Is the new inflation data a good sign for the U.S. economy?
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Yahoo
19 hours ago
- Yahoo
The Motley Fool's Just-Released Report Shows U.S. Inflation Is at 2.7%. Here's How 2 Consumer Goods Staples Are Faring.
Key Points The Consumer Price Index rose 2.7% versus a year ago. PepsiCo and Procter & Gamble have raised revenue via price increases. Have consumers grown weary of higher prices? 10 stocks we like better than PepsiCo › The U.S. Department of Labor released its June inflation reading recently. The Consumer Price Index (CPI) showed a 2.7% year-over-year increase. The figure includes volatile food and energy prices. Consumer staple companies should have an edge during an inflationary environment. That's because they sell basic necessities like food, beverages, and everyday items. These types of companies should have the ability to pass along cost increases to their customers. However, people seem wary about further price increases, since inflation has been running high for some time. How have these two consumer staple companies been faring? 1. PepsiCo PepsiCo (NASDAQ: PEP) sells beverages, snacks, and convenience foods. It produces these products under well-known brands like Pepsi-Cola, Gatorade, Doritos, and Quaker. Nonetheless, despite these products' long-standing popularity, people seem tired of paying higher prices given elevated overall inflation. You can see that by looking at PepsiCo's results, which have seen sluggish volumes in the face of price increases. The company's second-quarter revenue, adjusted to remove foreign-currency translation effects and the effect of acquisitions/divestitures, rose a tepid 2%. This was due entirely to higher prices, which contributed 4 percentage points. Meanwhile, lower volume subtracted about 1.5 percentage points. The price hikes weren't sufficient to offset higher costs, however. PepsiCo's adjusted operating income fell 3%. Investors haven't been too pleased with the company's results. PepsiCo's share price has dropped 16.9% over the last year through July 28. Meanwhile, the S&P 500 index gained 16.8% during this time. When inflation abates and PepsiCo can hold the line on prices, volume and sales growth should increase. That will likely boost profitability. Investors perhaps see the light at the end of the tunnel. The valuation has become more expensive over the last month, with the price-to-earnings (P/E) ratio increasing from 19 to 26. Still, that's cheaper than the S&P 500's P/E multiple of 30. Given the valuation and prospects for better results down the line, patient investors may find themselves rewarded. 2. Procter & Gamble Procter & Gamble (NYSE: PG) sells items that people use every day. These include shampoo, deodorant, razor blades, toothbrushes, laundry detergent, and diapers. It sells these products under popular brands like Head & Shoulders, Old Spice, Gillette, Crest, Tide, and Pampers. These basic items should be fairly impervious to price increases. After all, people will still use them no matter what's going on with their personal finances. Nonetheless, consumers have been shying away from its products. Procter & Gamble's fiscal third-quarter adjusted sales grew a scant 1%. Higher prices accounted for the entire increase, with volumes flat versus a year ago. The company's earnings per share increased 1%. The period ended on March 31. It was a similar story in the recently reported fourth quarter. Procter & Gamble's adjusted sales increased 2%, with higher prices and mix each adding 1 percentage point. Volume was constant compared to last year. Management expects a range of 0% to 4% sales growth this year. Procter & Gamble's stock price has dropped 7.9% over the last year. The share's P/E multiple has contracted from 28 to less than 25 during this time. Despite the better valuation, I'd hold off on purchasing the stock. Given the type of products it sells, I'd expect Procter & Gamble to have performed better during an inflationary environment. Should you buy stock in PepsiCo right now? Before you buy stock in PepsiCo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PepsiCo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,090,257!* Now, it's worth noting Stock Advisor's total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Motley Fool's Just-Released Report Shows U.S. Inflation Is at 2.7%. Here's How 2 Consumer Goods Staples Are Faring. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
a day ago
- Axios
Top White House economist: I believe jobs numbers, but agency needs fixes
Top White House economist Stephen Miran tells Axios a key economic statistics agency needs "fresh eyes," but he stopped short of repeating President Trump's claim that Friday's jobs data was politically manipulated. Why it matters: President Trump ordered the the firing of the Bureau of Labor Statistics commissioner on Friday after alleging — without evidence — that disappointing jobs numbers were "rigged." The bureau later confirmed commissioner Erika McEntarfer was terminated, with her deputy William Wiatrowski stepping in as acting commissioner. Catch up quick: The July jobs report, released earlier on Friday, showed just 73,000 jobs added last month. The BLS also announced massive revisions that showed employment was a combined 258,000 lower than previously thought. It was the second-largest two-month downward revision on record, behind only the pandemic. What they're saying: "There's been very little attempt to actually fix this problem and come up with creative solutions to make the data more reliable," says Miran. "It is