Inflation pops as markets weigh its risk, European home prices stoke bubble fears, and IRS cracks down on crypto investors: This Week in Finance

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Momentum builds on economic reopen

The U.S. continues to move toward pre-COVID normalcy as vaccination numbers rise, according to the Wall Street Journal. The New York City subway's daily ridership is at its highest since March 2020; dining reservations are surging; and capacity limits in Illinois, New Hampshire, and Washington D.C. are set to increase this month at bars, restaurants, and public venues. With more than 58% of American adults having received at least one dose of the vaccine, efforts have begun to increase that number to 70% by July 4. ?? Here's what people are saying.

• Retail sales level out after surge: Retail sales were unchanged in April after a stimulus-fueled spending spree in March, according to the Commerce Department. In fact, March retail sales numbers were revised upward to a 10.7% increase from a previously reported 9.7% increase. Economists were forecasting retail sales to rise 1% in April.
• Amazon, McDonald's join pay hikes: Pay hikes and surging consumer prices have stoked concerns about rising inflation among businesses and investors, though few economists are raising red flags.
• Biden brings back job-search rules: Responding to criticism of expanded unemployment benefits, the president said job-search requirements suspended during the pandemic will be reinstated. Recipients will again need to show they're actively searching for work, and will be told that turning down a suitable offer could cost them benefits.
• Jobless claims at yet another low: New jobless claims again notched a pandemic-era low last week, with the initial filings for unemployment benefits falling by 34,000 to 437,000. The claims, a proxy for layoffs, suggest continued momentum in the recovery of the U.S. labor market despite slowing payroll growth last month.
• In Canada, unemployment back on the rise: Canada's variant-driven third COVID-19 wave drove a loss of 207,000 jobs in April, and the unemployment rate jumped to 8.1% from 7.5% the previous month. A CIBC senior economist says further job losses are probable this month as lockdowns expand.

Prices pop most since 2008

Prices paid by U.S. consumers popped the most in more than a decade last month — rising 4.2% from a year earlier, when COVID-19 had virtually halted economic growth. From a month earlier, core consumer prices rose 0.9% in April, the most since 1982. Vaccinations and an end to pandemic-induced shutdowns have turbocharged demand for commodities and other goods that are also in shorter supply. The Federal Reserve, mandated to keep a lid on inflation, has suggested that it's still unclear whether price increases are more than temporary as the economy regains traction. ?? Here's what people are saying.

• Factories fuel inflation: Factory prices jumped in April, adding to signs of inflationary pressure in the world's biggest economy as demand reignites. Labor Department data show prices paid to U.S. producers rose 0.6% from the prior month, after a 1% gain in March. The higher cost of output is fueling the biggest increase in consumer prices in more than a decade.

EU more upbeat about economic rebound

The European Commission has grown more optimistic about the European recovery from the pandemic in a new forecast. The prospect of countries easing restrictions, more demand for EU exports due to a global rebound, and the highest levels of public spending in more than a decade are now expected to shepherd the EU economy back to pre-pandemic levels by the end of 2022. The European Commission revised its growth forecasts for the eurozone economy to 4.3% in 2021 and 4.4% in 2022, from 3.8% for both years in previous projections. That would follow the historic contraction of 6.6% last year. ?? Here's what people are saying.

• European house prices stoke bubble fears: Property analysts have warned of a housing-market bubble across Europe despite the economic impact of the pandemic. Government support has helped boost the market, and in many places demand is outstripping supply. Stockholm, Berlin, and Bratislava are among cities seeing double-digit percentage jumps in prices over the past year, and in the UK a property-tax break has helped push prices to record levels.

Hacked U.S. pipeline back online

The Colonial Pipeline's entire system is up and running following last week's ransomware attack, and its operator says petroleum is being delivered to "all markets." The key U.S. pipeline added it could take a few days for the supply chain to normalize, but authorities hope the announcement will ease the gasoline hoarding and panic-buying that gripped much of the U.S. East Coast. Colonial reportedly paid 75 bitcoin — about $5 million — to recover its stolen data. ?? Here's what people are saying.

