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☆ U.S. Economy Grew at 1.6% Rate in First Quarter Slowdown
▼ + stars: | 2024-04-25 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

The U.S. economy continued to grow but at a sharply slower rate early this year, as strong consumer spending was offset by pockets of weakness in other sectors. Taken on its own, the downshift in growth is not necessarily worrisome, particularly given that the Federal Reserve has been trying to cool off the economy. And the weaker first quarter numbers were driven in part by big shifts in business inventories and international trade, which often swing wildly from one quarter to the next. Still, the slowdown has come at the same time that the Fed’s fight against inflation has stalled: Prices rose more quickly in the first quarter than at the end of last year. That raises the uncomfortable possibility that high interest rates are taking a toll on economic activity but not succeeding in fully taming inflation.

Organizations: Gross, Commerce Department, Federal Reserve Locations: U.S

The Federal Reserve is likely to wait longer than initially expected to cut interest rates given stubborn inflation readings in recent months, the central bank’s top two officials said Tuesday. Policymakers came into 2024 looking for evidence that inflation was continuing to cool rapidly, as it did late last year. Instead, progress on inflation has stalled or even reversed by some measures. But he stopped short of saying he expected rates will need to stay at their current levels, 5.3 percent, deep into this year. Last month, Fed officials indicated that they expect to cut rates three times by the end of 2024.

Persons: ” Jerome H, Powell, Philip N, Jefferson Organizations: Federal Locations: Washington

☆ Housing Costs Continued to Rise Faster Than Before the Pandemic
▼ + stars: | 2024-04-10 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

Housing costs rose 0.4 percent in March and were up 5.7 percent from a year earlier, both unchanged from the month before. Shelter inflation has cooled since last year, when it peaked at more than 8 percent, but lately that progress has slowed. Housing is by far the largest monthly expense for most families, which means it also weighs heavily in inflation calculations. Before the pandemic, shelter costs rose at a rate of about 3.5 percent per year. Housing costs in the Consumer Price Index are based on rents.

Organizations: Federal Reserve

Many economists spent early 2023 predicting a painful downturn, a view so widely held that some commentators started to treat it as a given. Unemployment remains at historic lows and consumers continue to spend even with Federal Reserve interest rates at a 22-year high. Why did economists get so much wrong, and what can policymakers learn from those mistakes as they try to anticipate what might come next? But what is clear is that old models of how growth and inflation relate did not serve as accurate guides. Bad luck drove more of the initial burst of inflation than some economists appreciated.

Organizations: Federal Locations: America, academia

☆ U.S. Economy Grew at 3.3% Rate in Latest Quarter
▼ + stars: | 2024-01-25 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

The U.S. economy continued to grow at a healthy pace at the end of 2023, capping a year in which unemployment remained low, inflation cooled and a widely predicted recession never materialized. Gross domestic product, adjusted for inflation, grew at a 3.3 percent annual rate in the fourth quarter, the Commerce Department said on Thursday. That was down from the 4.9 percent rate in the third quarter but easily topped forecasters’ expectations and showed the resilience of the recovery from the pandemic’s economic upheaval. Instead, growth accelerated: For the full year, measured from the end of 2022 to the end of 2023, G.D.P. (A different measure, based on average output over the full year, showed annual growth of 2.5 percent in 2023.)

Organizations: Gross, Commerce Department Locations: U.S, G.D.P

☆ A 30-Year Trap: The Problem With America’s Weird Mortgages
▼ + stars: | 2023-11-19 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

And now interest rates have soared to a 20-year high, eroding buying power without — in defiance of normal economic logic — doing much to dent prices. They have been insulated from rising interest rates and, to a degree, from rising consumer prices. Their monthly housing costs are, for the most part, locked in place. Because the interest rate is fixed, homeowners get to freeze their monthly loan payments for as much as three decades, even if inflation picks up or interest rates rise. But because most U.S. mortgages can be paid off early with no penalty, homeowners can simply refinance if rates go down.

Persons: Buyers

At Burlington Bagel Bakery, a sign in the window advertises wages starting at $25 an hour. Cabot Creamery is bringing workers from out of state to package its signature blocks of Cheddar cheese. More than a fifth of Vermonters are 65 or older, and more than 35 percent are over 54, the age at which Americans typically begin to exit the work force. Vermont offers an early look at where the rest of the country could be headed. The baby boom population is aging out of the work force, and subsequent generations aren’t large enough to fully replace it.

