Dow Plunges as U.S. Inflation Rate Hits 40-Year High
The stock market extended an end-of-week selloff on Friday after the Labor Department reported inflation unexpectedly returned to record highs last month—feeding concerns that the Federal Reserve may embark on a more aggressive campaign to temper rising prices, even if it risks stunting economic growth.
The Dow Jones Industrial Average plunged 880 points, or 2.7%, to 31,392 on Friday, and the S&P 500 fell 2.89% and the tech-heavy Nasdaq 3.5%; for the week, the indexes fell 5%, 5.7% and 7%, respectively.
The government’s official consumer price index rose 8.6% year-over-year in May, its highest level since 1981.
Overall, the average inflation we're seeing with the basket of goods above comes out to 30.75 percent y/o/y. Of course these should be weighted to reflect the average consumer monthly budget allocation, but the point holds:
— Tom Elliott (@tomselliott) June 11, 2022
The central bank is expected to announce a half-percent interest rate hike next week, but based on this news it could decide to go higher.
The move would be historic — the last time the Fed delivered a 75 basis point hike was in November of 1994, nearly three decades ago.
In what alternative universe does this add up to an 8.6% inflation rate? pic.twitter.com/PI5cmnWU8Y
— Wall Street Silver (@WallStreetSilv) June 11, 2022
Inflation is properly defined as an expansion of the money supply. However in the 20th century, the federal government began a series of steps to expand the money supply to facilitate more expansive federal spending 2/
— Tom Elliott (@tomselliott) June 10, 2022
Great thread. All this talk about "The worst inflation since 1982" is nonsense. They know it's way worse. And it took 16% interest rates to tame it back in 1982. No way in Hell they could do that today. The stock market crashes when the raise it half a percent.
— Narrative Slayer (@death2freedom) June 10, 2022