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☆ High Fed Rates Are Not Crushing Growth. Wealthier People Help Explain Why.
▼ + stars: | 2024-04-30 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

More than two years after the Federal Reserve started lifting interest rates to restrain growth and weigh on inflation, businesses continue to hire, consumers continue to spend and policymakers are questioning why their increases haven’t had a more aggressive bite. The answer probably lies in part in a simple reality: High interest rates are not really pinching Americans who own assets like houses and stocks as much as many economists might have expected. Some people are feeling the squeeze of Fed policy. Credit card rates have skyrocketed, and rising delinquencies on auto loans suggest that people with lower incomes are struggling under their weight. Their house values are mostly holding up in spite of higher rates, stock indexes are hovering near record highs, and they can make meaningful interest on their savings for the first time in decades.

Persons: haven’t Organizations: Federal Reserve

☆ 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

☆ 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

☆ Immigrants in Maine Are Filling a Labor Gap. It May Be a Prelude for the U.S.
▼ + stars: | 2024-04-12 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Maine has a lot of lobsters. It also has a lot of older people, ones who are less and less willing and able to catch, clean and sell the crustaceans that make up a $1 billion industry for the state. Companies are turning to foreign-born workers to bridge the divide. As America overall ages, the state offers a preview of what that could look like economically — and the critical role that immigrants are likely to play in filling the labor market holes that will be created as native-born workers retire. Nationally, immigration is expected to become an increasingly critical source of new workers and economic vibrancy in the coming decades.

Persons: ”, Ben Conniff Organizations: Companies Locations: Maine, ” Maine

☆ Soft Landing or No Landing? Fed’s Economic Picture Gets Complicated.
▼ + stars: | 2024-04-11 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

America seemed headed for an economic fairy-tale ending in late 2023. The painfully rapid inflation that had kicked off in 2021 appeared to be cooling in earnest, and economic growth had begun to gradually moderate after a series of Federal Reserve interest rate increases. Rather than settling down, the economy appears to be booming as prices continue to climb more quickly than usual. Inflation is nowhere near as high as it was at its peak in 2022, wages are climbing and jobs are plentiful. Policymakers raised interest rates sharply in 2022 and 2023, pushing them to a two-decade high in an attempt to weigh on growth and inflation.

Organizations: Federal, Federal Reserve

☆ Live Updates: Inflation Expected to Remain Stubborn
▼ + stars: | 2024-04-10 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +4 min

Policymakers have made it clear that they want to see further evidence that inflation is cooling before they cut interest rates. But Fed officials do not want to cut rates before they are confident that inflation is on track to return to normal. That threat of lingering inflation has become a more serious concern for policymakers since the start of the year. Inflation has flatlined in recent months after months of steady declines, raising some alarm at the Fed and among forecasters. Going into the year, investors expected the Fed to cut rates sharply in 2024 — to about 4 percent — but have dialed back those expectations.

Persons: Goldman Sachs, Laura Rosner, Warburton, it’s, you’ve, ” Organizations: Federal, Fed, Goldman, Deutsche Bank Locations: Central

☆ Inflation Was Quicker Than Expected in March, Unwelcome News for the Fed
▼ + stars: | 2024-04-10 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

A closely watched measure of inflation remained stronger than expected in March, worrying news for Federal Reserve officials who have become increasingly concerned that their progress on lowering price increases might be stalling. The surprisingly stubborn inflation reading raised doubts among economists about when — and even whether — the Fed will be able to start cutting interest rates this year. The Consumer Price Index climbed 3.8 percent on an annual basis after stripping out food and fuel prices, which economists do in order to get a better sense of the underlying inflation trend. That “core” index was stronger than the 3.7 percent increase economists had expected, and unchanged from 3.8 percent in February. Counting in food and fuel, the inflation measure climbed 3.5 percent in March from a year earlier, up from 3.2 percent in February and faster than what economists have anticipated.