Organizations: Champlain, Burlington Bagel, Central Vermont Medical Center Locations: Burlington, Cabot, Vermont

Biden administration officials, worried that a growing conflict in the Middle East could send global oil prices soaring, are looking for ways to hold down American gasoline prices if such a jump occurs. President Biden tapped the reserve aggressively last year after Russia’s invasion of Ukraine sent oil prices skyrocketing, leaving the amount of oil in those reserves at historically low levels. The conflict in the Middle East has not yet sent oil prices surging. Administration officials are wary of the possibility that prices could again jump above $5 a gallon, a level they briefly touched in the spring of 2022. “In some ways, they’ve missed the boat.”

Persons: Biden, That’s, Mr, ”, Amrita Sen, Sen, “, they’ve Organizations: Biden, nation’s Strategic Petroleum Reserve, AAA Locations: Saudi Arabia, Gulf of Mexico, Ukraine, Israel, Iran

American families saw the largest jump in their wealth on record between 2019 and 2022, according to Federal Reserve data released on Wednesday, as rising stock indexes, climbing home prices and repeated rounds of government stimulus left people’s finances healthier. At the same time, median family income increased by 3 percent between 2018 and 2021 after subtracting out price increases. While income gains were most pronounced for the affluent, the data showed clearly that Americans made nearly across-the-board financial progress in the three years that include the pandemic. But the Fed report, which is released every three years, is considered the gold standard in data about the financial circumstances of households. It offers the most comprehensive snapshot of everything from savings to stock ownership across racial, wealth and age groups.

Organizations: Federal Reserve, Fed’s Survey, Consumer Finances

☆ Pay Gains Are Slowing, Easing Worries on Inflation
▼ + stars: | 2023-09-01 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

American workers got smaller pay increases in August. But the slowdown in wage gains is consistent with other evidence suggesting a gradual cooling in the labor market. For workers, the pain of slower wage growth is being offset, at least to some degree, by cooling inflation. Price increases outpaced pay gains for much of last year, but that trend has since reversed. Pay, adjusted for inflation, has risen in recent months; the Labor Department will release August price data later this month.

Persons: Price Organizations: Federal Reserve, Employers, Labor Department

Competition for workers is fierce: The Wendy’s on Mr. Bellman’s drive home from work advertises wages of $18 an hour. New Hampshire is surrounded by states where the minimum wage is above $13, so if Granite State employers tried to offer substantially less, many workers could cross the border for a bigger paycheck. Paige Roberts, president and chief executive of the Jackson County Chamber of Commerce in Mississippi, said she was “nearly laughed out of a job” when she started asking members about paying the minimum wage. Faster hikes in the wage floor in the late 2010s forced up long-stagnant wages in fields like restaurants and retail. And some businesses, such as summer camps, say they are still paying the minimum wage for entry-level workers or those in training.

Persons: Bellman’s, Mr, Bellman, Paige Roberts Organizations: Granite, Jackson County Chamber of Commerce Locations: New Hampshire, Granite State, Alabama, Mississippi, Jackson County

☆ Fresh Look at Data Shaves Just a Hair Off U.S. Job Growth
▼ + stars: | 2023-08-23 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

The red-hot American job market might be just a couple of degrees cooler than previously believed. There were 306,000 fewer nonagricultural jobs in the United States in March than initially reported, according to revised data released by the Labor Department on Wednesday. That suggests employers added jobs at a slightly slower rate in 2022 and early 2023 than more timely — but less accurate — monthly data suggested. The recent strength of the job market has surprised economists, who expected the rapid increase in interest rates to lead to a more significant slowdown in hiring. Some forecasters thought that the monthly jobs figures were overstating hiring, and that the annual update would show a substantial downward revision.

Organizations: Labor Department Locations: United States

Good news is bad news: It had been the mantra in economic circles ever since inflation took off in early 2021. A strong job market and rapid consumer spending risked fueling further price increases and evoking a more aggressive response from the Federal Reserve. But suddenly, good news is starting to feel good again. Inflation has finally begun to moderate in earnest, even as economic growth has remained positive and the labor market has continued to chug along. The economy could still be in for a big slowdown as the full impact of the Fed’s higher borrowing costs is felt.

