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Inflation surges 8.5% in July, stoking fears of stiff rate hike

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Inflation surged 8.5% in July, hovering at a four-decade high and adding pressure on the Federal Reserve to bring down the price of necessities such as food, gas and rent.

The July reading of the Labor Department’s Consumer Price Index, a closely watched measure of the costs of goods and services, marked a slight decrease from the previous month, when inflation hit a fresh peak of 9.1%.

That number, the highest since 1981, was driven in large part by a record spike in gas prices that has since receded.

Ahead of the Consumer Price Index release, economists projected inflation would rise 8.7% year-over-year in July and 0.2% compared to the previous month, according to Dow Jones data.

Economists had expected core inflation to hit 6.1% for the month. The Fed’s target for inflation is 2%.

The latest data supports the market’s view that the Federal Reserve will take aggressive action in the months ahead to tame inflation.

The decline in gas prices was the key factor in the slight downtick from June to July. The average price has fallen steadily in recent weeks after hitting an all-time high of $5.016 in mid-June.

As of Wednesday, the national average was $4.010, according to AAA.

While gas prices are on the decline, the costs of other key inflation drivers such as rent and services remain historically steep.

Even with the minor decline in headline inflation, American households likely experienced little relief in July, according to Greg McBride, chief financial analyst at Bankrate.

“To relieve the pressure on household budgets and boost the otherwise sour mood of consumers, we need to see a broad-based, significant, and sustained easing of pricing pressures for the remainder of 2022 and well into 2023,” McBride said.

The latest CPI data emerged just days after a July jobs report that blew away economists’ expectations.  US employers added 528,000 jobs in July – more than twice what economists expected – while wages jumped 5.2% year-over-year.

Gas prices have fallen since hitting record highs in June.
AFP via Getty Images

The red-hot jobs market raised concerns among investors that the Fed would implement more sharp interest rate hikes to ensure the economy is sufficiently cooled to bring down prices.

The rate-setting Federal Open Market Committee has hiked its benchmark rate by three-quarters of a percentage point, its sharpest clip since 1994, at each of its last two meetings.

Grocery shopper
Food prices have surged over the last year.
AFP via Getty Images

Two top Fed officials – San Francisco Fed President Mary Daly and Federal Reserve Governor Michelle Bowman – said this week to expect more larger-than-normal rate hikes until inflation shows signs of steady decline.

“My view is that similarly sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” Bowman said in prepared remarks for the Kansas Bankers Association, according to CNBC.

Ahead of the July CPI release, the market was pricing in a 67.5% probability for a three-quarter percentage point hike at the Fed’s next meeting in September, according to CME Group data.

Fed Chair Jerome Powell
Fed Chair Jerome Powell is under pressure to bring down prices.
AP

Fed Chair Jerome Powell has indicated the central bank will closely track data indicators between its July and September meetings before making any decision.

“We anticipate that ongoing increases in the target range for the federal fund rates will be appropriate,” Powell said after the most recent hike in July. “The pace of those increases will continue to depend on the incoming data and evolving outlook for the economy.”

“While another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data that we get between now and then,” he added.

President Biden
President Biden and his team have touted the recent decline in gas prices.
AP

Meanwhile, President Biden and his team took a victory lab ahead of the data, pointing to falling gas prices as a sign that the administration’s policies were having an effect.

Critics have alleged that Biden’s hardline stance toward domestic energy producers has exacerbated the problem.

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The F.D.A. Now Says It Plainly: Morning-After Pills Are Not Abortion Pills

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The F.D.A. said it made the change now because it had completed a review of a 2018 application to alter the label that was submitted by Foundation Consumer Healthcare, a company that in 2017 bought the Plan B brand from Teva Pharmaceutical Industries. Agency officials said the pandemic delayed the review process and that the timing was not motivated by political considerations.

A spokeswoman for the company, Dani Hirsch, said in an interview that for its 2018 application, the company had not conducted any new studies but had submitted “what was already out there.”

In a statement, the company’s marketing director, Tara Evans, said “the misconception that Plan B works by interfering with implantation can present barriers to broader emergency contraception access. The Plan B labeling correction will help protect continued over-the-counter emergency contraception access and reduce confusion about how Plan B works and further clarify that Plan B does not affect implantation.”

Plan B One-Step and its generic versions — including brands like Take Action, My Way and Option 2 — contain levonorgestrel, one of a class of hormones called progestins that are also found at lower doses in birth control pills and intrauterine devices. The pills are most effective in preventing pregnancy if taken within 72 hours of sexual intercourse, although they can sometimes work if taken within five days.

Another type of morning-after pill, marketed as Ella and containing a compound called ulipristal acetate, is only available by prescription and is not affected by the F.D.A.’s label change. There has been less research on this type of pill, but studies suggest that it is highly unlikely to prevent implantation of a fertilized egg. In 2009, after months of scrutiny, Ella was approved for sale in overwhelmingly Catholic Italy, where laws would have barred it if it had been considered to induce abortions.

According to data published in 2021 by the Centers for Disease Control and Prevention, nearly one-quarter of women of reproductive age who have sex with men answered yes to the question: “Have you ever used emergency contraception, also known as ‘Plan B,’ ‘Preven,’ ‘Ella,’ ‘Next Choice,’ or ‘Morning after’ pills?” The agency did not break down the data by the type of pills taken.

As far back as the 1999 approval process, the maker of Plan B — Barr Pharmaceuticals, later acquired by Teva — asked the F.D.A. not to list an implantation effect on the label, The Times reported in 2012.

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Who are Caroline Ellison’s parents? Fraudster’s mom and dad are MIT economists

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This apple fell far from the tree.

