Wall Street veered sharply into the red on Friday following a new inflation reading that was worse that economists had expected, fanning worries about more aggressive steps by the Federal Reserve to tame rising prices.
At 10am, the Dow was down 751 points, or 2.33 percent. The S&P 500 lost 2.56 percent and the Nasdaq composite was down 2.99 percent.
The Labor Department’s report on Friday showed that the consumer price index jumped 8.6 percent in May from a year ago, the fastest increase since December 1981 and much hotter than expected, a sign that inflation has not yet peaked.
The new figures suggested that the Federal Reserve could continue with its rapid interest rate hikes through September to combat inflation, after already raising rates by 75 basis points since March.
I watch my 401K account almost daily. As of the close of the market yesterday, the value of my account is down 18.54% since January 1, 2022, and more than 8% for the past year, effective May 31. I admit I am an aggressive investor; more than 50% of my account is invested in a stock fund. Bonds aren’t doing much better, btw; my bond fund is only down 7.4% over the past year. Whoopee.
This is the primary reason why.
If you have any question why we are in such a steep inflationary period, here is Rand Paul explaining it (skip ahead to about the 3:00 mark):
As he points out, it isn’t just the Democrats in government who won’t stop the crazy spending. Plenty of Republicans are just as guilty.