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☆ The case for a 2023 US recession is crumbling
▼ + stars: | 2023-06-05 | by ( Matt Egan | ) edition.cnn.com time to read: +6 min

New York CNN —Many CEOs, investors and economists had penciled in 2023 as the year when a recession would hit the American economy. But the case for a 2023 US recession is crumbling for a simple reason: America’s jobs market is way too strong. Zandi is growing more confident that 2023 won’t be the year when a downturn will begin. “We’re running out of time for a 2023 recession,” Justin Wolfers, an economics professor at the University of Michigan, told CNN. Friday’s jobs report did offer some conflicting signals, especially in the household survey, which economists put less weight on because it tends to be noisier.

Persons: Mark Zandi, won’t, ” Zandi, “, Justin Wolfers, “ We’ve, payrolls, Wolfers, They’ve, ” Wolfers, ” Macy’s, Zandi, Joe Brusuelas, Morgan Stanley Organizations: New, New York CNN, Federal Reserve, Moody’s, CNN, University of Michigan, Bureau of Labor Statistics, Bank of America, Challenger, RSM Locations: New York, ”

☆ With these many jobs, do we no longer have to worry about a recession?
▼ + stars: | 2023-06-03 | by ( Chris Isidore | ) edition.cnn.com time to read: +7 min

But for every recession alarm bell, the continued strength in the labor market seems to be an answer to those worries. “I think even in a recession environment, we’re going to have a relatively strong job market. “It’s still possible that the case of avoiding a recession is, in my view, more likely than that of having a recession. Jobs market still hot, but coolingThat’s not to say that the jobs market hasn’t slowed down. Powell said he’s not particularly worried about the cooling of the labor market over the last year.

Persons: That’s, ”, Jamie Cox, they’re, Mark Zandi, “, I’ve, we’ve, Dave Gilbertson, Jerome Powell, “ We’ve, ” Powell, It’s, Julia Pollock, Powell, he’s, —, ZipRecruiter’s Pollock, – CNN’s Bryan Mena Organizations: New, New York CNN, Labor Department, Costco, Federal Reserve, Harris Financial Group, Moody’s Analytics, Target, Labor Locations: New York

"The risk of a downgrade is exacerbated every time Congress flirts with the debt ceiling," said Calvin Norris, Portfolio Manager & US Rates Strategist at Aegon Asset Management, who sees another downgrade as still a risk. Economic damage from the 2011 and 2013 debt ceiling battles had a chilling impact. Rating agency Fitch and other smaller agencies recently placed the U.S. credit rating under review. Reuters GraphicsCASCADE EFFECTInvestors use credit ratings as one of the metrics to assess the risk profiles of governments and companies. In the 2013 debt ceiling crisis the legislative standoff did not cause a rating downgrade, although Fitch placed its rating under review.

Persons: Kevin McCarthy, Joe Biden, Leah Millis, Calvin Norris, Wendy Edelberg, Edelberg, Fitch, William Foster, ”, Andy Sparks, Olivier d'Assier, Peter Crane, MSCI's Sparks, Davide Barbuscia, Megan Davies, Nick Zieminski Organizations: U.S, White, REUTERS, Senate, Republicans, Aegon Asset Management, AAA, Government, Office, The, Brookings Institution, Moody's, Moody’s Investors Service, Applied Research, Crane, Treasury, Thomson Locations: Washington , U.S, U.S, United States, Washington, APAC, Qontigo

☆ Debt ceiling deal won’t have much impact on the US economy, analysts say
▼ + stars: | 2023-05-31 | by ( Bryan Mena | ) edition.cnn.com time to read: +5 min

The US economy is the world’s largest, so the relatively modest effects on growth could be good news for investors who feared the debt ceiling crisis could have posed a greater and more widespread drag. Here’s what’s in the proposed deal and how it would show up in the broader economy. What’s in the debt ceiling dealThe deal would suspend the federal government’s $31.4 trillion debt limit through January 2025. The debt deal and GDPEconomists at Goldman Sachs expect the deal to reduce federal spending by as much as 0.2% of gross domestic product per year over the two years of the deal, compared with their baseline estimate. “Getting this uncertainty out of the way for markets and decision makers has a real impact,” said Mike Skordeles, head of US economics at Truist Advisory Services.