Credit-card issuers are on edge

Americans are paying down their debt, and credit-card issuers are getting the short end of the stick. Following the government's pandemic response, which included stimulus checks, expanded unemployment benefits, and a pause on student-loan payments, the projected delinquency rate that banks were counting on fell sharply. Paid-off card balances in the first quarter were the highest since 2000, said Discover, while Synchrony Financial — the largest store card issuer in the U.S. — said payment rates have been higher than pre-pandemic averages. ?? Here's what people are saying.

IRS cracks down on crypto investors

Cryptocurrency investors who are avoiding taxes be warned: Two recent IRS efforts show how serious the U.S. agency is about compliance. According to The Wall Street Journal, a Boston judge approved an IRS summons last month for customer records at peer-to-peer payments company Circle and its affiliates. Earlier this month, a federal judge in San Francisco approved a separate IRS summons to Kraken, a crypto exchange and bank. Both evidence requests involve investors who had more than $20,000 in transactions from 2016 to 2020, The Journal reported. ?? Here's what people are saying.

Tesla to suspend bitcoin purchases

Elon Musk announced on Twitter that Tesla is suspending vehicle purchases made using bitcoin, citing concerns about "rapidly increasing use of fossil fuels for bitcoin mining and transactions." The move sent the digital currency tumbling, wiping out hundreds of billions of dollars from the cryptocurrency market. Tesla had revealed earlier this year that it had purchased $1.5 billion in bitcoin and planned to accept it as payment, which had helped fuel a rally in the currency and enhanced its perceived legitimacy as an investment and form of payment. ?? Here's what people are saying.

EBay embraces NFTs

With non-fungible tokens, or NFTs, experiencing a leap in popularity, eBay has become the first e-commerce company to allow sales of these collectibles on its platform. The company also said it would possibly allow "blockchain-driven collectables" further down the road. The move follows eBay's announcement last week that it was open to exploring the idea of accepting cryptocurrency as payment. ?? Here's what people are saying.

Robinhood's fragile revenue source

Despite a chaotic start to the year, a recent securities filing shows Robinhood could generate north of $1 billion in revenue in 2021, reports Barron's. But the report notes that concerns are rising about the startup's growing reliance on revenue from payment for order flow — heavily dependent on high trade volumes, which flared during February's GameStop mania and stay-at-home orders. As economies continue to reopen, brokers are expecting a decline in trading activity — a potential blow to Robinhood on the verge of its IPO. ?? Here's what people are saying.

Amazon wins EU tax-bill appeal

The European Union's second-highest court ruled in Amazon's favor in its appeal of a $300 million tax bill. The new ruling rejects a 2017 European Commission decision that ordered the e-commerce giant to pay up. The court ruled the commission failed to prove Amazon received a selective tax advantage from Luxembourg, where its European subsidiary is based. Last July, the commission lost a similar case after ordering Apple to pay the Irish government 13 billion euros. ?? Here's what people are saying.

Women exit the workforce again

Women left the U.S. workforce in droves again in April, according to the Bureau of Labor Statistics, reigniting discussion about the need for child care for the benefit of economic growth. Data show the COVID economy has been especially difficult on working mothers, many of whom have service jobs or shoulder a larger share of child-rearing duties if they've been able to work from home. According to the latest data, Latinas have taken the hardest hit in the workforce, shrinking by 5% since the start of the pandemic, followed by Black women. ?? Here's what people are saying.

• Child care is an economic wake-up call: Last month's employment report, showing a slowdown in new payrolls, dented expectations for a speedier economic recovery from the pandemic. Much of the new slack came from mothers once again leaving the labor force. The phenomenon has pushed the economics of care from the fringes of political discourse to its center, as the federal government weighs "human infrastructure" in its spending plans.

With Carrington York, Jake Perez, Cate Chapman, Pieter Cranenbroek, Siobhan Morrin, Riva Gold, Daniel Malynowsky, Aubrey Steinberg, and Cathy Anderson.

What's your take on the week's news and other developments impacting you or your business? Join the conversation in the comments below.