Inflation picks up as prices halt monthslong decline
U.S. inflation accelerated at the end of 2023, fueled by stubborn services costs while a protracted decline in goods prices petered out.
The consumer price index increased 3.4% in the year through December, the most in three months, according to government figures. It also rose by more than forecast on a monthly basis as housing costs continued to climb, Americans paid more to drive and energy prices advanced for the first time since September.
The figures show the Federal Reserve is facing a bumpy path to tame inflation, which risks staying elevated in coming months should prices of goods, such as clothing and cars, continue to climb. Fed policymakers and Wall Street economists have been starting to question the durability of the recent downturn, which has largely stemmed from improving supply chains.
Much of the surprise in so-called core goods, which excludes energy and food, came from pickups in prices for used cars and apparel, despite year-end promotional activity. Services prices also held firm, notably within costs for housing and car insurance, which rose the most on an annual basis since 1976.
“The concern that must be growing in the Fed's mind at this point is that we are now getting less deflation and disinflation from goods and energy prices, and we still have yet to see a measurable reduction in inflation in housing or most services components,” Scott Anderson, chief U.S. economist at BMO Capital Markets, said in a note. “This suggests the Fed's journey to sustainable 2.0% inflation is still not complete.”
Google, Amazon lay off hundreds
Alphabet's Google is laying off hundreds of people working on its digital assistant, hardware and engineering teams as part of a continued effort to lower costs and prioritize efforts around artificial intelligence.
The affected employees, with at least 700 in the Bay Area, included those working on the voice-based Google Assistant and at the augmented reality hardware team. The company's central engineering organization was also hit by cuts, the company said.
The reductions come as Google's core search business feels the heat from the AI offerings of Microsoft and ChatGPTcreator OpenAI. On calls with investors, Google executives pledged to scrutinize their operations to identify places where they can make cuts, and free up resources to invest in their biggest priorities.
Amazon.com also laid off hundreds of staff in its Audible, Prime Video and studios business this week, raising questions about whether another major round of job cuts was underway in Silicon Valley.
Hertz selling 20,000 EVs
Hertz Global Holdings plans to sell a third of its U.S. electric vehicle fleet and reinvest in gas-powered cars due to weak demand and high repair costs for its battery-powered options.
The sales of 20,000 EVs began last month and will continue over the course of 2024, the rental giant said Thursday in a regulatory filing. Hertz will record a non-cash charge in its fourth-quarter results of about $245 million related to incremental net depreciation expense.
The dramatic about-face, after Hertz announced plans in 2021 to buy 100,000 Tesla Inc. vehicles, underscores the waning demand for all-electric cars in the U.S. EV sales growth slowed sharply over the course of 2023, rising just 1.3% in the final quarter as consumers were put off by high costs and interest rates.
Tesla boosts pay for workers
Tesla notified workers at its California car plant of pay increases across its U.S. factories, the latest bump by a nonunion automaker the United Auto Workers is trying to organize.
All U.S. production associates, material handlers and quality inspectors are getting a “market adjustment pay increase” to kick off the new year, according to a flyer posted at Tesla's facility in Fremont, Calif. The document viewed by Bloomberg News doesn't say how much of a raise workers will get. Tesla's senior director of human resources didn't respond to questions.
Tesla is joining the likes of Toyota Motor Corp., Volkswagen AG and Hyundai Motor Co. in hiking pay at U.S. plants after the UAW secured historic labor contracts last year for workers at Ford Motor Co., General Motors Co. and Stellantis NV. The union is now parlaying success at the bargaining table into a simultaneous organizing drive targeting Tesla and a dozen other manufacturers.