Caroline Ellison — who pleaded guilty to fraud charges related to her role in the FTX cryptocurrency scandal, which led to the extradition of Sam Bankman-Fried this week — is the daughter of high-profile economists at the Massachusetts Institute of Technology.

According to his curriculum vitae, Ellison’s father, Glenn Ellison, was educated at Harvard, Cambridge and MIT before becoming the Gregory K. Palm (1970) Professor of Economics at the latter. 

In addition to coaching youth softball and his daughters’ middle school math teams, he writes “Hard Math,” a series of textbooks and workbooks about teaching arithmetic to younger students.

Glenn Ellison is also an Elected Fellow of the Society for the Advancement of Economic Theory and American Academy of Arts & Sciences.

Caroline Ellison’s parents, Glenn and Sara Ellison, outside their Newton, Mass., home in early December.
Robert Miller

Ellison’s mother, Sara Ellison, is also an accomplished academic. Armed with an undergraduate degree from Purdue University and a mathematical statistics diploma from Cambridge University, her profile shows she completed a doctorate at MIT in 1993. 

Sara Ellison is currently a senior lecturer in the department alongside her husband.

“We were definitely exposed to a lot of economics [growing up],” Ellison, 28, once told Forbes.

Ellison, 28, plead guilty to fraud this week.
Ellison, 28, pleaded guilty to fraud this week.
Twitter / @AlamedaResearch
Caroline Ellison's sister, Anna, now lives in the West Village.
Caroline Ellison’s sister, Anna, now lives in the West Village.
BRIGITTE STELZER

Glenn and Sara Ellison were photographed by The Post outside their home in Newton, an affluent Boston suburb, earlier this month. Armed with several bags, they told reporters they were too “busy” to comment on the FTX scandal.

The eldest of three sisters — including Anna, 25, who now lives in Manhattan’s West Village — Ellison distinguished herself as a precocious math whiz at a young age. 

When she was just 8 years old, she reportedly presented her father with a paper analyzing stuffed animal prices at Toys ‘R’ Us.

Sam Bankman-Fried leaving Manhattan Federal Court on Thursday.
Sam Bankman-Fried leaving Manhattan federal court on Thursday.
Matthew McDermott
Both Glenn and Sara Ellison are economists at MIT.
Both Glenn and Sara Ellison are economists at MIT.
Robert Miller

She went on to compete in the Math Prize for Girls while at Newton North High School before studying mathematics at Stanford University, where former professor Ruth Stackman described her to Forbes as “bright, focused, [and] very mathy.”

Ellison and Bankman-Fried, 30, crossed paths at the Wall Street trading firm Jane Street. Bankman-Fried’s parents are also both university lecturers, at Stanford in California. They became good friends and she joined Alameda Research, the hedge fund arm of the FTX crypto exchange, in 2018. She then became CEO in 2021. However, the company remained owned 90% by Bankman-Fried and 10% by another member of his circle.

In addition to documenting her supposed foray into polyamory on Tumblr, Ellison once boasted about drug use on social media.

Sara Ellison completed a doctorate at MIT in 1993.
Sara Ellison completed a doctorate at MIT in 1993.
Robert Miller

“Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is,” she tweeted in 2021.

Ellison reportedly admitted to Alameda employees that FTX had used client funds to bail out the fledgeling hedge fund during a video call in November. She was eventually terminated as CEO by insolvency professional and current FTX CEO John J. Ray III after FTX and Alameda filed for Chapter 11 bankruptcy.

She pleaded guilty to federal fraud charges on Monday, and has subsequently been released on $250,000 bail.

Ellison was spotted getting coffee in New York City on Dec. 4.
Ellison was spotted getting coffee in New York City on Dec. 4.
Twitter / @AutismCapital

Although she could be sent to jail for up to 110 years for her part in the FTX-Alameda scandal — which has been said by federal prosecutors to have lost between $1 billion and $2 billion of customers’ cash — she is thought to have struck a deal with the feds for a much lighter sentence in return for her cooperation.

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Iran condemns Zelensky’s remarks to Congress as ‘baseless.’

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Iran has condemned President Volodymyr Zelensky’s remarks to the U.S. Congress, warning the Ukrainian leader against further accusing Tehran of supplying weapons to Russia for use in the war.

Mr. Zelensky told Congress on Wednesday that Iranian-made drones “sent to Russia in hundreds” had been threatening Ukraine’s critical infrastructure, a view shared by American and European officials. In Iran, he said, Russia had found an “ally in its genocidal policy.”

A spokesman for Iran’s foreign ministry, Nasser Kanaani, called Mr. Zelensky’s comments “rude” and “baseless.”

“Mr. Zelensky had better know that Iran’s strategic patience over such unfounded accusations is not endless,” Mr. Kanaani said in a statement on Thursday.

Although Iran has officially denied supplying Russia with the weapons since Moscow’s invasion of Ukraine, U.S. officials have said that the first shipment was delivered in August.

Mr. Zelensky has said that drones used in Monday’s wave of predawn attacks on Kyiv and other Ukrainian cities were from a batch recently delivered to Russia by Iran. The strikes came after Biden administration officials said that Russia and Iran were strengthening their military ties into a “full-fledged defense partnership.”

The European Union last week condemned Iran’s military partnership with Russia as a gross violation of international law and announced new sanctions against Iranian individuals and entities over their roles in supplying the drones that Moscow has used to attack Ukrainian civilians and infrastructure. That followed a round of sanctions on Iranians over the drone deliveries in October.

Mr. Kanaani “once again emphasizes” that Iran has not supplied military equipment for use in Ukraine, the statement issued on Thursday added, and urged Mr. Zelensky to learn “the fate of some other political leaders” who were happy with U.S. support. It was not clear which other leaders the statement was referring to.

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