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Fast Take: U.S. Consumer Inflation Muted, Just Don’t Buy a Used Car | Investing News

Fast Take: U.S. Consumer Inflation Muted, Just Don’t Buy a Used Car | Investing News

(Reuters) – U.S. consumers on balance paid only a little bit more for goods and services last month as supply chain disruptions that contributed to a bump up in inflation over the summer began to ease, a welcome respite for the millions who remain unemployed.

While that easing pressure on pinched consumers might offer a benefit to Republican President Donald Trump’s reelection prospects against Democratic challenger Joe Biden, it does come with a big “on the other hand” caveat: It is the latest sign of fading momentum in the rebound from this spring’s record-setting economic slump.

A bit of inflation typically is an indication of strengthening demand, an encouraging signal that consumers have reliable sources of income allowing them to contribute to growing an economy that hinges extensively on their spending. But with roughly 11 million still out of work and desperate for a new round of COVID-19 relief from Washington, September’s modest uptick in prices is no such signal.

Here’s Jefferies chief financial economist Aneta Markowska’s take: “After several months of above-trend gains, price pressures are finally normalizing. Both headline and core CPI increased by just 0.2% (month-to-month) in September, with the underlying details painting an even weaker picture.”

Graphic: September CPI: All about used vehicles https://fingfx.thomsonreuters.com/gfx/mkt/azgvojwqepd/Pasted%20image%201602602548532.png

In fact, she notes prices would have been unchanged but for one thing: The largest monthly increase in used car and truck prices since 1969. And with cash-strapped consumers increasingly reliant on their own transport to get to an on-site job, that’s no welcome development.

Food price increases, too, are moderating after a big run up in the spring, but where you eat makes a big difference.

If eating at home, as millions without work have no choice but to do, then food prices were lower for a third straight month.

If

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Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next year.

(Reporting by Bart Meijer, editing by Larry King)

Copyright 2020 Thomson Reuters.

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Used Vehicles Lift U.S. Consumer Prices, but Inflation Slowing | Investing News

Used Vehicles Lift U.S. Consumer Prices, but Inflation Slowing | Investing News

WASHINGTON (Reuters) – U.S. consumer prices increased for a fourth straight month in September, with the cost of cars and trucks rising by the most since 1969, though inflation is slowing amid labor market slack as the economy gradually recovers from the COVID-19 recession.

While the benign report from the Labor Department on Tuesday will have no direct impact on monetary policy, it should allow the Federal Reserve to keep interest rates near zero for a while and continue with massive cash infusions as it nurses the economy back to health.

The U.S. central bank is now more concerned about the labor market and has embraced flexible average inflation targeting, which in theory could see policymakers tolerate price increases above its 2% target for a period of perhaps several years to offset years in which inflation was lodged below its goal.

At least 25.5 million people are on unemployment benefits.

The consumer price index rose 0.2% last month after gaining 0.4% in August. The CPI advanced 0.6% in both June and July after falling in the prior three months as business closures to slow the spread of the coronavirus weighed on demand.

A 6.7% jump in the prices of used cars and trucks accounted for most of the increase in the CPI last month. That was the biggest gain since February 1969 and followed a 5.4% advance in August. There were also increases in the costs of new vehicles and recreation. But prices for motor vehicle insurance, airline fares and apparel fell.

In the 12 months through September, the CPI increased 1.4% after rising 1.3% in August. Economists polled by Reuters had forecast the CPI climbing 0.2% in September and rising 1.4% year-on-year.

Excluding the volatile food and energy components, the CPI rose 0.2% last month after increasing 0.4% in

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Desperate Americans Hit by Pandemic Beg Congress, Trump to Pass Economic Relief Bill | Investing News

Desperate Americans Hit by Pandemic Beg Congress, Trump to Pass Economic Relief Bill | Investing News

By Brad Brooks, Mimi Dwyer and Rich McKay

(Reuters) – Sylvia Padilla spent last Thursday checking food pantries in Lubbock, Texas for groceries to feed herself, her daughter and three-year-old grandson.

Some places were closed, others had nothing available. Outside the shuttered St. John’s United Methodist Church, Padilla, 50, recounted her struggle to survive during the economic disaster that the novel coronavirus pandemic had dumped upon her, choking words out through tears of fear and frustration.

“This is like a nightmare I can’t wake up from,” Padilla said, resting her face in her hands. “It really feels like a nightmare, but it’s our reality.”

Like many Americans, Padilla is barely getting by and says she desperately needs government help. She received a $1,200 check in April from the Coronavirus Aid, Relief and Economic Security Act passed by the U.S. Congress and signed by President Donald Trump on March 27.

The check helped her pay back rent she owed and she and others are hoping that lawmakers and the Trump administration can reach accord soon on another relief package after months of disagreements.

“We’ve got some potatoes and beans at home. A bit of flour for tortillas. We’re just trying to make that stretch,” said Padilla, whose business selling food to construction workers ended with the pandemic and her daughter last month lost her job in retail sales.

“A new stimulus check would really mean the world to me right now.”

After March’s shutdowns to curb the spread of the virus, unemployment in the United States shot to levels https://www.reuters.com/article/us-usa-economy/coronavirus-deals-u-s-economy-great-depression-like-job-losses-high-unemployment-idUSKBN22K1NS not seen since the Great Depression. Many jobs returned as parts of the economy reopened, and consumer spending rebounded, thanks in part to the $2.2 trillion stimulus bill.

Now that cash, paid directly to individual Americans and small businesses to pay

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Exclusive: Goldman Sachs Financial Targets Jeopardized as Pandemic Slows Revamp | Investing News

Exclusive: Goldman Sachs Financial Targets Jeopardized as Pandemic Slows Revamp | Investing News

NEW YORK (Reuters) – Goldman Sachs Group Inc management is considering whether to scale back financial targets set earlier this year, as the coronavirus pandemic has hindered the bank’s business model revamp, analysts and sources inside the bank told Reuters.

Goldman unveiled plans to boost returns on equity and cut costs during its first-ever investor day in January. To reach its goals, Goldman would squeeze more revenue from existing businesses like wealth management as well as relatively new ones like consumer lending, while launching additional corporate services like cash management.

Since then, the pandemic has slammed into the economy, crippling loan demand and causing widespread unemployment. It has also prevented Goldman bankers from drumming up business with new customers the way they could before coronavirus lockdowns.

Although Goldman’s trading revenue has soared thanks to market volatility, other initiatives have stalled.

“Unless there’s a silver bullet vaccine cure, it looks like Goldman will not hit its targets,” said Viola Risk Advisors bank analyst David Hendler. “It’s behind on wealth management and it’s behind on consumer.”

A spokesman for Goldman referred Reuters to executives’ prior statements but declined to comment further.

Goldman Sachs executives have stood by their targets, stressing that the path to achieving them in the coming years would not be “linear.” They are not expected to move the goalposts on Wednesday when the bank reports third-quarter results.

Instead, the bank may change targets in January, a year after they were set, said the sources, who were not authorized to speak publicly.

As it stands, Goldman pledged to produce a return on tangible common shareholders’ equity (ROTE) of more than 14% by 2023, compared with 10.6% in 2019.

The bank also outlined plans to cut expenses by $1.3 billion over that time frame, producing an efficiency ratio of 60% compared

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