MARY REICHARD, HOST: Today is Monday, August 13th. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Mary Reichard.
NICK EICHER, HOST: And I’m Nick Eicher. Coming next on The World and Everything in It, the Monday Moneybeat.
Well, it looks as though the cost of borrowing money is going to keep going up.
A new government report from last week is likely to bolster the Federal Reserve’s drive for higher interest rates.
All this could jeopardize President Trump’s central economic promise of robust growth. The measure of Gross Domestic Product stands now at an annual 4.1 percent growth rate, the best in four years. Economists credit low taxes and lighter regulation.
But on Friday, the Labor Department reported consumer prices in July remained 2.9 percent higher than the same period a year ago. That was true in June as well. These are the highest levels in six years, and the report almost certainly means the Fed will keep increasing interest rates.
It also means wages haven’t kept pace with prices. And that despite a historically low unemployment rate and a growing economy, wage-earners are falling slightly behind.
The biggest factor in the rise in the consumer price index was the cost of housing: good news if you own one, not so much if you’re looking to buy.
REICHARD: Senate Majority Leader Mitch McConnell was back in his home state of Kentucky visiting a manufacturing plant on Saturday.
In a speech, he touted the benefits of the growing economy.
Reporters asked McConnell what he thought of the trade war with China.
McConnell is typically a free-trader. But he defended the president’s new import taxes known as tariffs. He said Beijing’s been, his words, “eating our lunch for years.” McConnell predicted the tariff war will end soon and result in a better trade deal between the two countries.
EICHER: The president has also hit NATO ally Turkey with new tariffs. He’ll tax Turkish aluminum imports now at 20 percent and steel imports at 50 percent. Trump is demanding that Turkey release American pastor Andrew Brunson. Late last month, Turkish authorities released Brunson from prison to house arrest. The White House praised the move but said it wasn’t enough.
The new tariffs come at a bad time for Turkey, with the value of the country’s currency seemingly in freefall. When the president tweeted about the tariffs on Friday, Turkey’s currency dropped 13 percent on the day. As of right now, the value of the country’s Lira is half what it was a year ago.
The currency shock in Turkey sent ripple effects across global financial markets, including the New York Stock Exchange.
The Standard and Poor’s 500 and the Dow Jones Industrial Average stock indexes suffered losses on Friday, and as a result broke their five-week winning streak.
Only the Nasdaq and the smaller-company stock index, the Russell 2000, enjoyed winning weeks.
Year-to-date, all the indexes remain in positive territory on the year.
And that’s this week’s Monday Moneybeat.