Biden enters the Always Be Closing phase of his first term

Somehow, someway, Joe Biden is back in the game.

After enduring a brutal year dominated by economic angst, legislative setbacks and sinking approval ratings, the president is suddenly on the verge of a turnaround that, the White House believes, could salvage his summer — and alter the trajectory of his presidency.

All he needs to do now is close.

“There’s just so much at stake here,” said one adviser to senior party leaders, describing how, overnight, a sense of enormity was added to the immediate calendar.

Over the next few weeks, the president will have to land centerpieces of his domestic agenda aimed at boosting the nation’s global competitiveness and revamping whole swaths of its economy. Major decisions on student loans and expanding abortion rights hang in the balance. There’s also the matter of containing twin outbreaks of monkeypox and the coronavirus, the last of which Biden just spent five days personally fending off.

If that weren’t enough, he’s juggling a slate of foreign affairs challenges as well — headlined by longer-term efforts to reset with Iran on a nuclear deal and negotiate the release of a basketball star and another American jailed in Russia.

It’s a massive political to-do list set against the backdrop of a midterm election likely to cost Democrats full control of Washington. And within a White House that’s often felt under siege, there’s broad recognition that how Biden executes on it will determine the difference between a historic first term and a tragic lost opportunity.

White House officials are approaching the moment with cautious optimism, energized by the fresh jolt of momentum for Biden’s top priorities in Congress, itself underscored by the passage Thursday of a bill designed to boost semiconductor production and better compete with China.

Yet they are also aware that many elements remain well outside their control.

The prospect of an eleventh-hour breakthrough on Democrats’ climate, tax and health care package after more than a year of stumbles has particularly captured the White House’s imagination. In the wake of Wednesday’s deal with holdout Sen. Joe Manchin (D-W. Va.), one senior aide contended the legislation could turn the tide for Democrats trying to persuade voters to keep them in power, allowing Biden and his party to draw an even sharper contrast with Republicans who they argue aren’t offering an alternative agenda.

“It very much changes how Democrats are going to look at the first half of this first term” if the bill passes, said Tobin Marcus, a former Biden adviser and current senior policy and politics strategist at investment bank Evercore ISI. “Democratic voters are going to feel a lot better about what this has all added up to.”

The deal also left Biden advisers feeling vindicated in their patient approach to the negotiations — a strategy that involved sticking to an administrationwide gag order even as the White House faced mounting criticism and second-guessing from within the party. It was a long-game approach that one senior aide described as a “ton of phone calls.”

Still, there is wariness about engaging in much preemptive celebration, especially for an administration so far defined by the outsize ambitions on which it’s largely failed to deliver. To that end, officials opted not to have Biden himself deliver remarks late Wednesday after Manchin announced the agreement, issuing a statement instead that leaned on caveats indicating the deal could still fall apart.

On Thursday, Biden took pains to point to the broad coalition of early bill supporters, from the former Obama economist Larry Summers to Sen. Elizabeth Warren (D-Mass.). The bill, Biden acknowledged, “is far from perfect.”

“It’s a compromise,” he added. “But that’s how progress gets made: from compromise.”

In a statement, White House spokesperson Chris Meagher called the reconciliation bill a “once-in-a-lifetime chance to fight inflation and lower costs like prescription drugs, energy and health care.”

“And we’re not done — the president is going to continue to focus on growing our economy from the bottom up and middle out, cutting costs for families, making our communities safe, and protecting critical rights,” he said.

The progress Democrats have made so far has come with Biden taking a hands-off approach, deferring to Manchin and Majority Leader Chuck Schumer — though the West Wing was in close consultation with Schumer. Until this week, Biden hadn’t spoken with the West Virginia senator since a polite-yet-frosty December call in the hours after Manchin went on Fox News to torpedo the president’s legislative agenda.

In subsequent months, Biden would often grouse about the senator’s reluctance to commit to a deal, even as he said he understood that Manchin had to play to West Virginia voters. In certain quarters of the White House, a sense of skepticism took hold whenever Manchin signaled that he was ready to start negotiating again.

Yet there was a persistent belief that at some point Manchin would return to the table — even after the senator signaled two weeks ago he could support only a bare-bones health bill.

