some career DoJ lawyers who brought the cases, Mr Trump’s actions only reinforce their belief that he sought on January 6th to goad his supporters to sack the Capitol. “This is one of the most candid acknowledgements that what happened that day is what he intended,” says a senior DoJ lawyer. It is indeed reasonable to see the pardons as an endorsement of the mob violence that took place. In the summary of his now-dismissed case published on January 7th, Jack Smith, the special counsel investigating Mr Trump for his role in the Capitol attack, wrote that his office had sufficient evidence to “obtain and sustain a conviction”. But Mr Trump has now made sure that the meaning of the January 6th assault will be long contested. To them the pardons rectify an injustice arising from overreach by Mr Trump’s foes, including Mr Smith.

It is unarguable that soon hundreds of people who punched police, smashed windows and broke through barricades will be home. Though many of them are ordinary doctors and businessmen, at least 200 have pledged allegiance to a militia-like group. In interviews Proud Boys across America say that jail time has subdued their movement—and watch-dog groups like Miami Against Fascism agree that their power has been “severely diminished”.

Nonetheless political violence, both on the left and the right, has soared since 2021; there were two lone-wolf attempts on Mr Trump’s life during the campaign. According to an analysis by Robert Pape of the University of Chicago, the DoJ prosecuted 26 threats against members of Congress between 2022 and 2023. Yet Mr Trump’s administration may not pursue domestic radicals as forcefully as Joe Biden’s administration did.

There is some precedent for a president pardoning citizens who attacked America’s government with physical force, says Kimberly Wehle, a law professor who wrote a book on pardon power. The closest parallel is perhaps Andrew Johnson’s decision to grant amnesty to thousands of Confederate soldiers after the civil war. But he forced them to swear loyalty to the country and free their slaves as a condition of their release, thereby requiring them to admit defeat on the biggest issue they had fought for. Then as now, forgiveness exacerbated the nation’s divides.

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Economics

Minimum payments on credit cards hit record level as delinquencies also rise

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In this photo illustration the Visa, Mastercard and American Express logo on various credit cards and debit cards are seen beside US one dollar bills on January 4, 2025 in Somerset, England. 

Anna Barclay | Getty Images

Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report.

In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data thorough the third quarter of 2024 shows.

The level rose to 10.75% for the period, part of a continuing trend that began in 2021 and has accelerated as average interest rates have soared and delinquencies also have accelerated. The increase also marked a series high for a data set that began in 2012.

Along with the trend in minimum payments came a move higher in delinquency rates.

The share of card holders more than 30 days past due rose to 3.52%, an increase from 3.21%, for a gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021.

The news counters a general narrative of a healthy consumer who has kept on spending despite inflation hitting a more than 40-year high in mid-2022 and holding above the Fed’s 2% target for nearly four years.

Signs of strength

To be sure, there remain plentiful positive signs. Even with the rising delinquency rate, the pace is still well below the 6.8% peak during the 2008-09 financial crisis and not yet indicative of serious strains.

“A lot remains unknown. We’ve seen in the past few days how quickly things might be changing,” said Elizabeth Renter, senior economist at personal finance company NerdWallet. “The baseline expectation is consumers in aggregate economywide will remain strong.”

Adjusted for inflation, consumer spending rose 2.9% on an annual basis in November, according to Goldman Sachs, which noted Tuesday that it sees consumers as “a source of strength” in the economy. The firm estimates that consumer spending will slow some in 2025, but still grow at a healthy 2.3% real rate in 2025, and Goldman sees delinquency rates showing signs of leveling.

PepsiCo CEO: Trump administration will be pro-growth and help consumer confidence

However, if the trend of solid consumer spending holds, it will come against some daunting headwinds.

Average credit card rates have climbed to 21.5%, or about 50% higher than three years ago, according to Fed data. Investopedia puts the average rate even higher, at 24.4%, noting that so-called low-cost cards that are given to borrowers with poor or no credit history have topped 30%. Consumers haven’t gotten any help from the Fed: Even as the central bank cut its benchmark interest rate by a full percentage point last year, credit card costs remained elevated.

Those rates are hitting much higher balances, with money owed on revolving credit swelling to $645 billion, up 52.5% since hitting a decade low of $423 billion in the second quarter of 2021, according to the Philadelphia Fed.

Renter noted that an increasing number of respondents — now at 48% — to the firm’s own consumer survey reported using credit cards for essentials. Moreover, the NerdWallet survey also found an even higher level, more like 22%, saying they are only making minimum payments.

With average credit card balances at $10,563, it would take 22 years and cost $18,000 in interest when just paying the minimum, according to NerdWallet.

“With higher prices, people are going to turn to credit cards more to use for necessities. You tack on higher interest rates and then you have more difficulty getting by,” Renter said. “If they’re only making the minimum payment, you can go very quickly from getting by to drowning.”

The trend in that direction is not encouraging. A recently released New York Fed survey for December found that the average perceived probability for missing a minimum debt payment over the next three months stood at 14.2%, tied with September for the highest since April 2020.

Home loans slow

It’s also not just credit cards where households are feeling the pinch.

Mortgage originations hit a more than 12-year low in the third quarter as well, according to the Philadelphia Fed report. After peaking at $219 billion in third quarter of 2021, originations are just $63 billion three years later.

“With high mortgage rates, consumers who have locked in low fixed-rate mortgages have little motivation to refinance, reducing mortgage demand,” the central bank branch said in the report.

Moreover, debt-to-income ratios on home loans also are on the rise, hitting 26% most recently, or 4 percentage points higher over the past five years.

The typical 30-year mortgage rate recently has swelled above 7%, posing another obstacle for housing and homeownership.

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