Inflation soared to a record high in Europe in November as a continued upward climb in energy costs pushed prices skyward, data showed on Tuesday.
Annual inflation in the eurozone surged to 4.9 percent, the European statistics agency Eurostat reported, the highest since records began in 1997. Excluding volatile energy and food prices, inflation jumped by 2.6 percent from a year earlier, the highest in two decades.
Prices for goods and services have been climbing steadily since summer as a reopening of the global economy from coronavirus lockdowns juiced economic activity, sending energy costs up and crimping global supply chains.
Energy costs jumped 27.4 percent in November from a year ago, continuing an upward trend.
“We haven’t seen inflation this high since the eighties,” Bert Colijn, senior economist for the eurozone at ING Bank, said in a note to clients. “The energy shock of 2021 is starting to have a substantial impact on consumers,” he added.
The inflation gains have driven up costs for a range of products and services, and have led workers and unions to demand higher wages in many European countries.
Germany, Europe’s largest economy, reported that inflation accelerated to 6 percent from a year ago, while in France it rose to 3.4 percent, the highest in over a decade. The highest rates were in Belgium, where inflation rose to 7.1 percent, and in Lithuania, where it topped 9 percent.
With the rapid circulation of the recently discovered Omicron variant of the coronavirus, the global economic outlook has suddenly grown more uncertain.
The European Central Bank has said that it expects the inflation spike to be temporary as energy price increases fade next year. The bank’s mandate is to keep inflation to a 2 percent target.
“Although the ECB has stated that it sees the current price pressures easing in 2022, and our baseline is that monetary policy will remain accommodative, the latest data will add to the debate on the appropriate level of policy support,” Katharina Koenz, an economist at Oxford Economics, said in a note to clients.
“However,” she added, “there isn’t much the ECB can do about higher energy prices and supply bottlenecks in the short-term anyway.”
Global stocks fell on Tuesday, following a short respite the day before, as traders were once again unnerved by the new Omicron variant of the coronavirus and its potential ability to evade existing vaccines. Oil prices also dropped.
The chief executive of Moderna, a vaccine maker, said in an interview that there could be a “material drop” in the effectiveness of current vaccines to the new variant. The executive, Stéphane Bancel, told The Financial Times that it might be months before an Omicron-specific vaccine could be produced at scale, but added that it would be risky to shift the company’s entire vaccine production while other variants are still prevalent.
Futures indicated the S&P 500 would open down by about 1 percent. The Stoxx Europe 600 fell 1.2 percent. In Asia, the Nikkei 225 in Japan and the Hang Seng in Hong Kong each dropped 1.6 percent.
Stocks have been volatile since the discovery of the new variant in southern Africa late last week. The S&P 500 suffered its worst day since February on Friday, dropping 2.3 percent. On Monday, it began to recover, climbing 1.3 percent, as politicians around the world cautioned against panic, even as some put travel bans in place.
Still, relatively little is known about the Omicron variant. Scientists have detailed its mutations, but it will be a couple of weeks before they know how it responds to existing vaccines and if it causes severe disease.
On Tuesday, investors sought the relative safety of government bonds. The yield on 10-year Treasury notes declined 8 basis points, or 0.08 percentage point, to 1.42 percent, the lowest level in more than two months.
Oil futures fell, with West Texas Intermediate crude slumping 2.4 percent to $68.27 a barrel. Its price has dropped 18 percent this month.
The emergence of the new variant complicates the work of the Federal Reserve, which had begun tightening monetary policy because of higher inflation. But if the new variant restrains economic growth, it could ease the pressure on prices.
“The emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Jerome H. Powell, the Federal Reserve chair, will tell lawmakers later on Tuesday, according to prepared remarks.
A federal judge on Monday temporarily blocked the Biden administration’s coronavirus vaccine mandate for health care workers in the 10 states that had filed a lawsuit against the government this month.
The mandate requires all 17 million health care workers in Medicare- and Medicaid-certified medical facilities, which receive government funding, to be fully vaccinated against the coronavirus by Jan. 4.
The injunction, issued by Judge Matthew Schelp of the U.S. District Court for the Eastern District of Missouri, prevents the Centers for Medicare and Medicaid Services from enforcing the mandate while the case is in court.
The judge said in his ruling that the plaintiffs were likely to succeed on the merits of the case in part because Congress had not granted the agency authority to issue a vaccine mandate.
“C.M.S. seeks to overtake an area of traditional state authority by imposing an unprecedented demand to federally dictate the private medical decisions of millions of Americans,” wrote Judge Schelp, who was nominated by President Donald J. Trump. “Such action challenges traditional notions of federalism.”
The lawsuit was filed by the states of Alaska, Arkansas, Iowa, Kansas, Missouri, New Hampshire, Nebraska, North Dakota, South Dakota and Wyoming. It said that by prompting health care workers to leave their jobs if they did not want to get vaccinated, the mandate could “exacerbate an alarming shortage of health care workers, particularly in rural communities, that has already reached a boiling point.”
Judge Schelp’s ruling is the second setback this month for the Biden administration’s vaccine mandates.
A three-judge panel in New Orleans affirmed a federal appeals court’s decision to temporarily block a requirement that companies with at least 100 employees test their unvaccinated workers weekly beginning in January. The judges said the mere existence of the regulation had resulted in “untold economic upheaval in recent months.”
