U.S. economy: midterm elections approaching, inflation hits record high since 1981

U.S. prices have hit a new record high due to persistently high gasoline and food costs, exceeding market expectations, with the year-on-year increase hitting the highest level since November 1981, the latest data showed.

The U.S. Department of Labor reported that the consumer price index (CPI) rose 9.1% in June from a year earlier, after rising 1.3% in May alone. U.S. gasoline prices hit record highs last month, averaging more than $5 a gallon. The data led the market to forecast further rate hikes by the Federal Reserve later this month.

Therefore, once the above data was released, the three major U.S. stock futures indexes dived, and the Dow Jones futures fell 0.98%. S&P 500 futures fell 1.46% and Nasdaq futures fell 2.13%. U.S. prices have continued to rise since the end of last year. Supply chain disruptions caused by the Covid-19 pandemic, combined with severe weather, have pushed up food prices. And the war in Ukraine has pushed up global energy and food prices. Some economists also blamed Biden's super-stimulus package in response to the outbreak for fueling price increases. In total, Biden has rolled out as much as $5 trillion in stimulus aimed at protecting households and businesses from the economic shock of the pandemic, but a flood of money has flooded the market, driving up prices. China's economy: Intensive stimulus but no improvement. Can real estate still underpin the economy? China is in a dilemma to save the economy under the Fed's strong interest rate hike,

  The White House set the stage for this latest data release earlier this week, also saying the consumer price index was a lagging indicator. Also, the figures highlight price increases from the previous month and do not reflect recent price declines, particularly for gasoline. But the report does show just how badly American households' finances have been hit. People are already changing their spending habits, using their savings to pay for rent and food. The real value of American hourly wages is falling faster than at any time since the 1980s. And that's exactly what U.S. President Joe Biden and his party are worried about. The midterm elections are in November, and Democrats are eager to keep their narrow majority in Congress. But the high cost of living is putting pressure on voters' minds and wallets at the same time.

Although the midterm elections are held in November, primary elections have been held across the country from May to September, and the campaign is in full swing. A Democrat fiasco would make it harder for the president to introduce new laws. Biden, who appears to be well aware of the stakes, has also said that U.S. voters typically do not vote based on events overseas; by contrast, skyrocketing gasoline prices are more likely to make Americans more uncomfortable. The Biden administration's popularity has fallen as inflation has soared. Earlier this week, the Biden administration sought to downplay June's price rise, emphasizing that prices for energy and other commodities have now fallen sharply. But Quincy Krosby, chief equity strategist at LPL Financial, said Biden's comments "show that concerns about the administration have deepened." "No one thought there would be more than 9 percent," he added.Financial markets expect the U.S. central bank to raise interest rates again at a meeting in two weeks' time to rein in soaring prices. Last month, the Fed announced its biggest rate hike in nearly 30 years, raising its key rate by 0.75% to a range of 1.5% to 1.75%. It is widely expected to raise rates by a similar amount in July. Despite such concerns, Cosby said there are signs that "inflation is nearing a peak or leveling off" in the U.S. "We're starting to see lower prices for commodities, freight and shipping, and global supply chain challenges appear to be easing marginally, which should lead to a pullback in prices." It is worth mentioning that US President Biden arrived in Israel on July 13, starting his first trip to the Middle East during his tenure. Before leaving, Biden said in an article in the American media that energy resources in the Middle East are crucial to mitigating the impact of the Russian-Ukrainian conflict on global supply.