On The Money — Inflation hits nearly 40-year high

Happy Friday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: digital-stage.thehill.com/newsletter-signup.

Today’s Big Deal: November’s rise in consumer prices was just about as high as we expected, which still isn’t great news. We’ll also look at a looming meeting between President Biden and Sen. Joe Manchin (D-W.Va.).

But first, find out which corporation is the latest target of Reddit mischief makers.

For The Hill, I’m Sylvan Lane. Write me at slane@digital-stage.thehill.com or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@digital-stage.thehill.com or @NJagoda and Aris Folley at afolley@digital-stage.thehill.com or @ArisFolley.

Let’s get to it.

Inflation up 6.8 percent, highest since 1982 

Consumer prices surged 6.8 percent in the year leading into November and 0.8 percent last month alone as a roaring economy overwhelmed struggling supply chains and fueled inflation, according to data released Friday by the Labor Department.

The consumer price index (CPI), a closely watched gauge of inflation, rose sharply in November as retailers, warehouses, suppliers and shipping companies scrambled to meet intense demand. 

• Economists expected the CPI to rise 0.7 percent in November and 6.7 percent annually after year-over-year inflation rose to 6.2 percent in October, the highest rate in 30 years.

• November’s annual inflation rate of 6.8 percent is the highest since 1982.

Why it happened: Prices rose broadly across the economy, the Labor Department said, with prices for gasoline, shelter, food and vehicles driving much of the increases. Inflation earlier in the year was driven almost entirely by vehicles, electronics and other goods constrained by a global computer chip shortage but has now spread through many sectors.

• Consumers paid 0.7 percent more for food, 6.1 percent more for gasoline and 0.5 percent more for shelter than they did in October.
• Prices for food in general are up 6.1 percent on the year, with grocery store purchases up 6.4 percent and food purchased from restaurants up 5.8 percent.

While prices for food, energy, and new and used vehicles all rose at a slower pace in November than in October, it could be months before slowing monthly price growth translates into lower annual inflation. I explain the problems it creates for President Biden and the Fed here.

LEADING THE DAY

Biden says he will speak with Manchin next week

President Biden on Friday acknowledged that he wasn’t sure he could get Sen. Joe Manchin (D-W.Va.) on board to pass his sweeping climate and social spending package but said he would be talking to him at the start of next week.

Biden was asked after an event at the White House on Friday afternoon whether he could get Manchin to vote for the package with inflation rising.

“I don’t know the answer to that. I’m going to be talking to him at the beginning of the week,” Biden answered.

The background: Manchin has repeatedly raised concerns about the legislation and called for his colleagues to proceed slowly and carefully in considering it. At an event sponsored by The Wall Street Journal, Manchin again warned Democratic colleagues to move cautiously and deliberately in order to not overstimulate the economy.

“We’ve got to make sure we get this right. We can’t afford to continue to flood the market as we’ve done,” he said.

The president argued that the legislation, which would provide funding for free preschool, lower prescription drug costs and extend the expanded child tax credit, would reduce inflation.

“I think if you look at what most people, most of the economists are saying, this Build Back Better bill is not going to increase inflation, it will diminish inflation,” Biden said. “It has a negative impact on inflation. It doesn’t raise inflation, but that’s hard for people to think about right now.”

Morgan Chalfant takes us there. 

Read more: More than 50 economists have signed on to a new letter calling on Congress to “swiftly” pass Biden’s sweeping climate and social policy bill, arguing that it would alleviate some of the pressures of inflation by lowering health care and other costs for families.

Here comes the son 

A disagreement over taxes between Senate Finance Committee Chairman Ron Wyden (D-Ore.) and his son Adam Wyden has become increasingly public in recent weeks as Democrats seek to enact a social spending package that is paid for in part by tax increases on high earners.

Ron Wyden, 72, is a leading proponent of raising taxes on the rich, and he’s been pushing to add to the social spending package his proposal to tax billionaires’ unrealized capital gains annually. Adam Wyden, a 37-year-old, Florida-based hedge fund owner, has criticized his father’s efforts to raise taxes on the rich on social media and in media interviews.

The dispute between father and son was spotlighted in a New York Times article on Friday. Naomi has more here.

Good to Know

A Starbucks store in Buffalo, N.Y., on Thursday became the first of the company’s U.S. locations to vote to unionize.

Here’s what else have our eye on:

• Republicans are hoping to sway Sen. Joe Manchin (D-W.Va.) into hitting pause on President Biden’s climate and social spending plan — or nixing it altogether — using a new Congressional Budget Office (CBO) report on the cost of the bill if all of its provisions were made permanent.
• Meta, the parent company of Facebook, announced on Friday that it was adding several products to its bug bounty program, which include their Ray-Ban smart glasses, dubbed “Ray-Ban Stories.”

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.