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With prices across the economy soaring at their fastest pace in decades, you might think Americans would tap the brakes on spending. Not so far. Consumers as a whole are showing surprising resilience, not only sustaining their spending but increasing it even after adjusting for inflation. That spending is helping allay concerns that a recession might be near. Yet there are signs that some people, especially in lower-income households, are starting to cut back. How long consumers as a whole continue to spend at healthy levels despite the pressures from inflation will be key to whether the U.S. can avoid a recession as the Federal Reserve raises borrowing rates.

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The stock market’s slump this year briefly pulled the S&P 500 into what’s known as a bear market Friday, before a late rally put the index in the green. Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks. A bear market is a Wall Street term for an index that's fallen 20% or more from a recent high. At Friday's close, the S&P 500 was down 18.7% from the record high set on Jan. 3.

Wall Street is pointing toward gains before the opening bell after a surprise interest rate cut from China relieved investors anxious about a slowdown in the world’s second-largest economy. Futures for the Dow Industrial Average are up 1% Friday and the S&P 500 rose 1.2%. Major benchmarks will need much bigger gains by the close to avoid a seventh straight week of losses for markets shaken by rising interest rates, a global pandemic and war in Ukraine. Shares in Europe and Asia also rose. Major U.S. benchmarks are down around 3% for the week heading into Friday trading.

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Stocks wavered in afternoon trading on Wall Street Thursday as persistently high inflation continues to weigh on the economy and keeps major indexes mired in a deep slump. The S&P 500, the benchmark for many index funds, slipped 0.3%. It's down roughly 18% from the record high it set early this year, nearly at the 20% point that defines a bear market. Investors are worrying that the soaring inflation that's hurting people shopping for groceries and filling their cars up is also walloping company profits. Target fell again, a day after losing a quarter of its value on a surprisingly large drop in profits.

AP
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President Joe Biden’s pick to be the Federal Reserve’s top banking regulator pledged Thursday to help reduce high inflation and provide clear rules to govern financial innovation. Michael Barr said he would be strongly committed to bringing down inflation to the Federal Reserve’s target of 2%. Barr testified before the Senate Banking Committee, which is considering his nomination. He was a top Treasury Department official during the Obama administration and helped design the 2010 Dodd-Frank financial regulations after the devastating 2008 financial crisis. He is now the dean of the University of Michigan’s Gerald R. Ford School of Public Policy.

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(The Center Square) – Then White House Press Secretary Jen Psaki said in October that inflation increases “will be transitionary.” But today, they have surpassed 40-year highs, and many believe the U.S. is already entering a recession or soon will be.

AP

New Mexico is delivering the first in a series of direct payments to the state's adult residents to offset higher consumer costs brought on by inflation. Individual taxpayers who receive direct deposit rebates are scheduled to receive $250 as early as Thursday and couples are set to get $500. Checks for another 200,000 taxpayers will arrive in the mail in coming weeks. The payments are among $1.1 billion in tax relief and payouts authorized by state lawmakers. High fuel prices are hurting household finances as New Mexico's state government benefits financially from record-setting oil production in the Permian Basin.