Inflation now "entrenched" in U.S. economy, Goldman Sachs CEO says
Inflation is now "deeply entrenched" in the U.S. economy, according to one of America's top bankers.
David Solomon, CEO of Goldman Sachs, told Wall Street analysts on Monday that a combination of economic factors and the war in Ukraine is eroding the confidence of consumers and businesses, while also contributing to stock market volatility.
Although the investment bank sees signs that inflation could ease in the second half of the year, "the answer is uncertain, and we will all be watching it very closely," he said in an earnings call.
As of June, inflation around the U.S. had jumped 9.1% over the last 12 months, the steepest increase since November of 1981, according to federal labor data. The jump in consumer prices was broad-based, including rent, medical care, and new and used vehicles.
Green shoots?
Despite surging inflation, economists point to several signals in suggesting that the sharp price increases that have slammed household budgets could be moderating.
While so-called core inflation, which strips out volatile food and energy prices, has risen nearly 6% over the last year, it rose more slowly in June than in the previous month. Ian Shepherdson of Pantheon Macroeconomics also notes that what has been a substantial rise in worker wages — a key cost for employers — is easing.
In battling inflation, the Federal Reserve has jacked up its benchmark interest rate this year and is expected to hike it as much as three-quarters of a percentage point when policy makers meet next week.
"We think core inflation will fall faster than markets and the Fed expect," Shepherdson said in a report.
Drivers are also seeing some relief at the pump, where gasoline prices have fallen for more than 30 straight days and now stand at a national average of $4.52 for a gallon of regular, down from $5.02 in mid-June.
Amos Hochstein, a Biden administration energy adviser, told CBS News' Margaret Brennan on "Face the Nation" on Sunday that he expects gas prices to continue sinking toward $4 per gallon.