With an agreement in hand, the White House is now expected to play a more significant role in convincing a handful of remaining Democrats to take the victory that’s in front of them.

And those who have worked with Biden in the White House and on Capitol Hill say that while he may have steered clear of the weedy negotiations along the way, the former seven-term senator relishes the role of legislative closer.

“Traditionally, it’s certainly something he’s been good at,” said Marcus, pointing to the 2013 fiscal cliff deal Biden cut with Senate Republican Leader Mitch McConnell. “[H]e closed [that] when I think not a lot of other people would have been able to.”

The lingering question for Democrats, though, is whether getting the bill passed is going to be enough. Biden still must tackle a lingering pandemic that will require more funds to combat — itself dependent on the votes of congressional Republicans now steamed about what they perceive as a Manchin-Schumer sleight-of-hand. And while he’s overseen an economy hitting its lowest unemployment rate in decades, the reward has been persistently high inflation and poll numbers approaching historic lows.

Those stiff economic headwinds are unlikely to ease before November, souring voters on the party’s performance overall and drowning out more encouraging signs of progress.

On Thursday, new data showed the economy shrank for a second straight quarter — an additional blow in an environment that many voters say already feels like a recession, even as White House aides spent the past week arguing over whether the country is technically in one.

The administration is also likely to face intensifying pressure in the coming weeks to deliver plans for forgiving student debt, protecting abortion access and containing the monkeypox outbreak — delicate issues that, if mishandled, threaten to fracture Democrats’ coalition and bring a swift end to the party’s current era of good feelings.

Biden officials have latched on to signs that the oil supply crunch that sent gas prices soaring in the spring is finally easing, in hopes that relatively lower costs at the pump may buy them some goodwill. Though Covid continues to surge, deaths have not done the same — prompting aides to cast it as evidence that their strategy of vaccines and treatments is working.

But especially among some longer-serving, more jaded aides who have watched the administration get hit with crisis after crisis, the spate of good news has them bracing for the other shoe to drop. Even after Biden quickly recovered from his own Covid case, a senior official said it would fit with the White House’s bad luck for him to spoil the round of positive press by becoming one of a minority of patients to suffer a second “rebound” illness.

“The president is going to rebound,” the official said, half-joking. “Those things just happen to us.”

Добавить комментарий

Главный тренер «Динамо» Славиша Йоканович прокомментировал то, что футболисты команды…
Uhtred of Bebbanburg’s (played by Alexander Dreymon) story will soon…
The first season finale of Power Book III: Raising Kanan…
GB News: EU to use Sturgeon’s IndyRef2 plot to make relations ‘more difficult’ with UK
Michelle Ballantyne went on GB News to discuss the issues she believes Scotland will face if the country becomes independent.…
‘Not realistic’ Jacob Rees-Mogg swats away claims Boris Johnson is plotting return to No10
The Brexit Opportunities Minister, a key ally to the outgoing Prime Minister, claimed it was “not realistic” to think Mr…
  • 1 неделя, 3 дня назад 03.08.2022Economy
    The Fed’s global problem

    The Federal Reserve’s efforts to fight inflation threaten to send the U.S. economy into a recession. They could also spark a series of economic crises in developing countries around the world.

    Higher interest rates are making it more expensive for many emerging economies to pay off the crushing debt they took on to survive the pandemic. On top of that, the war in Ukraine has sent the cost of staples like food and fuel skyrocketing.

    That’s bad news for dozens of countries where public finances are in perilous shape, such as Ghana, Kenya, Pakistan and El Salvador. The situation remains tenuous even for some larger emerging markets like Turkey that have underlying economic problems.

    “There is certainly a fragility that could interact with tighter financial conditions in a way that could trigger a certain amount of stress, even in some fairly healthy emerging markets,” said Tobias Adrian, director of the International Monetary Fund’s monetary and capital markets department.

    As the caretaker of the world’s reserve currency, the Fed has massive influence on global financial markets at a time when they are growing more tightly integrated. Monetary policies to slow inflation, such as raising borrowing costs, are transmitted primarily through these markets. As higher rates push up the value of the dollar, debt held in U.S. dollars anywhere in the world becomes more expensive to pay off.

