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☆ The Fed Is Eyeing the Job Market, but It’s Difficult to Read
▼ + stars: | 2024-05-02 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

That leaves economists turning to other indicators to evaluate the strength of the job market and to forecast its forward momentum. Job openings have been coming down, the unemployment rate has ticked up recently (particularly for Black workers) and hiring expectations in business surveys have wobbled. The takeaway is that this seems to be a strong job market, but exactly how strong is hard to know. If job gains were to slow, would that be a sign that the economy was beginning to buckle, or just evidence that employers had finally sated their demand for new hires? If job gains were to stay strong, would that be a sign that things were overheating, or evidence that labor supply was still expanding?

☆ Fed Holds Rates Steady, Noting Lack of Progress on Inflation
▼ + stars: | 2024-05-01 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Federal Reserve officials left interest rates unchanged and signaled that they are wary about how stubborn inflation is proving, paving the way for a longer period of high interest rates. The Fed held borrowing costs steady at 5.33 percent on Wednesday, leaving them at a more than two-decade high where they have been set since July. Central bankers reiterated that they need “greater confidence” that inflation is coming down before reducing rates. “Readings on inflation have come in above expectations,” Jerome H. Powell, the Fed chair, said at a news conference following the release of the central bank’s rate decision. After months of rapid cooling, inflation has proved surprisingly sticky in early 2024.

Persons: ” Jerome H, Powell Organizations: Federal Reserve, Fed

☆ The Fed’s Favorite Inflation Index Remained Stubborn in March
▼ + stars: | 2024-04-26 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: 1 min

The Federal Reserve’s most closely watched inflation measure remained stubborn in March, the latest evidence that price increases are not fading as quickly as policymakers would like, and another reason that interest rates may stay higher for longer. Investors came into 2024 hopeful that Fed officials would cut rates substantially this year, but those hopes have been fading as inflation has shown much more staying power than expected. Wall Street increasingly sees lower rates coming much later in the year, if the Fed manages to cut them at all. The latest Personal Consumption Expenditures index reading could keep the Fed on a cautious path as it considers when to lower borrowing costs. The overall inflation index rose by 2.7 percent in the year through March, up from 2.5 percent in February and slightly more than economists had expected.

Organizations: Fed

☆ Bets on Rate Cuts This Year Are Fading Away
▼ + stars: | 2024-04-26 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

At the start of 2024, investors expected the Federal Reserve to cut interest rates substantially this year as inflation cooled. Investors and economists are questioning when and how much Fed policymakers will manage to cut rates — and some are increasingly dubious that Fed officials will manage to lower them at all this year. Inflation’s stickiness has prompted Fed officials to signal that it may take longer to reduce interest rates than they had previously expected. Policymakers raised interest rates to 5.33 percent between March 2022 and last summer, and have held them there since. Investors who came into the year expecting a first rate cut by March have pushed back those expectations to September or later.

Persons: Inflation’s stickiness Organizations: Federal Reserve, Investors

☆ Insurance Costs Are Pushing Up Overall Inflation
▼ + stars: | 2024-03-12 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

It is costing Americans more to protect against disaster, a development that is pushing up official inflation figures. Various kinds of insurance — including car, medical and property protection — are costing more, at least as official inflation figures measure them. “Insurance of various different kinds — housing insurance, but also automobile insurance, and things like that — that’s been a significant source of inflation over the last few years,” Jerome H. Powell, the Federal Reserve chair, said during congressional testimony last week. “And it’s to do with a million different factors.”Vehicle insurance is the one adding notably to overall inflation, said Omair Sharif, founder of the research firm Inflation Insights. Part of the increase in car insurance comes from the fact that parts and replacement vehicles have become a lot more expensive over recent years, and that is slowly feeding through to insurance premiums, he said.

