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U.S. stocks drop to end a volatile month of April - YouTube
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it was not a good end of the week on
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wall street the dow jones dropped more
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than 900 points yeah the nasdaq and s p
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are also in the red the nasdaq capped
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off its worst month since 2008 down
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today
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more than 4 rough day s p is also off
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more than three percent
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joining us now to talk about this rough
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day megan
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excuse me castella she's an economic and
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policy reporter for barons magazine
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megan welcome what is driving the market
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today what uh you know how did we get
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into such a rough rough waters today
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you're right that it's been a tough
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month it's actually been in past four
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months uh for the markets a tough start
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to the year really the nasdaq in
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particular is really tech heavy and it's
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really being dragged down by amazon in
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particular apple as well both reporting
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earnings amazon's earnings came in well
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below estimates this week
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and they were reporting higher labor
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costs higher transportation costs higher
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fuel costs across the board um so their
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outlook doesn't look great either it
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wasn't a great quarter for them and
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they're not forecasting that things are
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getting better any time soon apple had
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similar problems they're particularly
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citing slowdowns in china continued
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shutdowns and uncertainties there due to
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covet and ongoing uh virus outbreaks
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that are shutting down factories and
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hurting supply chains so they're also
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forecasting a tough outlook over the
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next quarter or so um so you know
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between uh things like that the ongoing
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war between russia and ukraine inflation
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uh continuing to come in at a four
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decade high we're seeing slowdowns
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across the board and it really uh it's
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sort of no surprise that investors mood
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is a little bit dour yeah but always a
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shock when it actually happens so the
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core personal consumption expenditures
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price index
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never really heard of that before the
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full disclosure a tool used by the
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federal reserve apparently to gauge
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inflation it slowed from 5.3 percent in
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february to 5.2 percent in march
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do experts believe that that price that
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price increase may have peaked
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yeah it's a tool to measure inflation
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the more often cited one is the cpi the
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consumer price index but the federal
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reserve in particular always follows the
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pce as you mentioned which came out
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today it's really encouraging to see a
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flow down there it's not a significant
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one it's 0.1 percent um but you know at
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least it's something
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do experts believe inflation has peaked
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the jury is sort of still out some
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certainly say yes some people say we
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were really starting to see these
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massively high inflation numbers in may
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june of last year that's when used car
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prices were really spiking
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new cars as well just to a certain
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extent and so something that economists
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call base effects is just that when
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we're comparing prices to a year ago we
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probably aren't going to be rising quite
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as quickly as we were last may in june
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so maybe it looks like things are
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slowing down on one hand that's a good
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thing it's progress on another hand it
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doesn't mean that we're really out of
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the woods if prices are continuing to
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rise month over month quite rapidly
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they're still rising faster than wages
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for example it's still hitting consumers
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and hurting consumers they're spending
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more than they're making right now going
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down into their pandemic savings which
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they can do for a while but it does mean
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that the economy is really hot and uh we
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might hit i would call it a plateau more
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than a peak because we might remain
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pretty hot for a while
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well so in your latest article
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you emphasize that americans should not
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panic
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despite the commerce department's
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reporting that the economy shrank last
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quarter for the first time since the
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pandemic hit what's with this reassuring
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tone
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it's again you know throughout the last
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year or so i would say we've seen a lot
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of really mixed indicators from the
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economy some things are looking pretty
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strong the labor market for example is
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really really hot which is both good
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because people can get jobs bad because
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it might mean that wages are rising too
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quickly for the economy to keep up this
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gdp report that we saw which measures
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how fast the economy is growing we got a
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surprise shock yesterday when the data
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came out that we thought economists
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thought that the economy was growing
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really slowly at roughly a one percent
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rate uh in the first quarter of the year
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and it actually was shrinking at a more
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more than one percent rate so it looks
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really bad that's not what we want
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things are going backwards but when you
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sort of dive into the report a little
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bit
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the reasons for the slowdowns aren't
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necessarily really bad when you're
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thinking about the fundamentals of the
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economy
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one reason was just that imports surged
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americans were buying a lot of goods
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from overseas and part of that is
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because americans the u.s economy
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recovered faster than some of some
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foreign economies did and so people were
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buying a lot of goods still supply
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chains issues in some areas were easy
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and people were able to buy those
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products that's not a horrible thing but
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it does show up as a negative uh in the
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gdp calculation another thing is just
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inventories companies have really
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built up their inventories in the
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holiday season last year ahead of
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holiday sales thinking that it would
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take them a while to restock because of
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supply chain issues so they did all of
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that early that meant that that was that
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propelled growth in the fourth quarter
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of last year but again because we're
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comparing to the quarter before in this
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quarter it showed up as a really big
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drag but if you're looking at the things
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that are most important if you're
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looking at consumer spending and
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business investment and things like
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research and equipment those were really
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really strong and that's that's a good
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sign and that's part of why economists
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don't believe that we'll continue
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shrinking into the second and third
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quarter they expect things to turn
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around seeing the bright side oh yeah
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wow megan fit the
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i know the big picture in all the
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details important to get the details
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megan cassella
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thank you so much
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thanks for having me
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