Persons: Joe Biden, Mark Zandi, Biden, Goldman Sachs, ” Goldman Sachs, Ian Shepherdson, Gregory Daco, ”, Mike Skordeles, Zandi, ” Michael Reynolds Organizations: DC CNN, House Republicans, Moody’s, CNN, Internal Revenue Service, Congressional, Pantheon, Bureau of Labor Statistics, Truist Advisory Services, Investment, “ Locations: Washington, West Virginia

☆ The debt ceiling drama may feel like it’s over, but it may have only just begun
▼ + stars: | 2023-05-31 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +4 min

There could be an even more dramatic second act to the debt ceiling drama. This time around, one of the top credit rating agencies, Fitch, has already placed US debt on rating watch negative. As of Wednesday, the other two major sovereign debt credit rating agencies, S&P and Moody’s, have not placed US debt under review. If Fitch downgrades US debt, it could cause yields on Treasury notes to spike, underscoring the increased risks associated with holding US debt. However, the opposite occurred after S&P downgraded US debt in 2011 — investors shrugged it off and bought more bonds, sending yields lower.

Persons: Joe Biden, Kevin McCarthy, Biden, It’s, Fitch, McCarthy, Chip Somodevilla, Michael Reynolds, ”, George Catrambone Organizations: New, New York CNN, Senate, AAA, US Treasury, U.S . Department of Treasury, Treasury Department, DWS, Treasury Locations: New York, States, US, Washington ,, Americas

☆ This is the calamity Washington is trying to avoid with a debt ceiling deal
▼ + stars: | 2023-05-28 | by ( Samantha Delouya | ) edition.cnn.com time to read: +5 min

New York CNN —At long last, the White House and House Republicans have reached a tentative agreement to raise the debt ceiling. Every day that passes without a bill to raise the debt ceiling, the probability of the United States reaching the critical date that it can no longer meet its financial obligations steadily grows. Absent a bill passed by Congress and signed by Biden, Treasury will likely do everything in its power to avoid a debt default. In contrast to debt payments, government payments like Social Security or federal worker salaries aren’t considered debt instruments, so they are less likely to come into play when the agencies rate the United States’ debt. Though prioritizing debt payments might stave off an even-greater economic collapse, the United States may not emerge unscathed.

☆ From your 401(k) to bonds, here’s how to protect your financial well-being as debt default worries grow
▼ + stars: | 2023-05-27 | by ( Ramishah Maruf | ) edition.cnn.com time to read: +7 min

New York CNN —The White House and House GOP negotiators are rushing to finalize a deal to raise the country’s debt limit. With that X-date only about one week away, there’s still no deal to raise the debt ceiling – putting Americans’ finances in danger. If you invest in bonds, pay attention to when your Treasury bills are maturing. Stick with high-quality investmentsSteer clear of corporate junk bonds or emerging market bonds, CNN has previously reported. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers, CNN previously reported.

☆ Credit ratings agencies like Moody's decide the US credit rating. Here's what you need to know
▼ + stars: | 2023-05-27 | by ( Samantha Delouya | ) edition.cnn.com time to read: +4 min

CNN —Credit rating agencies are once again in the spotlight amid the ongoing high-stakes debt ceiling negotiations in Washington. What is the purpose of credit rating agencies? Put simply, credit rating agencies provide their opinions and issue a score evaluating the likelihood that a borrower will repay its debt. Rating agencies first rose to prominence over a century ago, but today, the three major agencies dominate the market. Bonsall has studied the effectiveness of credit rating agencies and their possible conflicts of interest.