    The Fed’s rate hikes can also lead to severe outflows of capital from other countries as investors pull their money out of emerging markets to get a better return in the U.S. This can have destabilizing effects on their economies.

    New data released Wednesday shows that emerging markets suffered a record-breaking fifth consecutive month of investors pulling their money out. The numbers, compiled monthly by the Institute of International Finance, a trade group for the global financial services industry, show that the capital flight — totaling $39.3 billion since March — is reaching the level of the “taper tantrum” crisis in 2013, when another move by the Fed to pull back support for the U.S. economy caused financial panic in some emerging markets.

    The stewards of the global economy are warning of extreme uncertainty as the Fed and other major central banks ratchet up their moves to tighten financial conditions around the world to battle spiking inflation. The IMF’s latest update to its global economic outlook revised inflation upward to 6.6 percent in advanced economies and 9.5 percent in emerging markets — nearly a full percentage point higher than previously forecast.

    Roughly 60 percent of low-income countries are in debt distress or close to it, according to the IMF. The amount of debt they could potentially default on totals $455.6 billion. If these countries were to default, it could mean hardship as governments would be unable to provide support for a wide swath of the world’s population.

    But former officials and experts say the shape of a potential Fed-induced global debt crisis looks different than in the 1980s, when rate hikes sent many economies into collapse.

    “Global financial markets have grown substantially as have capital flows, and the U.S. role in the global economy has somewhat declined with the rise of China and other emerging markets,” said Mark Sobel, a former Treasury official and U.S. chairman at the Official Monetary and Financial Institutions Forum think tank.

    The impact of the Fed’s policies may be felt the most in countries that are already fighting high levels of inflation and tighter financial conditions due to domestic and global pressures. That includes Central and Eastern Europe and sub-Saharan Africa, which are being hit the hardest by the shock of high commodity prices on fuel and food as a result of Russia’s war in Ukraine.

    Big emerging markets like Brazil, China and India may be less affected by the Fed’s moves.

    “When I look around at the major emerging markets, those that are part of the G20, I do see a lot of stability, perhaps with one or two exceptions,” said the IMF’s Adrian, declining to name specific countries.

    Central banks in many larger emerging markets have more credibility than they did decades ago because their policies are more data-driven and independent of political meddling. Many countries now also hold more foreign currency reserves or have less debt denominated in foreign currencies, such as the U.S. dollar, which makes them less exposed to debt in other currencies.

    Still, debt-to-GDP ratios continue to rise even in many economically stable countries — a worrying trend for global financial stability.

    No one, however, expects the Fed to pull any punches in its inflation-fighting campaign for the benefit of the global economy unless it serves U.S. interests.

    “The Federal Reserve’s mandate is to deliver price stability and full employment in the United States. Full stop,” said Nathan Sheets, global chief economist at Citi who formerly served as undersecretary of international affairs at Treasury and directed the Fed’s international division.

    “That is the perspective from which they view the domestic economy but also the global economy.”

    If the Fed is not delivering economic and financial stability at home, the U.S. risks becoming a source of instability for the rest of the world, he said.

    “Ultimately, the best way to support the rest of the world is to deliver that core mandate,” Sheets said.

    On the eve of the pandemic, Fed Chair Jerome Powell acknowledged that the world’s most important central bank was “more keenly aware” of how its policies affected other countries.

    “Pursuing our domestic mandates in this new world requires that we understand the anticipated effects of these interconnections and incorporate them into our policy decision making,” he said in a 2019 speech.

    That’s an evolution from the 1980s when then-Fed Chairman Paul Volcker pushed interest rates to dizzying heights to bring down sky-high inflation in the U.S. — and later admitted that “Africa was not even on my radar screen.”

    But there are few examples where the Fed has held back on policy decisions, such as rate hikes, because of global events. The central bank did hold off on an expected increase in 2015 and again in early 2016 because of market turmoil in China. But raising rates at that point may have had a negative impact on the U.S. economy.

    “What it’s not really an example of is the Fed making a policy decision that was good for other economies but not good for the United States,” said Steven Kamin, a senior fellow at the American Enterprise Institute who served as the Fed’s international division chief from 2011 to 2020. “It will be nearly impossible to find such an example.”

