On The Money: Inflation jumps at fastest pace since 2008 | Biden ‘encouraged’ on bipartisan infrastructure deal

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THE BIG DEAL—Inflation jumps at fastest rate since 2008 as coronavirus rebound spurs demand: Consumer prices rose at the fastest rate in more than a decade as the recovering U.S. economy pushes inflation higher, according to data released Wednesday by the Labor Department

• The consumer price index (CPI), a closely watched gauge of inflation, rose 0.8 percent in April and 4.2 percent in the year leading into last month. It was the fastest annual rate since a 4.9 percent jump in September 2008. 
• The CPI minus food and energy prices, which are more volatile, rose 0.9 percent in April for the largest monthly increase since 1982.

What happened? Most of April’s price increases were driven by areas of the economy hit hard by the coronavirus recession adjusting to a surge of new demand. 

• Prices for used cars and trucks soared 10 percent in April, the largest one-month increase since the Labor Department began tracking it in 1953, driving roughly a third of all April price increases.
• The Labor Department said that increases in prices for shelter, airfares, recreation, motor vehicle insurance and household goods and services — all of which had collapsed last year — were also major drivers of April’s price increases.

The political upshot: Inflation was widely expected to keep rising as prices recovered to and slightly exceeded their pandemic lows with the U.S. economy kicking back into gear. But the April increases in inflation were larger than some analysts expected, causing stock futures to sink after the release of the data. I break it down all here.

Reactions:

• “We have been saying for some time that reopening the economy would put some upward pressure on prices.” — Federal Reserve Vice Chairman Richard Clarida.
• “We believe part of the acceleration in inflation will be transitory, and we share the Fed’s view that this isn’t the start of an upward inflationary spiral.” — Kathy Bostjanic and Gregory Daco of Oxford Economics.
• “You’re watching food costs go up, housing costs go up, lumber costs. There is inflation everywhere.” — House Minority Leader Kevin McCarthy (R-Calif.)

LEADING THE DAY

Biden ‘encouraged’ by meeting with congressional leaders on infrastructure: President Biden on Wednesday said he was “encouraged” about the prospects of an infrastructure deal after meeting with top congressional leaders, even as he acknowledged the two parties remain at odds on how to finance a package.

• Biden told MSNBC’s Lawrence O’Donnell that he did not get into how to pay for the bill with the top four leaders from Capitol Hill, but focused on what constitutes infrastructure amid talks on a potential compromise.
• Speaking later to reporters, Biden said he “came away encouraged” from his meeting earlier in the day with Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Charles Schumer (D-N.Y.), House Minority Leader Kevin McCarthy (R-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.).

“I’m encouraged that there’s room to have a compromise on a bipartisan bill that’s solid and significant and a means by which to pay for it without dropping all of the burden on middle class and working class people,” Biden added. The Hill’s Brett Samuels has more here.

The prospects: The issue of how to pay for the eventual package remains one of the biggest roadblocks to getting an infrastructure deal done. Still, Biden has remained optimistic even as the White House says it wants to see progress by Memorial Day.

“I want to make it clear,” Biden told MSNBC. “I want to get a bipartisan deal on as much as we can get a bipartisan deal on. And that means roads, bridges, broadband, all infrastructure.”

Judge rejects GOP effort to block tax provision in Biden stimulus bill: A federal judge on Wednesday ruled against an effort by Ohio’s Republican attorney general to temporarily block a provision of President Biden’s coronavirus relief law that forbids states from using federal aid to offset any future tax cuts.

In a narrow victory for the Biden administration, District Court Judge Douglas Cole ruled that Ohio’s lawsuit against the tax provision has merit and may very well succeed in court but that a preliminary injunction against the law’s enforcement would be inappropriate at this stage, when it is unlikely that the Treasury Department would take action against the state.

“The bottom line is this — a preliminary injunction that stands no meaningful prospect of ever being enforced, as the Secretary is unlikely to be in a position to recoup funds while this suit is pending, adds nothing by way of clarity,” wrote Cole, a Trump appointee on the U.S. District Court for the Southern District of Ohio.

“Thus, while the Court finds that irreparable harm likely exists, the requested preliminary injunction does not avoid that harm,” he added. The Hill’s Naomi Jagoda breaks it down here.

GOOD TO KNOW

• Stocks on Wednesday extended losses from the beginning of the week following the release of a government report showing unexpectedly high inflation.
• A group of Senate Democrats on Wednesday introduced legislation to end the carried-interest tax break that benefits investment managers after President Biden also called for scrapping the tax preference as part of his human infrastructure plan.
• The Senate Commerce Committee voted Wednesday to approve legislation that would invest billions in science and emerging technologies in an effort to compete with China.
• Amazon is doubling its workforce in Arlington, Va., by hiring close to 2,000 employees for its second headquarters.
• The Senate Commerce Committee on Wednesday advanced President Biden’s nominee to the Federal Trade Commission, Lina Khan. 

ODDS AND ENDS

• Chick-fil-A is facing a shortage of its beloved “Chick-fil-A Sauce” at locations across the U.S.
• Delta is seeking volunteers to help out in loyalty lounges amid a staffing shortage.