Persons: ” Jerome H, Powell, Omair Sharif Organizations: “ Insurance, Federal Reserve

☆ The jobs report comes as the Fed considers the timing of interest rate cuts.
▼ + stars: | 2024-03-08 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

The Federal Reserve is considering when and how much to cut interest rates, and the employment report on Friday will give policymakers an up-to-date hint at how the economy is evolving ahead of their next policy meeting. Fed officials meet on March 19-20, and they are widely expected to leave interest rates unchanged at that gathering. “We’re waiting to become more confident that inflation is moving sustainably to 2 percent,” Mr. Powell told lawmakers on Thursday. If job growth is strong and the labor market is so robust that wages rise quickly, that could keep price increases higher for longer as companies try to cover their costs. On the other hand, if the job market begins to slow sharply, that could nudge Fed officials toward earlier interest rate cuts.

Persons: Jerome H, Powell, “, Mr, we’re Organizations: Federal

☆ Economists Expected a Hiring Slowdown. So Much for That.
▼ + stars: | 2024-02-02 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

“We’ve had a very strong labor market, and we’ve had inflation coming down,” Mr. Powell said. “So I think whereas a year ago, we were thinking that we needed to see some softening in the economy, that hasn’t been the case. But few if any economists expected job gains to remain this robust at a time when higher interest rates were expected to meaningfully weigh down the economy. The question for the Fed is what it means if the job market not only fails to slow down as anticipated, but actually accelerates again. While one month of data does not make a trend, officials are likely to keep an eye on strong hiring and wage growth.

Persons: “ We’ve, we’ve, ” Mr, Powell, hasn’t, Mr

☆ Fed officials aren’t bent on slowing the job market — but they’re watching it.
▼ + stars: | 2024-02-02 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

But for now, job gains have continued at a solid pace and the economy is growing at a rapid clip. If that continues, the Fed is likely to focus more on inflation as it contemplates when and how much to lower rates. Notably, Mr. Powell suggested that the Fed is willing to be patient as it waits for wage growth to slow to normal levels. Some economists think that today’s relatively quick pace of wage gains could prevent inflation from stabilizing at 2 percent over time, were they to prevail. “I think the labor market by many measures is at or near normal, but not totally back to normal,” Mr. Powell said.

Persons: Powell, Mr Organizations: Mr

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

☆ Climate Protesters Get in Fed’s Face as Policy Clash Grows Louder
▼ + stars: | 2023-12-01 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

A protest that disrupted a speech by Jerome H. Powell, the Fed chair, at the Economic Club of New York this fall generated extensive coverage. All three upheavals were caused by the same group, Climate Defiance, which a now-30-year-old activist named Michael Greenberg founded in the spring. Mr. Greenberg had long worked in traditional climate advocacy, but he decided that something louder was needed to spur change at institutions like the Fed. “I realized there was a big need for disruptive direct action,” he explained in an interview. “It just gets so, so, so, so, so much more attention.”

Persons: Jerome H, Powell, Michael Greenberg, Greenberg, “, ” Organizations: Federal, Economic, of New, International Monetary Fund Locations: Jackson, Lodge, Wyoming, of New York

☆ The Fed’s Preferred Inflation Measure Eased in October
▼ + stars: | 2023-11-30 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

The Personal Consumption Expenditures inflation measure, which the Fed cites when it says it aims for 2 percent inflation on average over time, climbed by 3 percent in the year through October. That was down from 3.4 percent the previous month, and was in line with economist forecasts. Compared to the previous month, prices were flat. The latest evidence that price increases are slowing came alongside other positive news for Fed officials: Consumers are spending less robustly. A measure of personal consumption climbing by 0.2 percent from September, marking a slight slowdown from the previous month.

Organizations: Federal Reserve, Fed

She said that it was still her basic expectation that the Fed would need to raise rates further. Investors appeared buoyed by the Fed officials’ comments. The two-year Treasury yield, which is sensitive to changes in investors’ interest rate expectations, fell noticeably on Tuesday morning. Fed officials have been nervously watching continued strength in the economy: Gross domestic product expanded at a breakneck 4.9 percent annual rate in the third quarter. The concern has been that continued solid demand will give companies the wherewithal to continue raising prices quickly.

