The rise in inflation is the main course today, along with a side order of workers returning to their Manhattan offices.
The Consumer Price Index was 5% higher in May than the year before, the largest 12-month increase in almost 13 years. While last year’s figure was certainly negatively impacted by COVID-19, this increase is still higher than expected. If we look just at the monthly increases, May CPI was 0.6% higher than April, which was 0.8% higher than March, which was 0.6% higher than February. The last time we saw three monthly increases that large was over a decade ago.
If we look at just core inflation, which excludes energy and food prices, the 3.8% increase from a year ago is the largest in almost 30 years. Scared yet?
Last Friday, I said that the one good thing about less-than-expected job growth is that it might keep the Fed from making policy changes for a while longer. But this data, along with the unprecedented increase in the money supply over the past year, should have them preparing to tighten. The Federal Open Market Committee meets next week, and the Fed has been dropping hints it is ready to move when needed. In my opinion, that time should be very soon.
Inflation is surging right now; the only question is how long it will last.
I’ll pause for a moment while you hear the theme from “Welcome Back, Kotter” in your head.
A new survey from the Partnership for New York City found that 62% of Manhattan’s one million office workers will be back in their offices—most following a hybrid model—by September. This is great news for the city’s economy, which desperately needs the economic activity and taxes these workers generate. As of late May, just 12% of workers had returned to their offices.
Here are some of the survey’s key findings:
- 71% of companies will use a hybrid work model, while 25% will be full-time in office, and 4% will not require workers to return.
- 84% of respondents said employee concerns about mass transit safety remain an obstacle to returning to the office.
- The real estate industry has returned 70% of its workers to their offices, the most of any industry. Financial services is in second place at just 14%.
- So far, large employers have been bringing workers back at a slower pace than smaller ones.
- 72% of employers surveyed said they would not require returning employees to be vaccinated.
Have a great weekend.