☆ The Fed’s favorite inflation gauge just heated up — and that could mean another rate hike
▼ + stars: | 2023-05-26 | by ( Alicia Wallace | ) edition.cnn.com time to read: +6 min

The closely watched core PCE index — where volatile components of food and energy are excluded — unexpectedly ticked up: The Fed’s go-to gauge was up 4.7% for the year. In March, the core PCE gauge grew by 4.6%. Economists had forecast that core PCE would hold steady at 4.6%, according to Refinitiv. Consumer spending jumped 0.8% in April from March, double what economists had expected. Excluding the effects of inflation, real consumer spending increased 0.5%, reflecting a boost seen from new car purchases, according to the report.

☆ Debt ceiling crisis: How a US default would ricochet around the world
▼ + stars: | 2023-05-26 | by ( Hanna Ziady | ) edition.cnn.com time to read: +9 min

But if it does, it could make the 2008 global financial crisis feel like a walk in the park. The consequences are frightful.”The belief that America’s government will pay its creditors on time underpins the smooth functioning of the global financial system. During the 2011 standoff over raising the US debt ceiling, the S&P 500 index of leading US shares plunged more than 15%. “It’s unclear in a Treasury default crisis whether the Fed could do enough even with the types of efforts it deployed in March 2020,” Obstfeld said. “A default would be a message to investors all around the world of eroding confidence in America,” he added.

☆ It’s Not Just the Debt Ceiling
▼ + stars: | 2023-05-26 | by ( Jeff Sommer | ) www.nytimes.com time to read: +3 min

These include:The potential for economic drag from the more restrictive fiscal policy that House Republicans are demanding from President Biden as a prerequisite for an increase in the debt ceiling. Oddly, the debt ceiling crisis provided temporary relief for many of the nation’s banks, economists for Moody’s Investor Service found in a recent study. “The debt ceiling impasse has been a tailwind for the banks,” Jill Cetina, associate managing director for Moody’s, said in an interview. But once the debt ceiling is lifted and the Treasury begins to raise money by selling large quantities of bonds, those purchases by investors in the open market will drain money from banks. “This may not be what you would expect, but the resolution of the debt ceiling crisis will be a headwind for banks,” she said.

☆ Analysis: Why we may need a stock market plunge to solve the debt ceiling crisis
▼ + stars: | 2023-05-22 | by ( Matt Egan | ) edition.cnn.com time to read: +4 min

They know how it ends: with politicians waiting until the last minute before giving in and finally raising the debt ceiling before disaster strikes. On Friday, it looked like the White House and Republicans were getting closer to a deal on the debt ceiling before talks unexpectedly broke down. In 2011, the most serious near-default in American history, markets experienced volatility in the days and weeks before Washington reached a last-minute deal to raise the debt ceiling. None of this is to say markets are completely ignoring the debt ceiling drama today. The debt ceiling is a manufactured crisis that officials could have dealt with months ago.

☆ Watch CNBC's full interview with Moody's Analytics' Mark Zandi on state of U.S. economy
▼ + stars: | 2023-05-19 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with Moody's Analytics' Mark Zandi on state of U.S. economyMark Zandi, Moody’s Analytics chief economist, joins 'Squawk on the Street' to discuss if Zandi has rethought his position on what the Federal Reserve should do, the mixed economic data the economy has recently shown and much more.

☆ Fed should be done with rate hikes as inflation begins to slow, says Moody's Mark Zandi
▼ + stars: | 2023-05-19 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailFed should be done with rate hikes as inflation begins to slow, says Moody's Mark ZandiMark Zandi, Moody’s Analytics chief economist, joins 'Squawk on the Street' to discuss if Zandi has rethought his position on what the Federal Reserve should do, the mixed economic data the economy has recently shown and much more.

