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Expand chart
Data: ISM; Chart: Axios Visuals

A spate of recent U.S. economic data releases suggest that inflation could be making a major comeback.

Driving the news: Thursday's report on the U.S. services sector for November from the Institute for Supply Management was slightly better than expected but still down from October's reading, however, the bigger story was in the prices paid index.

What happened: Prices paid jumped to its highest level since early 2012, rising for the second straight month and coming in above 60 for the third month in four and fourth month in six.

  • Prior to June, the prices paid index hadn't risen above 60 since November 2018.
  • The increase in services prices has come in concert with increasing manufacturing prices. ISM's manufacturing prices paid index has been above 60 for each of the past three months (October through December) after not hitting 60 since December 2018.
  • A reading above 50 indicates that prices are increasing.

Why it matters: A return of inflation would put the U.S. economy in a precarious position, especially with the renewed rise in COVID-19 diagnoses and the still weak job market.

  • The Fed is holding interest rates down to help spur economic activity but could be forced to choose between the need to rein in inflation and the need to assist the economy.

Yes, but: Some economists have been incredulous about rising inflation, given the deflationary impact of the coronavirus pandemic.

  • "Just a reminder that one off shifts in prices (goods vs services >> services vs goods) do not an inflation process make," MacroPolicy Perspectives president Julia Coronado wrote on Twitter.
  • "Inflation is steady increases in a broad set of prices underpinned by steady gains in consumer purchasing power. Thank you for coming to my Ted talk..."

Yes, but, but: Closely followed inflation metrics are reacting just the same — 5-year, 10-year and 30-year breakeven inflation rates have climbed all week, hitting fresh highs every day since Tuesday that date back to May 2019.

  • The 5-year, 5-year forward inflation expectation rate rose to 1.94% Thursday, the highest its been since July 2019.

Go deeper

Dion Rabouin, author of Markets
Jan 19, 2021 - Economy & Business

Economic growth is slowly returning

Data: New York Fed; Chart: Axios Visuals

The New York Fed's index of real-time data indicators shows the reversal of the economy's progress in late December and early January, but it moved upwards again last week.

Driving the news: Central bankers said the index's rise for the week of Jan. 9 was due to increases in tax withholding, fuel sales and rail traffic, which countered disappointing numbers for initial unemployment insurance claims and a decrease in electricity output.

Kaine, Collins' censure resolution seeks to bar Trump from holding office again

Sen. Tim Kaine (center) and Sen. Susan Collins (right). Photo: Andrew Harnik/Pool via Getty Images

Sens. Tim Kaine (D-Va.) and Susan Collins (R-Maine) are forging ahead with a draft proposal to censure former President Trump, and are considering introducing the resolution on the Senate floor next week.

Why it matters: Senators are looking for a way to condemn Trump on the record as it becomes increasingly unlikely Democrats will obtain the 17 Republican votes needed to gain a conviction, Axios Alayna Treene writes. "I think it’s important for the Senate's leadership to understand that there are alternatives," Kaine told CNN on Wednesday.

Stark reminder for America's corporate leaders

Rosalind "Roz" Brewer is about to become only the second Black woman to permanently lead a Fortune 500 company. She starts as Walgreens CEO on March 15.

Why it matters: It's a stark reminder of how far corporate America's top decision-makers have to go during an unprecedented push by politicians, employees and even a stock exchange to diversify their top ranks.

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