“The public interest is also served by maintaining our constitutional structure and maintaining the liberty of individuals to make intensely personal decisions according to their own convictions,” wrote Judge Kurt D. Engelhardt, a Trump appointee.
Jerome H. Powell, the Federal Reserve chair, will tell lawmakers on Tuesday that inflation is likely to last well into next year and that the new Omicron variant of the coronavirus creates more uncertainty around the economic outlook, according to a copy of his prepared remarks.
The remarks by Mr. Powell, who will testify before the Senate Banking Committee alongside Treasury Secretary Janet L. Yellen, convey a sense of wariness at a time when price increases are running at their fastest pace in three decades.
“It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year,” Mr. Powell plans to say. “In addition, with the rapid improvement in the labor market, slack is diminishing, and wages are rising at a brisk pace.”
Mr. Powell will also address the new variant, which governments and scientists are racing to assess and contain.
“The recent rise in Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Mr. Powell said. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”
Ms. Yellen will also warn that the path of the recovery depends on the pandemic.
“Of course, the progress of our economic recovery can’t be separated from our progress against the pandemic, and I know that we’re all following the news about the Omicron variant,” Ms. Yellen will say, adding that vaccines continue to be a crucial tool. “We’re still waiting for more data, but what remains true is that our best protection against the virus is the vaccine.”
The Treasury secretary will also urge lawmakers to raise or suspend the nation’s borrowing cap next month. Ms. Yellen has said that the United States could be unable to pay its bills sometime after Dec. 15. At that point, Social Security checks and military paychecks could be delayed and the country would face a deep recession.
“I cannot overstate how critical it is that Congress address this issue,” Ms. Yellen will say. “America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery.”
Much is unknown about the new variant of the coronavirus, but it represents something Fed officials worry about: The possibility that the pandemic will continue to flare up, shutting down factories, roiling supply lines and keeping the economy out of balance. If that happens, as it did with the Delta variant earlier this summer and fall, it could perpetuate high prices.
Inflation has surged in 2021 as strong consumer demand has crashed into the barrier of limited supply. Production line closures, port pileups and parts shortages have kept goods from getting onto shelves and to customers, prompting companies to charge more. At the same time, a dearth of labor in certain industries caused by virus wariness and pandemic-related child-care shortages has been pushing up wages and prices for some services.
It’s too early to know if the new virus strain will contribute to those trends, making inflation last longer than it otherwise would. But the new variant strikes at a delicate moment for monetary policy.
Central bankers are slowing their bond-purchase program, a move that should give them more flexibility to raise interest rates — their more traditional and powerful tool for stoking the economy — if doing so should prove necessary next year.
Several Fed officials have signaled that they may speed up their so-called bond-buying “taper” given how high and how stubborn inflation is proving. Many economists think officials could announce a plan to do so at their meeting in December.
But if the coronavirus again hits the economy, it could make such a decision — and the timing and pace of eventual rate increases — more challenging.
That’s because the Fed balances two goals, controlling inflation and stoking employment, when it sets its policy. A faster and fuller removal of help for the economy might slow down price gains by weighing down demand, but it would likely slow business expansions and hiring in the process.
“We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched,” Mr. Powell plans to say, after once again acknowledging that the Fed realizes “high inflation imposes significant burdens, especially on those less able to meet the higher costs of essentials like food, housing, and transportation.”
Mr. Powell, whom President Biden plans to reappoint for a second term as Fed chair, will tell lawmakers that the Fed is “committed to our price-stability goal.”
On Monday, Mr. Biden called Omicron “a cause for concern, not a cause for panic,” and his press secretary, Jen Psaki, told reporters that she was not aware of any projections by the administration’s economic team for how the variant might affect hiring, growth and inflation. “It is something obviously we will continue to assess,” she said.
Thousands of pages of new evidence and sworn testimony released on Monday show the extent to which former Gov. Andrew M. Cuomo relied on a group of allies, including his younger brother, the CNN host Chris Cuomo, to strategize how to deflect and survive a cascade of sexual harassment charges that eventually engulfed him.
Chris Cuomo pressed to take on a greater role in crafting his brother’s defense, including phoning into strategy calls and using his media contacts to keep tabs on reporters pursuing stories about the governor. At one point, he even ran down a secondhand tip that another woman accusing the governor of unwanted advances at a wedding was lying. (She was not.)
“You need to trust me,” Chris Cuomo pleaded with Melissa DeRosa, the governor’s secretary, at one point in March, arguing that she should rely on him and other outside advisers like the political consultant Lis Smith and the pollster Jefrey Pollock.
He added: “We are making mistakes we can’t afford.”
CNN said on Monday that the investigative documents “deserve a thorough review and consideration.”
“We will be having conversations and seeking additional clarity about their significance as they relate to CNN over the next several days,” the company said in a statement.
When Ms. DeRosa was trying to keep tabs in early March on journalists working to uncover stories of harassment, she turned to Chris Cuomo for “intel.”
“On it,” he wrote back after one such request. A few days later, Ms. DeRosa wrote to the governor’s brother that she had heard Ronan Farrow of The New Yorker was “getting ready to move” a story. “Can u check your sources?”
In text messages with Ms. DeRosa in March, Chris Cuomo said he was in a “panic” about how the governor’s team was handling the accusations and pleaded to “let me help with the prep” before drafting his own proposed statements for the governor to read, including one referencing “cancel culture.”
The newly released records included copies of text and email messages, as well as transcripts of depositions with many of Governor Cuomo’s closest aides. READ THE ARTICLE →