Congress returns to work as inflation hits 3.9%

The U.S. Department of Labor will release the October Consumer Price Index on Tuesday. Economists predict the inflation rate rose to 3.9 percent in October, up from 3.7 percent in September. This figure tracks price changes for goods and services affecting households. The index has remained above 3 percent since March, following the start of the war with Iran in February.

The conflict reduced global oil supplies and increased fuel costs. These higher energy prices drove up transportation and storage expenses. The Department of Labor will also publish the October Producer Price Index on Friday. This report measures inflation before it reaches consumers. September data showed the largest increase since December 2022. Diesel prices in particular continue to push up costs for businesses.

Oil prices dropped in the week following the midterm elections. Democratic voters took full control of Congress, defeating President Donald Trump's Republican Party. Many analysts believe the new Democratic leadership will move to end the conflict with Iran. This could lower energy prices in the coming months.

The housing market remains under pressure from high prices and interest rates. The National Association of Realtors will release its October report on existing home sales on Thursday. Economists expect the number of sales to stay flat compared to September. Home sales have hovered near an annual pace of 4 million since 2023. This is well below the historical average of 5.2 million.

Home prices have risen for 39 consecutive months. The average 30-year fixed mortgage rate is near its highest level in three years. The Federal Reserve is considering another increase in its benchmark interest rate at its December meeting. This decision aims to cool persistent inflation.

Employers created 165,000 new jobs in October. The Department of Labor will release weekly jobless claims on Thursday. These claims serve as an early indicator of layoffs. Current levels remain historically low. However, wage growth has been slow and has not kept pace with inflation. This gap makes higher prices more painful for families. It is also becoming harder to find work if a person loses their job.

Corporate earnings reports will arrive next week. CoreWeave will report on Tuesday, with stocks down 20 percent in the past week. Cisco and Applied Materials will report on Thursday. SkyDance will release its first earnings report on Monday following the 81 billion dollar acquisition of Warner Bros. Discovery by Paramount.