☆ US Chamber of Commerce argues invoking 14th Amendment would be as ‘economically calamitous’ as a default
▼ + stars: | 2023-05-19 | by ( Matt Egan | ) edition.cnn.com time to read: +2 min

Bernie Sanders, Elizabeth Warren and other progressives to urge the White House to use the 14th Amendment to avoid a disastrous default. Bradley argued that invoking the 14th Amendment would send Treasury rates spiking, lifting the cost of borrowing for families and businesses. Experts have warned that invoking the 14th Amendment would likely spark a constitutional crisis and Treasury Secretary Janet Yellen recently cast doubt on the idea. US markets turned negative on Friday on news that debt ceiling negotiations between the White House and House Republicans have hit a snag. “If the rhetoric is dark next week, markets will start to react.

☆ How tornadoes, crypto and mudslides pushed up the debt default deadline
▼ + stars: | 2023-05-19 | by ( Samantha Delouya | ) edition.cnn.com time to read: +3 min

While the Treasury Department hasn’t explicitly given a reason for its tax revenue deficiency, experts have said two main factors may have caused a shortfall. Pugliese said that last year, capital gains taxes paid to the government were “unusually strong” due to a market boom. That led to really strong capital gains tax revenue increases,” he said. Tornadoes, winter storms and mudslides pushed deadlines for millions of taxpayersAnother factor that may have lowered the federal government’s tax income this year: unexpected natural disasters. California’s payments might have had an outsized effect on the federal government’s tax revenue shortage, said Mark Zandi, chief economist at Moody’s Analytics.

☆ Debt conundrum gives Italy weak hand in EU talks
▼ + stars: | 2023-05-18 | by ( Lisa Jucca | ) www.reuters.com time to read: +6 min

After inflation hit 40-year highs in the West last year, global rate-setters, including the European Central Bank, launched a dramatic series of interest rate hikes. Unless there is a sudden series of interest rate cuts, the cost of servicing Italy’s debt could stay well above 4% of GDP for years. To fight that, Meloni’s government will have to shrink the public deficit and bring Italy back to the healthy pre-pandemic habit of keeping a primary budgetary surplus excluding debt interest payments. As long as Italy’s debt is not spiralling out of control, markets won’t worry too much. Yet even if Meloni chooses a milder approach, Italy’s unresolved debt challenge risks giving her a weak negotiating hand in Brussels.

☆ Debt ceiling threat: Time to take this political football off the field
▼ + stars: | 2023-05-17 | by ( Christine Romans | ) edition.cnn.com time to read: +5 min

In theory, the debt ceiling should act as a fiscal restraint during the budgeting process. Deciding later not to pay the bills by not raising the debt ceiling is not sound fiscal policy. Federal Reserve Chairman Jerome Powell, a Republican, has said the debt ceiling is counterproductive. And the CEO of the nation’s biggest bank, JPMorgan Chase’s Jamie Dimon turns visibly frustrated at the subject of the debt ceiling. KPMG Chief Economist Diane Swonk says the politicization of the debt ceiling has weakened America.

☆ Major Financial institutions warn of "devastating scenario" if Biden and Congress do not raise debt ceiling
▼ + stars: | 2023-05-16 | by ( Vanessa Yurkevich | ) edition.cnn.com time to read: +3 min

In an open letter to President Biden and top Congressional leaders Tuesday, nearly 150 business leaders urged the two sides to act – or face “a devastating scenario … and potentially disastrous consequences,” the letter states. Much worse will occur if the nation defaults on our debt obligations, which would weaken our position in the world financial system,” the letter states. A default on the nation’s debt could send the economy into a recession, and the stock market could tank. In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June,” Secretary Yellen wrote Monday. “This cannot be allowed to happen,” the letter states.

