Economic Report: Consumer Prices Have Risen 7.9% Over the Past 12 Months, a 40-Year High

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – March 14, 2022

NAM Weekly Economic Toplines

• Consumer prices rose 0.8% in February, continuing to increase solidly. Food and energy prices increased 1.0% and 3.5% in February, respectively, with gasoline costs up 6.6%. Excluding food and energy, core consumer prices increased 0.5% in February, suggesting broad-based growth in costs beyond food and energy.

• The consumer price index has risen 7.9% over the past 12 months, the fastest year-over-year pace since January 1982. At the same time, core inflation (which excludes food and energy) increased 6.4% year-over-year in February, the biggest increase since August 1982.

• Overall, price pressures for consumers remain very elevated—a trend that will continue over the coming months. With the Russian invasion of Ukraine, prices are likely to accelerate further, particularly for food, energy and certain commodities.

• The Federal Reserve will be in focus this week. The Federal Open Market Committee has ended its asset purchases, likely starting to reduce its balance sheet over the summer. The FOMC will increase short-term rates by 25 basis points at this week’s meeting. There will also be another increase of 25 basis points at the May 3–4 meeting, with more hikes at subsequent meetings.

• The Index of Consumer Sentiment declined to the lowest reading since October 2011, according to preliminary data from the University of Michigan and Thomson Reuters. Confidence was lower “due to falling inflation-adjusted incomes, recently accelerated by rising fuel prices as a result of the Russian invasion of Ukraine.”

• There were 855,000 manufacturing job openings in January. The number of job postings continues to be well above pre-pandemic levels. Over the past 10 months, job openings in the sector have averaged 873,000, including the record 943,000 in July.

• In the larger economy, nonfarm business job openings declined from a record 11,448,000 in December to 11,263,000 in January. There were 6,513,000 unemployed Americans in January, which translated into 57.8 unemployed workers for every 100 job openings in the U.S. economy.

• In addition, total quits in the manufacturing sector rose from 322,000 in December to 331,000 in January, a new record. That translated into 2.6% of the manufacturing workforce and continues a trend of very significant “churn” in the labor market, exacerbating the workforce difficulties that companies are experiencing.

• The U.S. trade deficit rose to $89.69 billion in January, another record high, with the goods trade deficit jumping to $108.86 billion, also an all-time high. Goods exports, on the other hand, decreased to $155.89 billion but remained not far from October’s record pace ($159.02 billion).

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