Key Inflation Gauge Sets 40-Year High as Gas and Food Soar​​​

An inflation gauge that is closely monitored by the Federal Reserve jumped 6.4% in February compared with a year ago, with sharply higher prices for food, gasoline and other necessities squeezing Americans’ finances, the Associated Press reported. The figure reported today by the Commerce Department was the largest year-over-year rise since January 1982. Excluding volatile prices for food and energy, so-called core inflation increased 5.4% in February from 12 months earlier. Squeezed by inflation, consumers increased their spending by just 0.2% in February, down from a much larger 2.7% gain in January. Adjusted for inflation, spending actually fell 0.4% last month. The decline partly reflected a shift away from heavy spending on goods to a focus on services, such as health care, travel and entertainment, which consumers had long avoided during the worst of the pandemic.

Commentary: American Consumers Are Starting to Hit Their Breaking Point​​​

Signs are emerging that the resilience of American consumers is rapidly waning, potentially undermining one of the few remaining pillars supporting the bull market in equities, according to a Bloomberg News commentary. U.S. households have until recently mostly absorbed higher prices on everything from coffee to chicken to clothes, helping companies maintain large profit margins despite higher input. But that doesn’t mean consumers were happy about paying more for the same goods, which is why the University of Michigan’s sentiment index has steadily deteriorated to the lowest since 2011, according to the commentary. The line from the bulls has been to watch what consumers do, not what they say. And for the most part, the bulls have been right about consumer spending, which is why many investors remain positive on stocks and the riskier parts of the credit markets. Although Americans have griped about higher prices, they have kept buying goods and have increasingly gone out to eat and started traveling as the pandemic waned. But the latest surge in inflation rates, stemming in part from rising energy prices as a result of Russia’s invasion of Ukraine, has pushed many households to the breaking point. Energy prices have surged about 26% over the past year while food costs have jumped 8% in the largest increase since 1981, according to Joseph Lavorgna, the chief economist at Natixis North America LLC. These two inputs account for more than 20% of household outlays, he wrote in a March 23 research note.

ASM Session Spotlight: Survey the Legislative Landscape for Important Bankruptcy Developments!

Join William A. Brandt, Jr. of Development Specialists, Inc. (Chicago) and Robert J. Keach of Bernstein Shur (Portland, Maine) as they discuss recent, pending and upcoming legislation impacting the insolvency and restructuring industry. Register today for the Annual Spring Meeting!

U.S. Jobless Claims Edge Higher Amid Tight Labor Market​​​
New applications for U.S. unemployment benefits rose slightly last week, indicating a strong labor market in which employers are holding on to their workers amid high demand, the Wall Street Journal reported. Initial jobless claims, a proxy for layoffs, rose by 14,000 to a seasonally adjusted 202,000 last week, the Labor Department said Thursday, up from the week before when they reached a revised 188,000, matching the lowest level in more than 52 years reached back in December. The four-week moving average, which smooths out volatility, decreased to 208,500 from a revised 212,000. Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, moved slightly down to 1.3 million for the week ended March 19 from the previous week. Continuing claims are reported with a one-week lag. (Subscription required.)

As Corporate Landlords Make a Push for Purchases in U.S. Suburbs, Some Homeowners Are Pushing Back​​​

Hundreds of communities across the U.S. have become the target of large companies amassing empires of suburban homes for rent, according to a Washington Post analysis. Since the Great Recession, when millions of Americans lost their homes to foreclosure, these companies have been expanding their portfolios of tens of thousands of single-family houses, a disproportionate number of them located in majority-Black neighborhoods. The rise of investor purchases has spawned complaints that the companies, flush with Wall Street money, are pricing out first-time home buyers and renting to tenants who have not been properly screened. Using the same legal authority that allows homeowners associations to punish people who fail to cut their grass, some boards erected a hurdle for investors: a new rule required any new home buyer to wait two years before renting it out. As neighborhoods in several states have moved to adopt similar rules, advocates for rental home companies argue that the restrictions make housing less affordable. They say rental exclusions also can be discriminatory, echoing a past when real estate restrictions were used to keep out racial minorities, and have asked state legislatures in Florida, Georgia and Tennessee, as well as North Carolina, to protect them from such restrictions.

From the pandemic to Europe’s largest military conflict since World War II, it seems the world is moving from one extraordinary period to another. The conflict in Europe has generated a maze of rapid legal, political and economic responses from authorities around the globe. Those actions are rippling through capitals, markets and boardrooms as businesses grapple with how to respond. Click here to watch a replay of a webinar with experts assembled by Squire Patton Boggs and ABI discussing where we are headed and what businesses should consider.

Property Investors Target Small Businesses as Market Heats Up​​​
Some real estate investors looking for the next big thing are turning to small businesses, the Wall Street Journal reported. A new breed of property firms is buying up buildings occupied by gas stations, doctors’ offices and corner grocery stores. They see an opening because big asset managers typically avoid these properties, which they consider risky. Withco, a New York-based landlord that signs rent-to-own deals with small businesses, recently raised $30 million in venture funding from backers including Founders Fund, Canaan Partners, Lennar Corp., actor Will Smith and athletes Venus Williams and Kevin Durant. Keyway, also of New York, buys medical-office buildings from small businesses, then leases them back. Earlier this month, Keyway said it had landed a $70 million debt facility from a group of banks to fund its acquisitions. These firms are the latest example of real estate investors venturing into more obscure corners of the property market. They are looking to buy unconventional properties — including cold-storage facilities and short-term rental homes — because historically low interest rates have pushed up the prices of apartments, warehouses and other more traditional commercial-property types. (Subscription required.)

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