The Week in Business: Moderating Inflation

What’s Up? (April 9-15)

Inflation Falls, With Caveats

There was good news and bad news in last week’s inflation report. First, the good: The Consumer Price Index climbed 5 percent in March from a year earlier, a full percentage point lower than it was in February. That’s the slowest pace of price increases in almost two years. Details in the report, however, showed that inflation remained firm below the surface. A measure known as core inflation, which removes volatile food and fuel prices, picked up by 5.6 percent from a year earlier. Analysts say the new data probably helps make the case for another interest rate increase by the Federal Reserve at its next meeting in early May. But economic data isn’t the only consideration: Jerome H. Powell, the Fed chair, has said that the central bank is also keeping a close eye on credit conditions, after the recent bank failures.

Biden’s Electric Ambitions

Last Wednesday, the Biden administration proposed sweeping plans to get more electric vehicles on the road. The plans outlined that two-thirds of new passenger cars and a quarter of new heavy trucks are to be all-electric by 2032. That’s an ambitious goal, given that about 6 percent of new cars and less than 2 percent of trucks sold last year meet that standard. Shrinking tailpipe emissions is key to reaching the administration’s goal of cutting the country’s emissions in half by 2030. While most automakers have already poured billions into developing electric vehicles, they could struggle to scale up their production because of difficulties sourcing materials and the fact that they need to build plants to manufacture millions of E.V.s. And car buyers may still hesitate to buy electric: Though the federal government offers buyers tax credits for electric vehicles, less than half of the cars on the market right now qualify for them. Plans to build charging stations are also lagging.

No Slump for Big Banks

What banking crisis? In their quarterly earnings reports on Friday, some of the country’s largest banks defied analysts’ dim expectations that last month’s bank collapses could crimp profits. Not so. Revenue at JPMorgan Chase rose across the board, pulling in $12.6 billion in profit, up 52 percent from a year earlier. Wells Fargo reported $5 billion in profit, a 32 percent increase from a year ago. Those increases are partly because of the fallout from the failures of two midsize banks, Silicon Valley Bank and Signature Bank, which may have led many customers to turn to bigger banks for confidence. Higher interest rates have also shored up large banks’ balance sheets. But their smaller counterparts, some of whom will report their first-quarter results this week, may feel more of a sting.

What’s Next? (April 16-22)

Fox News v. Dominion

Fox News is heading to trial this week to defend itself against a $1.6 billion defamation lawsuit brought by Dominion Voting Systems, the voting machine maker accusing the network of broadcasting lies about the 2020 election. A series of revelations led up to this moment, including text messages from the Fox host Tucker Carlson that suggested a difference in his private opinions and those he had espoused on his show. One of Fox’s main defenses was going to hinge on the notion that these election falsehoods were newsworthy. But a judge said last week that Fox’s lawyers could not make that argument in court. The judge also ruled Dominion could not refer to the Jan. 6 attack on the Capitol except in very narrow circumstances. Over the course of several weeks, Rupert and Lachlan Murdoch, chairs of the conservative media empire, and other high-profile Fox employees are expected to testify.

Article source: https://www.nytimes.com/2023/04/16/business/the-week-in-business-inflation-economy.html