Organizations: Federal Reserve Locations: chug

Government data released Tuesday showed that boom continued in June, with spending on manufacturing facilities up nearly 80 percent over the past year. The manufacturing sector as a whole has added nearly 800,000 jobs since Mr. Biden took office and now employs the most people since 2008. Measures by the University of Michigan and the Conference Board suggest consumers have grown happier with the current state of the economy and more hopeful about the year ahead. Hourly wages outpaced price gains in the spring for the first time in two years, giving consumers more purchasing power. National opinion polls still show a sour economic mood — but it appears to be improving slightly.

Persons: Biden, ”, Joseph Brusuelas Organizations: RSM, University of Michigan, Conference Board, New York Times, Siena College Locations: Siena

☆ Wage Growth Slowed in Second Quarter, a Sign the Economy is Cooling
▼ + stars: | 2023-07-28 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

Wage growth, by various measures, has softened in recent months, but inflation has fallen by even more. Workers are better off as a result: Pay, adjusted for inflation, rose in the second quarter for the first time in two years. The slowdown in wage growth has surprised some economists because the unemployment rate remains very low, which ordinarily would put pressure on companies to raise pay to attract and retain workers. But other evidence suggests that the labor market has softened even without a big increase in joblessness. Employers are posting fewer job openings, are adding fewer new jobs and are poaching fewer employees from competitors, all signs that demand for workers has slowed.

Persons: ”, Beth Ann Bovino, Michael Gapen Organizations: Workers, “, U.S . Bank, Fed, Bank of America Locations: joblessness

☆ U.S. Economy Grew at 2.4% Rate in Second Quarter
▼ + stars: | 2023-07-27 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

Instead, layoffs were mostly contained to a handful of industries, the banking crisis did not spread and even the housing market has begun to stabilize. “The things we were all freaked out about earlier this year all went away,” said Michael Gapen, chief U.S. economist at Bank of America. Jerome H. Powell, the Fed chair, said on Wednesday that the central bank’s staff economists no longer expected a recession to begin this year. Still, many economists say consumers are likely to pull back their spending in the second half of the year, putting a drag on the recovery. And although unemployment remains low, job growth and wage growth have slowed.

Persons: ”, Michael Gapen, Jerome H, Powell Organizations: Tech, Bank of America, Fed, Savings

Time and again, predictions about ways in which the labor market had been permanently changed have proved temporary or even illusory. Women lost jobs early in the pandemic but have returned in record numbers, making the she-cession a short-lived phenomenon. Retirements spiked along with coronavirus deaths, but many older workers have come back to the job market. In a historically strong labor market with very low unemployment, workers have a lot more power than is typical, so they are winning better wages and new perks. And a shift toward working from home for many white-collar jobs is still reshaping the economy in subtle but important ways.

Persons: he’s

Last year, as policymakers relentlessly raised interest rates to combat the fastest inflation in decades, forecasters began talking as though a recession — economic contraction rather than growth — was not a question of “if” but “when.” Possibly in 2022. As recently as December, less than a quarter of economists expected the United States to avoid a recession, a survey found. But the year is more than half over, and the recession is nowhere to be found. Not even in the housing market, the industry that is usually most sensitive to rising interest rates, which has shown signs of stabilizing after slumping last year. All of which is leading economists, after a year spent being surprised by the resilience of the recovery, to wonder whether a recession is coming at all.

Persons: ”, Diane Swonk Organizations: KPMG US Locations: United States

☆ The ‘Great Resignation’ Is Over. Can Workers’ Power Endure?
▼ + stars: | 2023-07-06 | by ( Ben Casselman | More About Ben Casselman | ) www.nytimes.com time to read: +1 min

Wage growth has slowed, especially in the low-paying service jobs where it surged as turnover peaked in late 2021 and early 2022. Employers, though still complaining of labor shortages, report that it has gotten easier to hire and retain workers. Ms. Richardson compared the labor market to a game of musical chairs: When the economy began to recover from pandemic shutdowns, workers were able to move between jobs freely. “Everyone knows the music is about to stop,” Ms. Richardson said. Ms. Moya, 38, became one of the millions of Americans to start a small business during the pandemic.

Persons: ”, Nela Richardson, Ms, Richardson, ” Aubrey Moya, —, Moya Organizations: Employers

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