Persons: Michelle Bowman, ”, ” Ms, Bowman Organizations: Fed, Treasury, Gross

Ms. Aitchison, 55, who works for a senior living home, advises her family each year that she plans to make the holidays smaller, spending less. “I’m a huge gift giver,” Ms. Aitchison, who started her shopping in early November. I’m always running around the last week before Christmas because I have to find just a few more gifts.”There are many reasons for people to be more prudent in their holiday spending this year. While inflation is less rapid than it was a year ago, millions of shoppers still feel sticker shock when buying groceries. And higher interest rates have meant larger credit card bills and, for home buyers, mortgage payments.

Persons: Christina Beck, Beck, Kristin Aitchison, Aitchison, “, Ms, I’m Locations: Minneapolis

☆ Fed Officials Thought Rates Could Rise More if Inflation Stayed Stubborn
▼ + stars: | 2023-11-21 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +2 min

Wall Street is keenly focused on what officials will do next. Fed policymakers had predicted one more 2023 rate move as of their September economic projections, but investors think that there is little chance they will raise rates at their final meeting of the year on Dec. 12-13. Those, together with remarks from Fed Chair Jerome H. Powell, could provide important clues about the future. As of now, market pricing suggests that Wall Street expects policymakers to begin lowering interest rates at some point in the first half of 2024. Several central bankers have been clear in recent weeks that they aren’t sure they are done raising interest rates.

Persons: Jerome H, Powell, ” Susan Collins Organizations: ”, Federal Reserve Bank of Boston, CNBC

Look at economic data, and you’d think that young voters would be riding high right now. Inequality is down, wage growth is finally beating inflation, and the economy has expanded rapidly this year. On Instagram, jokes about poor housing affordability are a genre unto themselves. Social media reflects — and is potentially fueling — a deep-seated angst about the economy that is showing up in surveys of younger consumers and political polls alike. It suggests that even as the job market booms, people are focusing on long-running issues like housing affordability as they assess the economy.

Persons: Biden’s Organizations: Social

☆ An Optimistic Inflation Report Reduces Pressure on the Fed to Raise Rates
▼ + stars: | 2023-11-14 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Inflation eased in October and price increases showed encouraging signs of slowing under the surface, according to fresh data released on Tuesday. The report provided the Federal Reserve with renewed evidence that its battle against rapid inflation is working — and likely reduced the need for further rate increases. The overall Consumer Price Index slowed to 3.2 percent last month on a year-over-year basis, lower than the 3.7 percent reading in September and the coolest since July. Inflation has come down meaningfully over the past year after peaking at just above 9 percent on an overall basis in the summer of 2022. Fed officials are trying to wrestle price increases back to roughly the 2 percent pace that was normal before the pandemic by raising interest rates, which they hope will slow consumer and business demand.

Organizations: Federal Reserve

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

☆ Fed Chair Recalls Inflation ‘Head Fakes,’ Pledges to Do More if Needed
▼ + stars: | 2023-11-09 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Jerome H. Powell, the chair of the Federal Reserve, on Thursday expressed little urgency to make another interest rate increase. But he made clear that policymakers remain willing to adjust policy further if doing so proves necessary to cool the economy and fully restrain inflation. Mr. Powell and his Fed colleagues left their interest rates unchanged in a range of 5.25 to 5.5 percent earlier this month, up from near-zero as recently as March 2022. The Fed has raised borrowing costs over the past year and a half to wrangle rapid inflation by slowing demand across the economy. He said Fed officials are still “not confident that we have achieved such a stance.”

Persons: Jerome H, Powell, ” Organizations: Federal, International Monetary Fund

☆ Are Higher Rates Slowing the Economy? A Zoo Offers Clues.
▼ + stars: | 2023-11-02 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

But they are also looking for further evidence that their moves are working to restrain the economy. “The same is true of growth.”But he said that economic growth, which is mainly powered by consumer spending, would most likely need to slow for inflation to fully return to a normal pace. It is now running at about 3.4 percent, still well above the Fed’s 2 percent goal. “What we do with demand is still going to be important,” he said. Surveying the economy reveals that the effects of the Fed’s rate moves are clear in some places, are mixed in others and have yet to make much of a dent elsewhere.

