Americans Are Still Spending Ahead Of Holiday Season Despite Inflation Surge

Personal spending rose 1.3% last month in a sign that consumers are continuing to spend more despite higher inflation, which continues to rise at its fastest pace in three decades, according to new data from the Commerce Department on Wednesday.

Prices climbed by 5% in the year through October, the fastest gain in over 30 years, according to the latest Personal Consumption Expenditures price index report.

Inflation is surging at its fastest pace in three decades, data shows: October’s annual jump in prices is more than last month’s reading, which showed prices for the year through September climbing 4.4%.

Despite the lingering Covid-19 pandemic, the reduction of stimulus payments and ongoing supply chain issues adding to investor fears about inflation, consumer demand remains steady amid rising private wages and salaries, the Commerce Department’s report said.

Personal consumption expenditures (or PCE)—a key measure of consumer spending—rose 1.3% in October, while personal income rose 0.5%, according to the data.

Both measures of consumer strength were up sharply from recent months: The elevated spending levels ahead of a busy holiday season could help boost the broader economic recovery, experts say.

The increase in personal spending comes as Americans benefit from large pay increases and healthy household balance sheets, especially after several rounds of government stimulus, according to the report.

“Within goods, increases were widespread, led by motor vehicles and parts,” according to the report. Energy prices increased over 30% and food prices nearly 5%. Excluding both of those, the PCE price index for October gained 4.1% from a year ago.

Whether rising inflation starts to cut into consumer demand. While spending on consumer goods is now well above prepandemic levels, Americans with lower incomes could start to defer purchases if price increases continue, economists warn.

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In a more positive sign for the U.S. economic recovery, weekly jobless claims fell substantially to their lowest level in 52 years, according to new data on Wednesday. The latest report from the Labor Department showed that the jobs market has continued to make a comeback in recent weeks. Around 199,000 people filed initial jobless claims in the week ending November 20, which was down 71,000 from the previous week and the lowest level since November 1969.

Stocks continue to remain near record highs—with the S&P 500 up 26% so far this year, though markets could be more volatile in 2022, experts warn. Rising fears about higher inflation, the Covid-19 delta variant, supply chain issues and Federal Reserve policy are all top of mind for investors going into the end of the year.

Further Reading:

This Wall Street Firm Sees A Negative Year Ahead For The Stock Market (Forbes)

New Jobless Claims Unexpectedly Sink To 52-Year Low Despite 2 Million Americans Still Receiving Unemployment Benefits (Forbes)

Stocks Jump After Biden Reappoints Jerome Powell To Lead Federal Reserve (Forbes)

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Source: Americans Are Still Spending Ahead Of Holiday Season Despite Inflation Surge

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Covid Surge Worse Than Anything We’ve Seen

German Chancellor Angela Merkel said boosting vaccination rates will not be enough to contain soaring coronavirus infections across the country, Bloomberg reported, calling for tough action as countries across Europe come down hard on the unvaccinated and prepare drastic measures to smother the outbreak.

Key Facts

Merkel reportedly told officials from her conservative party on Monday that many Germans don’t appear to understand how severe the country’s outbreak is, according to Bloomberg, calling on individual German states to implement tougher restrictions this week.

The measures would exceed new restrictions barring unvaccinated people from public transport and many areas of public life—which apply in areas where hospitalized Covid-19 patients exceed a certain threshold—and health minister Jens Spahn said he could not rule out another nationwide lockdown.

Some politicians in Germany are debating following neighboring Austria—which went back into full lockdown Monday after a more targeted, unvaccinated-only lockdown—in requiring everyone to get vaccinated against Covid-19.

From February next year, Austrians refusing the jab will face fines of up to €3,600 ($4,000), with smaller penalties for those refusing booster shots.

Czechia and Slovakia have also started to make life harder for vaccine holdouts—Slovak Prime Minister Eduard Heger reportedly called the measures a “lockdown for the unvaccinated”—barring them from using various services, entering restaurants and public events.