Organizations: Federal Reserve

☆ Higher for Longer After All? Investors See Fed Rates Falling More Slowly.
▼ + stars: | 2024-04-09 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Investors were betting big on Federal Reserve rate cuts at the start of 2024, wagering that central bankers would lower interest rates to around 4 percent by the end of the year. But after months of stubborn inflation and strong economic growth, the outlook is starting to look much less dramatic. Market pricing now suggests that rates will end the year in the neighborhood of 4.75 percent. That would mean Fed officials had cut rates two or three times from their current 5.3 percent. Central bankers do not want to risk tanking the job market and causing a recession by keeping interest rates too high for too long.

Organizations: Federal

☆ New Questions on How a Key Agency Shared Inflation Data
▼ + stars: | 2024-04-05 | by ( Ben Casselman | Jeanna Smialek | ) www.nytimes.com time to read: +1 min

The Bureau of Labor Statistics shared more information about inflation with Wall Street “super users” than previously disclosed, emails from the agency show. The revelation is likely to prompt further scrutiny of the way the government shares economic data at a time when such information keenly interests investors. An economist at the agency set off a firestorm in February when he sent an email to a group of data users explaining how a methodological tweak could have contributed to an unexpected jump in housing costs in the Consumer Price Index the previous month. The email, addressed to “Super Users,” circulated rapidly around Wall Street, where every detail of inflation data can affect the bond market. And they suggest that there was a list of super users, contrary to the agency’s denials.

Persons: ”, — Organizations: Labor Statistics, of Labor Statistics Locations: Wall

☆ Fed Chair Awaits More Inflation Cooling as Path Proves ‘Bumpy’
▼ + stars: | 2024-04-03 | by ( Jeanna Smialek | Santul Nerkar | ) www.nytimes.com time to read: +1 min

Jerome H. Powell, the chair of the Federal Reserve, reiterated on Wednesday that the central bank can take its time before cutting interest rates as inflation fades and economic growth holds up. This year is a big one for the Fed: After long months of rapid inflation, price increases are finally coming down. That means that central bankers may soon be able to lower interest rates from their highest levels in two decades. The Fed raised rates to 5.3 percent from March 2022 to mid-2023 to cool the economy and bring inflation to heel. Figuring out when and how much to cut interest rates is tricky, though.

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

☆ Will A.I. Boost Productivity? Companies Sure Hope So.
▼ + stars: | 2024-04-01 | by ( Jordyn Holman | Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Rapid productivity improvement is the dream for both companies and economic policymakers. If output per hour holds steady, firms must either sacrifice profits or raise prices to pay for wage increases or investment projects. Economies experiencing productivity booms can experience rapid wage gains and quick growth without as much risk of rapid inflation. — especially generative A.I., which is still in its infancy — has spread enough to show up in productivity data already. “may” have the potential to increase productivity growth, “but probably not in the short run.” John C. Williams, president of the New York Fed, has made similar remarks, specifically citing the work of the Northwestern University economist Robert Gordon.

Persons: Jerome H, Powell, ” John C, Williams, Robert Gordon Organizations: Ben, Abercrombie, Fitch’s, Federal Reserve, New York Fed, Northwestern University

☆ A Key Inflation Gauge Hovers Above Fed’s Target
▼ + stars: | 2024-03-29 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

The latest reading of the Federal Reserve’s favorite inflation gauge was in line with economists’ expectations, as price increases hovered above the central bank’s target even after months of cooling. The Personal Consumption Expenditures inflation measure climbed by 2.5 percent in February compared with a year earlier, according to a report released by the Commerce Department on Friday. The Fed officially targets that measure as it tries to achieve 2 percent annual inflation, so the latest reading, while widely anticipated, is evidence that inflation still has farther to fall. The report’s details underscored that inflation continues to moderate, even if the process is bumpy. And on a monthly basis, inflation cooled slightly.

Organizations: Commerce Department, Bloomberg, Fed

☆ Fed Chair Says Central Bank Need Not ‘Hurry’ to Cut Rates
▼ + stars: | 2024-03-29 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Jerome H. Powell, the chair of the Federal Reserve, said on Friday that resilient economic growth is giving the central bank the flexibility to be patient before cutting interest rates. Fed officials raised interest rates sharply from early 2022 to mid-2023, and they have left them at about 5.3 percent since last July. That relatively high level essentially taps the brakes on the economy, in part by making it expensive to borrow to buy a house or start a business. The goal is to keep rates high enough, for long enough, to wrestle inflation back under control. Given that slowdown, officials have been considering when and how much they can cut interest rates this year.

