Data from the Bureau of Labor Statistics released on Friday painted a grim picture for American consumers and is predicted to shape how the Federal Reserve rules on interest rates next week. Although August saw more jobs added than expected, that is likewise expected to result in a rate hike. The annual inflation rate was 3.4% last month, unchanged from July, but not as bad as it was in May at 4.2%. That’s translated into higher fuel and grocery costs for consumers, such as meat, poultry, eggs and dairy, which increased slightly, from 0.1% to 0.3%.
Not surprisingly, lettuce prices continued to trend in the other direction, likely from the cyclospora “explosive diarrhea” outbreak, though the Food and Drug Administration declared an end to the problem Friday, after nearly 13,000 people across 21 states were sickened by the parasite, at least 570 people were hospitalized, and two died.
Prospects for September aren’t looking much better for the U.S. economy. Also on Friday, the University of Michigan released its monthly Surveys of Consumers, finding that consumer sentiment dropped from 51.7 in August to 47.8 this month so far. This is the second-lowest level of consumer sentiment on record. The survey has been conducted since 1952.
“With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come,” Joanne Hsu, the director of the Surveys of Consumers, said. Additionally, the average price of diesel hit $6 a gallon for the first time in history on Thursday. This will almost certainly translate into higher transportation and agriculture costs.
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And as the Iran war ramps up, it is predicted to continue raising fuel prices around the globe. On Friday, officials announced that Yemen’s Iranian-backed Houthi rebels had captured a strategic island at the southern entrance to the Red Sea, which opens a new front in the Iran war and further threatens oil exports from Saudi Arabia.
Donald Trump clearly understands these stubborn prices aren’t likely to fall before the midterm elections, which could shift votes to Democrats, and may explain why he’s offering every American adult $5,000 if Republicans maintain control of Congress. Unsurprisingly, many critics see this as a blatant attempt at bribery or distraction from fighting in the Middle East.
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