Crucial Quote

By spring, “pretty much everyone in Germany… will be vaccinated, cured or dead,” Spahn said at a news conference Monday. “With the very contagious delta variant, it is very, very likely … that anyone who is not vaccinated will over the next few months become infected.”

Key Background

Europe has, again, become the center of the pandemic. Cases and deaths have been rising there even as they mostly fell around the world. The World Health Organization said it is “very worried” about the situation, warning that an additional 500,000 deaths could be recorded by March if sufficient steps aren’t taken.

Many countries, particularly in Central and Eastern Europe, are facing dramatic surges and infections are at record-breaking levels. Slovakia, Slovenia, Austria, Czechia, Germany and the Netherlands are all at, or have hit, new highs and cases are rapidly rising in other countries.

Violent protests against new lockdowns and other restrictions have erupted across the bloc as governments scramble to contain rising cases. Many of these measures explicitly target the unvaccinated, who experts and officials warn are undoubtedly driving the new wave by refusing provably safe and effective vaccines.

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I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at rhart@forbes.com

Source: Covid Surge ‘Worse Than Anything We’ve Seen’: Germany Mulls Tough Restrictions As Europe Targets Unvaccinated With Lockdown, Compulsory Shots

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Further Reading

Czechs, Slovaks target unvaccinated people in step behind Austria (Reuters)

Not Just Austria—Here Are The Countries Making Covid-19 Vaccination Compulsory For Everyone (Forbes)

Europe’s Carrot vs. Stick Approach to COVID-19 Vaccination (Atlantic)

Austria Sends Unvaccinated Into Lockdown—Here’s How Other Nations Are Limiting People Who Don’t Get Covid-19 Shots (Forbes)

Merkel Says Covid Spike ‘Worse Than Anything We’ve Seen’ (Bloomberg)

‘We Have To Face Reality’: Austria Announces Nationwide Vaccine Mandate, Full-Scale Covid-19 Lockdown (Forbes)

Lockdown And Restrictions Resurface In Europe As Continent Battles Another Covid Surge (Forbes)

To Get Kids Vaccinated Against COVID-19, Health Officials Will Need to Reach Hesitant Parents

For as long as COVID-19 vaccines have existed, Melissa Chernofsky has been practically counting down the days until she can get one for her 5-year-old son. “If it was like getting Lollapalooza tickets, where you have to camp out all night, that’s what I would do,” says the 46-year-old from Brooklyn.

Chernofsky got a shot for herself as soon as she was eligible, and says she has never hesitated about doing the same for her child once she has the option. “As a parent, our number one job is to keep our kids safe,” she says. “I don’t really understand the idea that if there is a tool that can keep your kid from getting a disease, that you wouldn’t give it to them.”

One such tool—Pfizer-BioNTech’s COVID-19 vaccine for 5- to 11-year-olds—was authorized by the U.S. Food and Drug Administration on Oct. 29, bringing it a step closer to widespread availability. If the U.S. Centers for Disease Control and Prevention (CDC) recommends it for some or all children in that age group, kids could start getting vaccinated in the coming days.

But for every parent who feels as passionately pro-vaccine as Chernofsky does, there is at least one other with serious concerns about vaccinating their child. According to an October Kaiser Family Foundation poll, 27% of parents with kids ages 5 to 11 said they would vaccinate their child right away. But even more—35%—said they either definitely wouldn’t vaccinate or wouldn’t unless required. The rest were somewhere in the middle and said they would “wait and see.”

That split illustrates the significant challenge ahead of federal officials and health care workers, who must be ready to fulfill many families’ urgent desire for shots while also reaching those who are hesitant. Dr. Sara Bode, who is the medical director of school-based and mobile-care clinics for Ohio’s Nationwide Children’s Hospital, says pediatric hospitals and public-health departments around the country are gearing up to hold larger-scale clinics that can satisfy much of the pent-up demand for pediatric shots.

Vaccine supply is no longer an issue, so she thinks parents who want to vaccinate their kids should be able to do so easily. But “once this initial surge is over and everyone who wanted it gets it,” Bode says, “that’s where the real work starts to happen.”

