WASHINGTON – The best hiring market in five years should limit the damage from inflation and position the economy to thrive in the second half of the year.

Higher food and gas prices are threatening to slow growth this spring. But economists say the drag from inflation will likely be only temporary. Commodity prices are easing. Gas prices could follow in the weeks ahead.

“We are going to see the economy picking up steam,” said Joel Naroff of Naroff Economic Advisors, who is among many economists who think gas prices will taper off. “Lower energy prices will give consumers more confidence to spend, and higher consumer spending will give businesses more confidence to hire and invest.”

The nationwide average for a gallon of gas has jumped by more than a dollar in the past year, though it leveled off the past week slightly below $4 a gallon. And consumers are paying more for groceries, after the biggest monthly spike in food prices in nearly three years.

Surging prices for necessities, like gas and food, were the main reason why sales at U.S. retailers rose 0.5 percent in April. It was the 10th straight monthly gain. But excluding sales at gas stations, the increase was a slighter 0.2 percent, the Commerce Department said. And grocery store sales rose at triple the rate from March.

Economists have concerns those higher prices could leave consumers with less money for discretionary goods and services, like cars and clothing, furniture and vacations — the kind of spending that helps power the economy and encourages employers to hire.

 


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