Personal income rose in the US and consumers continued to spend freely last month, according to a new government report released on Friday. But at the same time, a crucial measure of inflation inched higher.
Investors were encouraged by the news and seemed to ignore concerns about inflation. The markets rose on Friday, ending the week on an up note.
The US Commerce Department reported that consumer spending rose at a seasonally adjusted annual rate of 0.6 percent in March as income moved up at roughly the same pace.
A measure of inflation that excludes food and energy, which the Fed studies closely to gauge inflation, rose 2.1 percent compared with last April, just above the 2 percent mark the central bank considers healthy.
The Dow Jones industrial average jumped 67.56 points, or 0.6 percent, to 11,278.61. The Standard & Poor's 500-stock index rose 7.28 points, or 0.57 percent, to 1,280.16. The NASDAQ composite index added 12.13 points, or 0.55 percent, to 2,210.37. For the week, the Dow rose 1.21 percent, the S&P 500 gained 1.04 percent and the NASDAQ 0.75 percent.
Influence
Yet, some economists said on Friday that rounding of the inflation number might have been the biggest factor influencing investors.
The Commerce Department reported the inflation number for last month as 0.2 percent. However, the actual figure was 0.24968, giving some economists pause.
"What's .001 between friends?" said Stuart Hoffman, chief economist with PNC Financial.
Had that 0.24968 been rounded up to 0.3, which was the number in March, investors probably would have had a different reaction on Friday.
"The economy is slowing down," Hoffman said.
"But at the same time inflation is speeding up. That's why they have a tough call to make. Is rising inflation a bigger threat to sustained economic growth, or is a softer economy a bigger threat?" he said.
The Fed, which will decide late next month whether to raise its benchmark short-term interest rate above 5 percent, will look at inflation against the backdrop of what by most accounts is a slowing economy.
Unfazed
As investors barely blinked at the consumer spending data, they also shrugged off a report that showed consumer confidence is at its lowest point since right after the hurricanes last summer.
The University of Michigan's consumer sentiment index, an indicator of how well the economy will perform in coming months, moved to 79.1 for this month, from 87.4 last month. That is in line with what many economists see as a pattern for the economy for the remainder of the year.
"A gradually softening trend for consumer spending is the most likely scenario in the quarters ahead," Joshua Shapiro, chief US economist at MFR, wrote in a research note, "particularly as housing cools off. The recent steep rise in gasoline prices will not help any as well."
Richard Curtin, director of the Michigan study, called the effect of gas prices on the economy "corrosive," and noted that a large percentage of respondents in the survey's history said gas prices were hurting their financial situations.
"Consumers expect a slowdown in economic growth," Curtin said.
"High gas prices and rising interest rates have finally convinced households to sharply realign their expectations," he said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”