Once it begins, a successful vaccine rollout must serve parents with questions or concerns about the vaccine in addition to those who are highly motivated—not just for the sake of those families, but for U.S. public health. Immunizing the roughly 28 million U.S. kids between the ages of 5 and 11 is a key piece of federal officials’ plan for controlling the virus, following their push to vaccinate older children after a shot was authorized for 12- to 15-year-olds in May.

“Not getting vaccinated means that our kids could potentially pass on the virus to others if they get infected,” U.S. Surgeon General Dr. Vivek Murthy said during a May call with parents, pediatricians, youth organizations and community leaders. “Breaking the chain of transmission is going to require us vaccinating our children.”

And, since 5- to 11-year-olds are too young to consent to vaccination themselves, that’s going to require convincing parents who, in many cases, are even more skeptical about vaccinating their children than they were about getting inoculated themselves. All told, about 78% of U.S. residents 12 and older have gotten at least one dose, but looking specifically at 12- to 15-year-olds, that number falls to about 57%.

“Messaging has to be to the parents, not to the kids,” Bode says. “It has to be sensitive and it has to be, usually, one-on-one,” so it can address each parent’s specific concerns. Individuals also tend to respond better when they hear about the vaccine from people who live and work in their community, rather than from government agencies or mass-communications campaigns, Bode adds.

The Biden Administration is banking on that. Its plan to vaccinate kids ages 5 to 11 hinges largely on distributing shots in pediatricians’ offices and schools, capitalizing on the trust parents often inherently hold for those institutions. “You are so often the people that folks want to hear from,” Murthy said on the May call with pediatricians and community leaders. “Your story, your outreach, can make all the difference in helping people get the information they need … and ultimately take that step of protecting their children.”

Dr. Tyree Winters, a New Jersey-based pediatrician, says he and his colleagues have been fielding questions from parents of older children for months, and he expects that to continue once younger kids can get the shot. Parents—even those who are vaccinated—often come in with concerns about their children experiencing vaccine-related side effects, or worried about misinformation they’ve read online.

(The incorrect idea that the shots can cause infertility is a big source of hesitation, he says.) Some are just plain uncomfortable with giving their kids a fairly new vaccine, even if they were willing to get it themselves. Getting through to these parents requires a balance of empathy and careful explanation of the science behind the vaccines, Winters says. “I let them know, ‘You’re not crazy, you’re not being over-dramatic, you’re not being unreasonable,’” he says. “That’s the beauty of being a pediatrician …we can relate to our patients and our families.”

Dr. Kelly Moore, CEO of the pro-vaccine Immunization Action Coalition, agrees that pediatricians can get through to many parents. But “not all children have a regular health care provider that they see, and public education through school systems will be important to reach families more widely,” Moore adds. Offering the shots in schools will also improve access to them, particularly for families that do not have a strong relationship with the traditional health system or parents who can’t take time off work to bring their child to a vaccine clinic.

The desire to keep kids in school can also convince some parents to vaccinate, says Dr. Sherri Young, who led adult and adolescent vaccination efforts in West Virginia’s Kanawha County. By mid-September, just a few weeks into the 2021-2022 school year, more than 1,800 U.S. schools had already experienced COVID-related closures, according to CDC data. That’s something both parents and kids want to avoid—and pitching vaccines as the way to do that can be effective, Young says.

“Sports are very important to kids. Going to school is very important to kids. Going to school is very important for parents,” Young says. “We’re going to keep our schools open longer if we all get in this together.”

Still, there are some parents who don’t believe their children need to be vaccinated, given the low rates of serious illness and death among people 18 and under. Others, concerned by reports of rare heart-related side effects among young people, think the risks of vaccination outweigh the benefits.

More Must-Read Stories From TIME

In authorizing Pfizer’s shot, the FDA said the opposite is true. The vaccine appears more than 90% effective at preventing symptomatic infections among 5- to 11-year-olds, and no serious side effects have been reported among a group of more than 3,000 kids who participated in trials. The CDC’s advisory group will soon discuss in more detail whether certain groups of kids should or should not get the shot.

