Why is gas so expensive?

Nationally, gasoline prices are closing in on a record $5 a gallon. At the end of May, the European Union chose to ban two-thirds of its Russian oil imports. The EU had been discussing the move throughout the month, and oil markets responded with higher prices.

“For energy prices, it looks like we’re in for a bit of a bumpy ride until we get to some kind of stability in how public policy is going to react to the war,” Mahedy said. “This war looks like it’s protracted and the policy response continues to tighten.”

The conflict also created a global oil refining crunch, which is pushing up prices for refined petroleum products.

“We’re not just talking about crude oil going up,” said Skanda Amarnath, executive director at Employ America, a labor advocacy and research group. “We’re talking about gasoline going up because of refining margins going up. We’re talking about natural gas prices pushing electricity utility gas. We’re talking about refined products like jet fuel being pushed up now that everyone wants to travel by air again.”

OPEC announced in June that it would produce 50% more oil in July and August, which should bring some relief to gas prices.

Why is housing still getting more expensive?

While the Federal Reserve’s interest rate hikes continue to make buying a new home less affordable and mortgage applications are down, home prices are still rising and rents prices are still in a steady ascent.

Median rents in Manhattan moved past $4,000, which means that landlords are now rejecting single tenants that don’t make above $160,000.

Despite the fact that house financing is getting more expensive, a housing shortage that’s persisted for more than a decade makes the supply and demand mismatch in housing more extreme than in other categories.

What’s the Federal Reserve doing about inflation?

The Fed likely wants to see at least three months of inflation looking “more behaved” before it slows its pace of rate hikes, said Amarnath.

The inflation measure the Fed watches most closely, US personal consumption expenditures, comes out several weeks after the CPI. So August core PCE will be reported in late September, which means the Fed will probably continue to do half-point interest rate raises through the end of September.

So far, consumers have drawn down on excess savings and spent at a strong level despite feeling negatively about the economy. That could soon change as the Fed raises rates, said George Pearkes, an investment analyst at Bespoke Investment Group.

“If sentiment remains as negative as it is and income growth continues to slow, it’s hard to imagine that we don’t see a leg lower in spending at some point,” Pearkes said. “The rubber’s just gotta hit the road at some point.”

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