Persons: we’ve, Jerome H, Powell, “, ” Organizations: Fed

☆ Fed Holds Rates Steady and Pledges to Proceed Carefully
▼ + stars: | 2023-11-01 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Rates have been on hold in a range of 5.25 to 5.5 percent since July, up from near-zero as recently as March 2022. Policymakers think that borrowing costs are now high enough to weigh on economic growth if they are kept at this level over time. While the economy has held up so far — growth was unusually strong this summer — inflation has come down since 2022. Overall price increases decelerated to 3.4 percent as of September, down from above 7 percent at their peak. Fed policymakers are now trying to wrestle inflation the rest of the way back to 2 percent.

Organizations: Federal Reserve, Fed

☆ A Key Measure of Wages Grew at a Moderate Pace This Summer
▼ + stars: | 2023-10-31 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

A measure of pay and benefits that officials at the Federal Reserve have been watching closely as they try to gauge the heat of the labor market grew at a moderate pace over the summer. The Employment Cost Index, a quarterly inflation measure from the Labor Department that tracks changes in wages and benefits, climbed 1.1 percent in the third quarter of 2023 versus the prior three months. That pace of growth does mark a deceleration from a series of rapid quarterly gains in 2022. Still, the index averaged 2.2 percent yearly gains in the decade leading up to the pandemic, underscoring that today’s pace remains unusually quick. And it is notable that wage gains continue to come in strong at a time when economists had expected them to be returning to a more normal pace.

Organizations: Federal Reserve, Labor Department

☆ What to Watch for as the Federal Reserve Meets This Week
▼ + stars: | 2023-10-31 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Federal Reserve officials are widely expected to leave interest rates steady at the conclusion of their two-day meeting on Wednesday. Both will offer policymakers a chance to signal what they think might come next for interest rates and the economy. Central bankers have already raised interest rates to a range of 5.25 to 5.5 percent in a push to tame inflation. That rate setting is up from near-zero as recently as early 2022, and is the highest level in 22 years. And once they decide that rates are high enough, how long will they leave them elevated?

Persons: Jerome H, Powell Organizations: Federal

But for companies like Soergel Orchards in western Pennsylvania, a slowdown is nowhere in sight. “People love to pick — people will pick anything.”Sales are up even though a string of rainy weekends have held back attendance at the farm’s annual fall festival. And the owners are bracing for a strong season in their store selling Christmas decorations. Consumer demand has unexpectedly boomed in 2023, defying widespread expectations for a slowdown and helping to fuel strong overall growth. The economy expanded at an eye-popping 4.9 percent annual rate in the third quarter, far faster than the roughly 2 percent pace officials at the Fed think of as its standard growth pace.

Persons: ”, Amy Soergel Organizations: Federal Reserve, Consumer Locations: Pennsylvania

☆ Consumers Kept Spending in September, as Inflation Held Steady
▼ + stars: | 2023-10-27 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: 1 min

The Fed’s policy moves have been intended to slow demand in order to tamp down inflation. Price increases have been slowing down: Friday’s Personal Consumption Expenditures report also showed that overall inflation held steady at 3.4 percent in September. That was in line with what economists had expected, and is down from a peak of 7.1 percent in the summer of 2022. And after stripping out volatile food and fuel for a clearer sense of the underlying inflation trend, a closely-watched core inflation measure eased slightly on an annual basis. Still, Fed officials aim for 2 percent inflation, so the current pace is still much faster than their goal.

Persons: Price Organizations: Federal

☆ New Normal or No Normal? How Economists Got It Wrong for 3 Years.
▼ + stars: | 2023-10-24 | by ( Jeanna Smialek | More About Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Economists spent 2021 expecting inflation to prove “transitory.” They spent much of 2022 underestimating its staying power. And they spent early 2023 predicting that the Federal Reserve’s rate increases, meant to cure the inflation, would plunge the economy into a recession. The question is why experts so severely misjudged the pandemic and postpandemic economy — and what it means for policy and the outlook going forward. Economists generally expect growth to slow late this year and into early next, nudging unemployment higher and gradually weighing inflation down. But several said the economy had been so hard to predict since the pandemic that they had low confidence about future projections.

Organizations: Fed

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