Persons: Jerome H, Powell Organizations: Federal Reserve

☆ Email ‘Mistake’ on Inflation Data Prompts Questions on What Is Shared
▼ + stars: | 2024-03-19 | by ( Ben Casselman | Jeanna Smialek | ) www.nytimes.com time to read: +1 min

One afternoon in late February, an employee at the Bureau of Labor Statistics sent an email about an obscure detail in the way the government calculates inflation — and set off an unlikely firestorm. Economists on Wall Street had spent two weeks puzzling over an unexpected jump in housing costs in the Consumer Price Index. Several had contacted the Bureau of Labor Statistics, which produces the numbers, to inquire. Now, an economist inside the bureau thought he had solved the mystery. In an email addressed to “Super Users,” the economist explained a technical change in the calculation of the housing figures.

Organizations: Bureau of Labor Statistics, Wall, of Labor Statistics, Federal Reserve

☆ Fed Meets Amid Worries That Inflation Progress Might Stall
▼ + stars: | 2024-03-19 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Slowing America’s rapid inflation has been an unexpectedly painless process so far. That flatline is stoking questions about whether the final phase in fighting inflation could prove more difficult for the Federal Reserve. Fed officials will have a chance to respond to the latest data on Wednesday, when they conclude a two-day policy meeting. The Fed’s most recent economic estimates, released in December, suggested that Fed officials would make three quarter-point rate cuts by the end of 2024. Some economists think it’s possible that officials could dial back their rate cut expectations, projecting just two moves this year.

Organizations: Federal Reserve, Fed

☆ Japan’s Labor Market Has a Lesson for the Fed: Women Can Surprise You
▼ + stars: | 2024-03-19 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

But there’s another, longer-running trend happening in the Japanese economy that could prove interesting for American policymakers: Female employment has been steadily rising. Working-age Japanese women have been joining the labor market for years, a trend that has continued strongly in recent months as a tight labor market prods companies to work to attract new employees. The jump in female participation has happened partly by design. Since about 2013, the Japanese government has tried to make both public policies and corporate culture more friendly to women in the work force. The goal was to attract a new source of talent at a time when the world’s fourth-largest economy faces an aging and shrinking labor market.

Organizations: Bank of Japan

☆ Should China Own TikTok?
▼ + stars: | 2024-03-13 | by ( David Leonhardt | ) www.nytimes.com time to read: +2 min

After Hamas’s Oct. 7 terrorist attack, TikTok flooded users with videos expressing extreme positions from both sides of the Israeli-Palestinian conflict, tilted toward the Palestinian side, a Wall Street Journal analysis found. On Monday, the top U.S. intelligence official released a report saying that the Chinese government had used TikTok to promote its propaganda to Americans and to influence the 2022 midterm elections. TikTok is also owned by a company, ByteDance, that’s based in a country that is America’s biggest rival for global power: China. ByteDance executives say that they operate separately from China’s government and that they regularly remove misleading content from TikTok. The most likely scenario, experts say, is that officials aligned with the Chinese government shape TikTok’s algorithm to influence what content Americans see.

Persons: Jeanna Smialek, Jim Tankersley, “, Sapna Maheshwari, China’s, Xi Jinping, Xi Organizations: Rutgers University, Rutgers, Communist Party, Soviet NBC Locations: U.S, Tibet, Hong Kong, United States, China, Soviet

☆ 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

☆ Inflation Ticked Up Last Month, Backing the Fed’s Caution on Rate Cuts
▼ + stars: | 2024-03-12 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Inflation sped up slightly in February on an overall basis and a closely watched measure of underlying price increases was firmer than economists had expected. The Consumer Price Index climbed 3.2 percent last month from a year earlier, up from 3.1 percent in January. That’s down notably from a 9.1 percent high in 2022, but it is still quicker than the roughly 2 percent that was normal before the pandemic. After stripping out volatile food and fuel costs for a better sense of the underlying trend, inflation came in at 3.8 percent, slightly faster than economists had forecast. And on a monthly basis, core inflation climbed slightly more quickly than anticipated as airline fares and car insurance prices increased, even as one closely watched housing measure climbed less rapidly.