absolutely time for fresh eyes on this to try and come up with solutions to improve the reliability of the data and get those revision levels down." Miran said the agency should try to incentivize faster responses or delay the data publications by a week or two, if it means smaller revisions down the line. Catch up quick: "In my opinion, today's Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad," Trump posted on Truth Social. Trump accused the agency of boosting jobs figures to support his opponent's presidential candidacy. Reality check: The BLS, a nonpolitical agency housed within the Labor Department, has faced plummeting response rates to the surveys that comprise the report. It has scaled back some of its data collection — the Consumer Price Index report, for instance — due in part to proposed budget cuts. "Economic data are always noisy and this has always been a problem that has plagued economic research and economists — it's one that we make the best of," Miran said. Asked if he believes the numbers released by the BLS, Miran said "I think if the BLS tells me that there were 14,000 jobs created [in June], I don't have a competing survey that tells me otherwise." Between the lines: Miran said that revisions were largely a result of statistical artifacts — namely adjustments to account for seasonal quirks. He said that Trump's immigration policies would "inevitably show up in one way or another in the labor market data. I think that some of what we saw is also due to that." "If we're swapping out foreign-born job holders for American-born job holders, I think that's a win," Miran said. What to watch: Mainstream economists say the economy and labor market will likely slow further this year.
Yahoo
a day ago
- Yahoo
Here's what could get more expensive from Trump's massive tariff hikes
President Donald Trump has said that tariffs won't lead to higher prices. But the United States economy seems to disagree: Inflation, which has remained fairly tame, is slowly creeping up because of tariffs. Trump's latest round of higher taxes on imports, which goes into effect next week, will immediately make imported goods from impacted countries more expensive in the United States. And while businesses have tried to shoulder part of the cost, they now may be forced to pass along some of those expenses to consumers. That means higher prices for Americans. Here's what could get more expensive: Computers and other electronics Computers are among the top goods the United States imported last year, according to US Commerce Department data. The top countries that exported computers and other electronic products to the United States last year were China, Mexico, Taiwan, Vietnam and Malaysia. Goods from China already face a minimum 30%, albeit with some exclusions. However, rates could soon shoot even higher if a trade deal is not reached with China by August 12. Goods from Mexico can be shipped to the US duty-free if they comply with a trade deal Trump signed during his first term. Meanwhile, goods from Taiwan, Vietnam and Malaysia are all set to be taxed at nearly double their current levels by next week. Though price increases have been tame across the board, computers cost consumers nearly 5% more in June of this year compared to last, according to Consumer Price Index data. While not among the top five sources of foreign-produced computers, India is still a major supplier of computers and other electronics to the US. Goods from there are set to face 25% minimum tariffs. Economists at the Yale Budget Lab estimate that the tariffs Trump announced as of Thursday, if put in place indefinitely, could cause computer and other electronic prices to rise by 18.2% in the short run and 7.7% in the long run. The authors consider the short run to be two to three years from now, while the long run is considered three to ten years. Clothing As with electronics, America buys much of its apparel from other countries. Top destinations include China, Vietnam, Bangladesh, India and Indonesia. The tariffs Trump is placing on these countries are impactful for the cost clothing, especially since that's one of the top goods the US imports overall. Yale Budget Lab estimates prices could rise by 37.5% in the short run and 17.4%. Watches Wristwatches are one of the top exports to the United States from Switzerland, which is set to face a 39% 'reciprocal' tariff. Last year the country sent over $4 billion worth of watches to the United States. Prices of leather products, which often includes watches, are estimated to rise by 39.7% in the short run and 18.9% in the long run. Shoes China, Vietnam and Indonesia are top destinations where shoes are made and tariffs are set to start at a minimum of 19% for the three countries, come next week. Like watches, many kinds of shoes use leather and could face similar price increases as a result. Furniture Vietnam is the top source of imported furniture, followed by China. Toys China and Vietnam are the top two countries that ship toys to the United States. Toy brands have already been warning of higher prices due to the tariffs in place on Chinese goods. The higher tariffs on Vietnamese goods are also likely to be a pressure point. When could tariff-related price increases happen? In addition to the fact that businesses haven't been fully passing on tariff costs to consumers thus far, in anticipation of higher import taxes, many spent months stockpiling goods. That's in part why Goldman Sachs economists estimate it takes eight months for the effect of the costs of imported consumer goods 'to be fully realized in consumer prices.'