Moore says the recent Delta-related spike in cases should show parents that there is serious benefit to vaccination. It remains true that children develop severe disease much less often than adults and die from coronavirus even less frequently—but images of overflowing pediatric ICUs and kids on ventilators from this past summer prove that the worst does sometimes happen, she says. Vaccines drastically reduce that risk.

Getting parents to understand that could not only save their children’s lives, but also help the U.S. finally put the worst of the pandemic in the past.

By Jamie Ducharme

Source: How Health Officials Can Reach Vaccine-Hesitant Parents | Time

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Investors Buy Oil on Inflation Fears, Pushing Prices Even Higher

Luc Filip doesn’t work at a big energy company or an industrial manufacturer. He isn’t a day trader or an OPEC official. But he is still helping drive the surge in oil prices.

Mr. Filip is head of investments at SYZ Private Banking in Switzerland, and his big concern is inflation taking a bite out of the $28.5 billion of clients’ investments he manages. So he has been buying oil.

Fund managers like Mr. Filip are contributing to a rally that has pushed oil prices to their highest level since the 2014 energy bust. While energy-futures markets are more typically the province of producers and commodities-focused hedge funds, an oil rally that shows no signs of slowing is now exerting a pull on traditional money managers who run portfolios of stocks and bonds.

Because commodities prices tend to rise alongside inflation, they can protect investment portfolios against its erosive effects. When combined with other commodities like copper and gold, energy is “quite a decent hedge,” said Mr. Filip, who has been buying energy futures and selling longer-dated bonds that will lose value if inflation turns out to be high for longer than expected.

To be sure, inflation fears aren’t the main driver of the West Texas benchmark’s run from $62 a barrel in August to $85 this week. The Organization of the Petroleum Exporting Countries has stuck to its plan to increase production in small increments. A shortage of natural gas has caused some industrial manufacturers to switch to diesel, which is refined from oil.

Untangling these inputs is hard. But traders and analysts say that some of the recent oil gains could be explained by inflation worries, especially on days with no news about supply that might drive trading by the usual players such as commodities brokers and oil producers.

What the Inflation of the 1970s Can Teach Us Today. The U.S. inflation rate reached a 13-year high recently, triggering a debate about whether the country is entering an inflationary period similar to the 1970s.

In one sign of investors’ interest, money has been pouring into funds that buy energy futures and stocks, accelerating just as inflation fears took center stage this fall. These funds have experienced four straight weeks of inflows for the first time since the spring, with last week’s $753 million the highest weekly total in five months, according to data provider EPFR.

Data from the Commodity Futures Trading Commission showed a rise in speculative buying of crude-oil futures and options in the week to Oct. 19. Bets on $100-a-barrel oil—a price last seen seven years ago—surged earlier this summer. This month, investors have put wagers on $200.

These investors, especially those that are newcomers or buying for ancillary reasons like inflation fears, are taking the risk that a sudden shock could send oil prices plummeting. That happened in the spring of 2020, when demand collapsed due to the Covid-19 pandemic just as Saudi Arabia ramped up production.

What is more, energy is a major contributor to the consumer-price index, the broadest measure of inflation. That means that investing in energy as a hedge against rising prices can be a self-reinforcing cycle: As oil prices rise, so does inflation, which sends money managers like Mr. Filip back to the energy market to reup their protection.

“People buy oil, that boosts inflation expectations, and that can feed on itself,” said Evan Brown, head of asset allocation at UBS Asset Management.

Inflation has gone from an expected and natural consequence of economies emerging from lockdowns to a major source of investor angst. Higher prices eat into yields on fixed-rate bonds and loans. Stocks of companies that can’t as easily pass on higher costs to customers tend to take a hit, too.

Some investors have bet that oil prices could rise to $200 a barrel.

U.S. consumer prices in September rose at a 5.4% annual rate, faster than in August and just below a 30-year high. Germany’s 4.5% annual rate in October was the biggest year-to-year increase since 1993.

