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A Hotter-than-expected Inflation Report Highlights What Could Be The Economy's New Normal

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Happy almost Friday! The Trump administration's deferred resignation offers are back on the table for federal employees after a federal judge lifted an order blocking them.

In today's big story, inflation isn't going anywhere — thanks, eggs! — but don't get too worried.

What's on deck

Markets: A Goldman Sachs partner shares advice for handling the marathon interview process for summer internships.

Tech: The tech world isn't just coding anymore. They're "vibe coding."

Business: They were fired. They were unfired. They were re-fired. A chaotic five days at the SBA.

But first, here we go again.

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The big story

Wearing out its welcome

A stock image of a white man's hand grabbing a dozen eggs from a store shelf.

Grace Cary/Getty Images

Like a cold you can't kick or a friend who won't take a hint, inflation is sticking around.

January's consumer price index rose 3% from a year ago. That's higher than the 2.9% forecast and marks the fourth straight month of rising inflation.

Eggs were one of the key culprits in this month's report. Prices rose 15.2% between December and January, the biggest monthly increase in almost a decade. It's a unique situation, though. The main thing causing egg prices to spike — bird flu — is more of a one-off than indicative of a wider inflation threat.

Something that's not as easily solvable and has a much bigger impact on inflation is housing costs. Shelter prices were up 0.4% this month and 4.4% over the past year. That increase accounts for nearly 30% of inflation's overall spike, according to the Bureau of Labor Statistics.

TIMOTHY A. CLARY/AFP via Getty Images

January's hotter-than-expected report isn't necessarily a sign of inflation's resurgence.

The report initially spooked the markets, with stocks dropping and bond yields rising, though stocks pared some losses by the end of the day.

If anything, the report confirmed what many in the market had already realized: It'll be a while until the next rate cut. The consensus pick for the next interest-rate cut is now October.

Philipp Carlsson-Szlezak, Boston Consulting Group's global chief economist, told me that's not necessarily bad. High rates can be a sign of a strong economy. He described the current environment as "higher but healthy."

That might not be great news for companies hoping for more rate cuts, but the market ultimately took the report in stride, Carlsson-Szlezak said. (Besides, the Treasury secretary wants to lower borrowing costs without the Fed's help.)

"I view this as markets saying this isn't a sign of reacceleration," he added. "It's probably a fluke."

News brief

Top headlines

  • Nissan and Honda are calling off their $50 billion merger.
  • Elon Musk said he'll drop his $97.4 billion OpenAI bid if it remains a nonprofit.
  • Reddit's stock drops 15% after the CEO said a Google algorithm tweak hurt traffic.
  • Diddy files $100 million lawsuit against NBC.
  • Deloitte tells some staff to remove pronouns from their email signatures.
  • Thomson Reuters had the first big win in an AI copyright case. It doesn't mean a cakewalk for other publishers: experts.
  • Elon Musk's DOGE has worked quickly to cut federal agencies. Here's a list of what's been targeted so far.

  • The New York Stock Exchange is coming to Texas.

    3 things in markets

    imaginima/Getty Images

    1. Wall Street's latest concern is underwater. Undersea cables are vital to the financial ecosystem, carrying transactions totaling $10 trillion daily. But cables are mysteriously getting damaged, with some people pointing fingers at Russia and China. They aren't easy or cheap to fix, so organizations need to mitigate the risk.

    2. The Magnificent 7 gets by with a little help from their dividend-paying peers. The dividends paid by smaller companies are often finding their way into the hands of mega-cap stocks, Bank of America said. The Mag 7 only makes up about 6% of the dividends paid by the S&P 500, but they receive 32% during the reinvestment phase. Here's why.

    3. Acing Wall Street's intern "superdays." Back-to-back interviews, face time with multiple bankers, and an evolving list of questions. Wall Street's "superdays" can make or break the careers of aspiring investment bankers before they even begin. Goldman Sachs partner Eric Jordan shared some advice.

    3 things in tech

    JOEL SAGET/AFP via Getty Images

    1. The deal with GPT-5. Sam Altman took to X to lay out OpenAI's plans for GPT-4.5 (known as Orion) and GPT-5. He wrote that Orion will be OpenAI's final "non-chain-of-thought model," and the company will unify its models going forward. Free ChatGPT users can also expect "unlimited chat access to GPT-5," Altman added.

    2. Letting AI take the wheel. Silicon Valley has a new buzzword, courtesy of OpenAI cofounder Andrej Karpathy. "Vibe coding" refers to giving AI tools simple instructions and letting them take the reins with coding. While easing an engineer's workload may seem like good vibes, there are still risks.

    3. Apple just became a little less exclusive. The AppleTV+ app is now available for Android users. It's an attempt to boost revenue as hardware headwinds like tech rivals in China challenge iPhone sales. Apple is focusing on its services business, with the app already accessible on Windows devices and many smart TVs.

    3 things in business

    Ricardo Rey for BI

    1. There's a hot new side hustle in town, but you'll have to wait in line. People spend a lot of time in a queue — trying to snag restaurant reservations, concert tickets, or merch — so why not profit off the demand? Professional line-standers are doing just that, with those Taskrabbit users earning an average of $27 an hour. Not all patrons and businesses are on board, though.

    2. The Trump administration's next big target: Comcast. Brendan Carr, President Trump's pick to head the Federal Communications Commission, is investigating Comcast because he's concerned about its DEI promotion. But it would be naive to think Carr is only going after the media company for its HR practices, writes BI's Peter Kafka. Meanwhile, many companies are quietly pulling back on their DEI efforts.

    3. You're fired… again. Over the course of five days, Small Business Administration probationary workers were terminated, unterminated, and then officially terminated. The final notice came just minutes after President Trump signed an executive order to reduce federal hiring. Two SBA workers who received the back-and-forth termination notices shared their experience with BI.

In other news

What's happening today

  • President Trump hosts the Indian PM at the White House.
  • House Budget Committee markup hearing on 2025 budget.
  • The Senate Judiciary Committee meets for nomination of Kash Patel to be FBI director.

  • Senate HELP Committee hearing on Linda McMahon to serve as Education Secretary.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.

Read the original article on Business Insider

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