☆ Turkish lira sinks to new record low on possibility of Erdogan re-election
▼ + stars: | 2023-05-15 | by ( Anna Cooban | ) edition.cnn.com time to read: +3 min

The Turkish lira slipped 0.5% to trade at 19.70 against the US dollar, a record low. The uncertainty has investors in Turkish government bonds worrying about the country’s ability to pay them back. Supporters of Turkish President Recep Tayyip Erdogan celebrate at the AK Party headquarters on May 14, 2023 in Istanbul, Turkey. Annual consumer price inflation surged to 85% in October, before slowing to 44% in April, data from the Turkish Statistical Institute shows. “A victory for President Erdogan, which now looks like the base case scenario… would be negative for Turkey’s macroeconomic stability and financial markets,” Peach added.

☆ ‘Every family should be concerned’ about debt ceiling, consumer watchdog warns
▼ + stars: | 2023-05-12 | by ( Matt Egan | ) edition.cnn.com time to read: +5 min

Every family should be concerned,” Rohit Chopra, director of the Consumer Financial Protection Bureau, told CNN in an interview on Thursday. If Congress fails to address the debt ceiling, the federal government could run out of money as soon as June 1, according to Treasury Secretary Janet Yellen. “A lot of things we assume are part of our financial fabric would get ripped away,” Chopra told CNN. The debt ceiling is very likely to be a focus next week when Yellen is scheduled to meet with leading bank CEOs in Washington at a trade association meeting. Moody’s Analytics on Wednesday increased its probability of a breach of the debt ceiling to 10%, up from 5% previously.

☆ Pakistan’s political crisis will deepen its economic misery
▼ + stars: | 2023-05-12 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

London CNN —The political unrest that’s engulfed Pakistan since former Prime Minister Imran Khan was arrested earlier this week will complicate efforts to secure a financial lifeline from the International Monetary Fund and exacerbate the country’s economic crisis. Pakistan’s economic meltdownThe political tumult in Pakistan comes as the country grapples with a dire economic outlook. The government has been working with the International Monetary Fund to resume a financing program that’s been stalled since November and expires in June. Prime Minister Shehbaz Sharif said in a televised address Friday that the country’s economic problems stem from his predecessor. In February, the ratings agency said about 50% of government revenue will need to go to debt interest payments “for the next few years,” compounding economic woes and fanning political discontent.

In that instance, S&P Global Ratings credit rating agency downgraded the government from AAA to AA+ credit rating. The federal government maintains a perfect credit rating from Fitch and Moody’s, but that could change as the stalemate drags on. Investors care about stability and predictability, so a credit rating downgrade would send a chill down Wall Street’s spine. The broadest economic impact of a US debt default would be a recession that would encompass the global economy, including sharp job losses. And the housing market would not be spared by the “economic calamity” of a US government default, as Yellen once described it.

Notably, Trump refused to plant a flag in the sand on a potential federal abortion ban. Trump is vague on federal abortion banTrump repeatedly ducked questions about whether he would sign into law a federal abortion ban, as well as after how many weeks into a pregnancy abortion should be made illegal. He touted the Supreme Court’s decision last year to overturn Roe v. Wade’s federal abortion rights as “such a great victory” – and one made possible by his appointment of three conservative justices. But Trump also recognized splits within the GOP over whether to impose a federal abortion ban, and what the conditions of such a ban should be. “We now have a great negotiating ability, and I think we’re going to be able to get something done,” Trump said.

☆ Premarket stocks: Wall Street is strangely calm about the debt ceiling. That could change this month
▼ + stars: | 2023-05-10 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

New York CNN —Dire warnings about the economic chaos and catastrophe that will ensue if the US debt ceiling isn’t lifted soon abound. The debt ceiling crisis of 2011 caused Standard and Poor’s to downgrade US debt for the first time in history. Schwenkler says to expect “a lot more volatility” if debt ceiling issues don’t appear resolved by the last week of the month. By contrast, recovery from a debt-default crisis would likely start the day Congress, belatedly, suspended the debt ceiling,” he added. “A misstep over the debt ceiling would subject businesses and consumers to an economic shockwave,” he added.

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