() U.S. stocks plummeted Tuesday after the federal government reported another sharp rise in food and other prices in August, despite falling gas prices.
The S&P 500 dropped 4.3%, its largest single day decline since June 2020 during the height of the pandemic. The Nasdaq Composite index fell 5.2%, also its worst day since June 2020. The Dow Jones Industrial Average dropped nearly 4% to 31,105.
The Bureau of Labor Statistics released its Consumer Price Index Tuesday that showed the inflation rate at 8.3% in August over a year prior. With gas prices dropping, analysts expected the inflation rate to be 8.1%.
“Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase,” BLS said, as The Center Square reported earlier Tuesday.
“These increases were mostly offset by a 10.6-percent decline in the gasoline index,” it added. “The index for all items less food and energy rose 0.6 percent in August, a larger increase than in July.”
While the gas prices have been artificually buoyed by President Joe Biden’s tapping of the Strategic Petroleum Reserve that former President Donald Trump had replinished, some project those prices may begin to skyrocket yet again after the November midterm election, while putting the emergency reserves at critical levels.
Meanwhile, Biden’s reckless spending policies—including his plan to transfer some $500-800 billion in student-loan debt from borrowers to taxpayers at large—is having its expected impact on inflation by fueling even greater spending as the Fed desperately raises interest rates to curb the excess money supply that has driven up prices.
The combination of factors makes a recession—or worse, a catastrophic financial meltdown like that of 2008—seem more likely in the near future, while it is unclear what the political ramifications may be in a midterm election now just weeks away.
Headline USA’s Ben Sellers contributed to this report.