Persons: That’s Organizations: Federal

☆ February Inflation Report Consumer Price Rises Likely Held Steady
▼ + stars: | 2024-03-12 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +3 min

PinnedThe Consumer Price Index inflation report set for release on Tuesday morning could be a big news event for the Federal Reserve and many in markets. Overall inflation is expected to hold steady at 3.1 percent on an annual basis. In particular, economists are likely to keep an eye on housing costs and other services’ prices in the measure. Fed officials have been debating how long they need to leave rates at their current level, about 5.3 percent. And Fed officials want to avoid lowering interest rates too early, only to find out that inflation is not fully quashed.

Persons: ” Jerome H, Powell, we’re, ”, Omair Sharif Organizations: Federal Reserve, Fed

☆ 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

☆ Fed Chair Powell Still Expects to Cut Rates This Year, but Not Yet
▼ + stars: | 2024-03-06 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Jerome H. Powell, the chair of the Federal Reserve, said on Wednesday that he thinks the central bank will begin to lower borrowing costs in 2024 but that policymakers still needed to gain “greater confidence” that inflation was conquered before making a move. “We believe that our policy rate is likely at its peak for this tightening cycle,” Mr. Powell said in remarks prepared for testimony before the House Financial Services Committee. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”The Fed next meets on March 19-20, but few investors expect officials to lower interest rates at that gathering. Markets see the Fed’s June meeting as a more likely candidate for the first rate cut, and are betting that central bankers could lower borrowing costs three or four times by the end of the year. The Fed chair warned against cutting rates too early — before inflation is sufficiently snuffed out — noting that “reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy.”

Persons: Jerome H, Powell, Mr, ” Organizations: Federal Reserve, Financial Services, Fed

☆ Bank Runs Spooked Regulators. Now a Clampdown Is Coming.
▼ + stars: | 2024-03-05 | by ( Jeanna Smialek | Rob Copeland | ) www.nytimes.com time to read: +1 min

One year after a series of bank runs threatened the financial system, government officials are preparing to unveil a regulatory response aimed at preventing future meltdowns. After months of floating fixes at conferences and in quiet conversations with bank executives, the Federal Reserve and other regulators could unveil new rules this spring. The interagency clampdown would come on top of another set of proposed and potentially costly regulations that have caused tension between big banks and their regulators. Taken together, the proposed rules could further rankle the industry. The goal of the new policies would be to prevent the kind of crushing problems and bank runs that toppled Silicon Valley Bank and a series of other regional lenders last spring.

Organizations: Federal Reserve, Bank Locations: Silicon

☆ It’s Me, Hi, I’m the Problem. I’m 33.
▼ + stars: | 2024-03-02 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

I have covered economics for 11 years now, and in that time, I have come to the realization that I am a statistic. Every time I make a major life choice, I promptly watch it become the thing that everyone is doing that year. When I moved to a big coastal city after graduation, so did a huge crowd of people: It was the age of millennial urbanization. My partner and I bought a house in 2021, along with (seemingly and actually) a huge chunk of the rest of the country. What I am is 32, about to be 33 in a few weeks.

Organizations: Craigslist Locations: America

☆ Shrinkflation 101: The Economics of Smaller Groceries
▼ + stars: | 2024-03-01 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Companies are downsizing products without downsizing prices, and consumer posts from Reddit to TikTok to the New York Times comments section drip with indignation at the trend, widely known as “shrinkflation.”The practice isn’t new. President Biden tapped into the angst in a recent video. (“What makes me the most angry is that ice cream cartons have actually shrunk in size, but not in price,” he lamented.) One Canadian chain unveiled a growflation pizza. (“In pizza terms,” the company’s news release quipped, “a larger slice of the pie.”)

Persons: Sellers, Biden, ” Organizations: New York Times Locations: Reddit, TikTok

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