Central bankers in the U.S. and Europe say higher prices are likely temporary and will ease as supply-chain delays are resolved and economies work through restart creaks. But investors aren’t so sure. In addition to more traditional inflation hedges, such as bonds whose yields are linked to consumer prices, they are flocking to commodities.

SHARE YOUR THOUGHTS

How concerned are you about inflation? Join the conversation below.

Mr. Brown, who helps devise portfolios for some $1.2 trillion of client assets at UBS, is recommending commodity futures, energy stocks and currencies of oil-rich countries such as Russia and Canada. John Roe, head of multiasset funds at Legal & General Investment Management, said he is protecting his investments against runaway prices with Chilean pesos, which are linked to copper prices, and shares in gold miners.

So far the strategy appears to be working. Inflation is rising but so are the prices of energy and many metals. Paul O’Connor, head of multiasset at Janus Henderson, warned that might not last.

Today’s inflation is being driven by gummed-up supply chains that have created shortages of nearly everything, pushing the prices of raw materials higher. But he expects future inflation to be driven more by rising wages, and it is less clear if that would have the same effect on commodity prices. “Quite questionable,” he said of the strategy.

By: Anna Hirtenstein

Anna Hirtenstein is a reporter at The Wall Street Journal in London, covering financial markets. She was previously a reporter at Bloomberg in London, an investment banker at Greentech Capital Advisors in Zurich and has also worked as a field correspondent with a focus on oil in Northern Iraq and West Africa. 

Source: Investors Buy Oil on Inflation Fears, Pushing Prices Even Higher – WSJ

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Ng, Abigail (14 October 2021). “Goldman Sachs says oil prices could be higher for much longer”. CNBC. Retrieved 18 October 2021.

Amazon Bitcoin Rumors Send The Cryptocurrency Surging Towards $40,000

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The crypto market seems to be finally getting out of the mid-summer doldrums. Bitcoin is 14% up from its Friday close, trading at $38,474 as of 6:48 a.m. ET, a price level not seen since mid-June. All major assets are also bouncing up. Ethereum is back above $2,000, trading at $2,354. Cardano and Dogecoin are the biggest movers in the top 10, up by 10.5% and 15% respectively. The broader market is returning 9.85% over the past 24 hours.

The surge began amid the swirling rumors that Amazon AMZN +1.2% is starting to move into crypto. On June 22, the company published a job posting for a ‘digital currency and blockchain lead’ and this weekend London-based business publication CityAM published an unconfirmed report (based on an anonymous ‘insider’), saying that Amazon could start accepting bitcoin payments “by the end of the year” and is investigating its own token for 2022. It also noted that the company was getting ready to accept payments in bitcoin, ether, cardano, and bitcoin cash.

Blockchain is no stranger to the retail and cloud computing giant – it was a member of the Forbes Blockchain 50 list in 2020 and 2019, offering services such as a toolkit on top of Amazon Web Services for clients to build permissioned blockchains, and is, in fact, the primary host for Infura, a middleware solution for nodes to access the Ethereum blockchain. However, the company has largely kept a firewall between itself and virtual currencies.

The rally gained further steam early Monday due to short squeezes among bitcoin bears. Thousands of traders liquidated $883 million in short positions overnight, according to data from Bybt, a cryptocurrency derivatives trading and information platform. Shorts on bitcoin accounted for $720 million, or 81% of those liquidations.

Bendik Norheim Schei, head of research at Norwegian crypto analytics firm Arcane Research, noted in a message to Forbes that  “this was the largest short liquidation (short squeeze) we have recorded to date.” He also speculated that Amazon rumors could have been a major catalyst behind the surge.

It remains unclear whether the rally could be sustained but analysts offer positive outlooks. “As simple as it might be to say, the bottom is in,” writes Maxwell Koopsen, senior copy editor at crypto exchange OKEx. “Now that resistance has formed at $40,000, it may either take substantiation to the claims of Amazon’s intentions or a strong show by the buyers at $34,000–$36,000.”

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I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

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