If you thought the 21st century’s debilitating fight over health care would be over, think again. Rising healthcare costs, a surging stock market and elevated home prices are just three of the challenges policymakers face when it comes to controlling inflation.
Budget-makers, government agencies and Fed watchers here at the Washington Post Business section are keeping a close eye on all of these issues. What follows is a rundown of some of the questions we’re grappling with as we look forward to the new year.
Although critics contend that the Fed is too hands-off, policy makers are determined to stay ahead of any market forces that may end up eroding their ability to keep inflation under control. Health care, stock market and housing prices are all on policymakers’ radar, as are the biggest trade issues to loom over the region, including a widening trade gap and a possible trade war between the United States and China.
“Inflation remains a significant risk in 2019, particularly in the context of moderate economic growth,” said David Malpass, managing director at Encima Global. “All three of these factors — inflation, a possibly softening housing market and a potentially overheated labor market — will feed into continued price pressures. The Fed has a unique role in controlling these events. It has prevented the inflation climate from getting more worrisome than it is. The central bank’s ability to influence the prices of these items will be tested in 2019.”
Fed policy makers have raised interest rates three times in 2018, out of four total increases planned for the year. Still, Fed policymakers have signaled an intention to boost rates “a little bit more” in 2019. But many have been spooked by recent indicators.
Among the recent indicators of inflation:
Housing and rental prices rose at a relatively weak pace of 2.2 percent from December 2017 to October 2018.
Energy prices rose only 0.4 percent from October 2017 to October 2018.
Wholesale prices are projected to have risen 1.7 percent from October 2017 to October 2018.
Consumer prices are estimated to have risen 2.2 percent over the same period.
Consumer prices rose 2.9 percent from October 2018 to November 2018, their fastest year-over-year pace since 2014.
The Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) for November on Wednesday, December 26. (1/2/19). The Labor Department’s Bureau of Labor Statistics releases its Consumer Price Index (CPI) for November on Wednesday, December 26. (1/2/19). SEE MORE VIDEOS
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