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Latest economic data is 'contradictory and dissonant'

Yahoo Finance's Rick Newman takes on Fed policy, energy, and "the virus still in charge."

Video transcript

- Which Queen song would best describe where we stand after this jobs report? Would it be, "Another One Bites the Dust" or "Don't Stop Me Now?"

RICK NEWMAN: It's a mix of both. I mean, you have to play a medley. And we were singing some Queen before we came on, so I'm glad it's top of mind, Adam. It's really a total contradictory story in the economy this week. So I'm looking at three things that affect the political economy this week. First, Fed Chair Jay Powell, for the first time, signals elevated concern about inflation and possibly tightening monetary policy sooner. The market's had a negative reaction to that. Then, we got a weak jobs report today. And on top of this, the oil slide continues, and crude futures prices are now down 12% over the last two weeks.

So Powell is concerned about inflation, but this huge slide in oil prices is anti-inflationary, and that's going to lower inflation, probably not going to show up next week. But we'll show up in the numbers next month. And then you got a weak jobs report that suggests growth is slowing, which also is anti-inflationary. So I don't think anybody can draw a single narrative out of what's happening in the economy right now. It's very messy. And I think it's going to be like this, possibly through the winter, because we're now facing another COVID winter, a lot of uncertainty. And it might not be until spring until this picture starts to clear up.

- When you talk about this picture clearing up, I'm trying to, like everybody, figure out where things are going. And we were told to prepare for this record-cold winter, which hasn't hit yet. And you just brought up the fact that heating prices may actually fall. Do people forgive if you hold-- Republicans, Democrats-- if you hold political power responsible for inflation? Do you forgive when those prices that you fear don't come to materialize?

RICK NEWMAN: Well, first of all, you're going to filter this through your own political views. So if you don't like the guy in charge, a 10% increase in gas prices is going to drive you crazy, and you're going to blame it on the president. But let's talk about the marginal, you know, the marginal voters, the swing voters who basically decide elections these days. You know, if you talk about gasoline, for example, my thinking is if gas is under $3 a gallon, on average, so if there's a two handle on a gallon of gas, I think consumers are fine with that. I think the pain point is when you get over $3 in up to around where we are right now, which is about 3.35, 3.40.

It's harder to measure heating fuel costs because people don't see the price advertised. On the corner of the way, they do with gasoline. But they know when it hurts. And it's possible consumers are going to be getting a break there, too, as well, not for the right reasons, but for the wrong reasons, which is, apparently, we have an economic slowdown because of Omicron. So this goes back to what we've been seeing for over a year, Adam. The virus is in charge. And we keep wanting to get past the virus, but we're not yet.

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