    Clearly communicating when it might raise rates and setting expectations for how much may be the Fed’s best tool to avoid sending shockwaves around the world. That could be the main reason why its moves have not yet caused widespread crises in other countries.

    The impact “is more limited than maybe would have been expected from a historical sense, and I think that’s because of the communication from the Fed,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland who studies the Fed’s impact on emerging markets. “The Fed is now very clearly communicating.”

  • 2 недели, 2 дня назад 28.07.2022Economy
    U.S. economy shrinks again, creating new headwind for Biden

    The White House faces a fresh political nightmare as a report Thursday showed the economy contracted 0.9 percent in the second quarter of the year, offering Republicans a tantalizing opportunity to declare that the economy under President Joe Biden is now in a recession.

    The report from the Commerce Department on gross domestic product over the April-June period followed a first-quarter decline of 1.6 percent and meets one – though far from the only – criteria for an economic recession. The figure is a first estimate and subject to future revisions.

    Biden and senior administration officials have argued in public and private over the last week that even two quarters of decline would not mean the economy is in recession given other strengths including robust job creation, solid consumer spending and record numbers of job openings.

    But Republicans are poised to cast aside all the economic technicalities and bash Democratic candidates up and down the midterm ballot over an economy that is already deeply unpopular with voters in both parties who are seeing prices for gas, food, travel and nearly everything else rise 9 percent, much faster than their own wages. Fresh data on inflation arrives on Friday.

    Many economists agree that this post-pandemic period doesn’t meet many criteria for recession, a politically charged word with no precise definition. Recessions are generally only declared — often after the decline is over — by the National Bureau of Economic Research, a private research group.

    The unemployment rate is near record lows. Job openings remain high and consumer spending is still fairly strong, undermining the case that we are in recession. And the first quarter’s negative numbers were heavily skewed by technical factors on inventories and trade.

    Still, Biden’s approval ratings on the economy already hover around just 30 percent and could now sink even lower, anchoring the economy as a dead weight on Democrats already widely expected to suffer significant losses in the midterms, particularly in the House of Representatives.

    “It’s too bad the White House doesn’t have a vaccine for denial,” Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, told POLITICO this week. “The question isn’t if we have a recession. The question is how harsh and how long it will be.”

    ”While the White House can fairly argue that two quarters of negative growth alone don’t necessarily mean the economy is in recession, it is a politically difficult and highly technical case to make. And Democrats already face strong headwinds for the fall election in the form of soaring inflation, a Federal Reserve bent on raising interest rates to reduce demand and bring down prices, and an electorate that remains deeply sour about the state of the economy and the direction of the nation.

    The report on second-quarter growth, subject to a first revision next month, showed decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending and nonresidential fixed investment. The declines were partly eased by increases in exports and personal consumption expenditures, the Commerce Department said.

    Imports, which subtract from GDP, increased.

    The report comes after the Fed on Wednesday bumped up interest rates by another hefty three-quarters of a point, a belt-tightening campaign that is already showing signs of slowing consumer demand for big-ticket items like houses and cars. The impact of the hikes is expected to increase as the year goes on putting further pressure on growth.

    Fed Chair Jerome Powell said at his press conference on Wednesday that he did not think the economy was in recession given strengths other than GDP growth. But he said the path to reducing inflation without going into recession was growing more narrow.

    And White House officials acknowledge that changing people’s minds about the economy is a daunting task as the highest inflation in four decades slashes into wages.

    “I don’t think any of us are trying to convince anyone that their feelings about the economy are wrong,” Jared Bernstein, a member of the Council of Economic Advisers and one of Biden’s longest-serving aides, told POLITICO this week. “What we are trying to do is explain things in a much more nuanced way than most people are getting from the daily news flow.”

  • 1 месяц назад 13.07.2022Economy
    Pay raises are getting smaller. That could be a good thing for workers.

    Wage gains for American workers are beginning to slow, threatening one of the few positive trends for the economy since the pandemic. But that could be good news for the nation’s labor force.

    The government on Wednesday reported that inflation soared 9.1 percent in June — the biggest 12-month jump since November 1981. Prices rose across the board, but not because of salary increases, which have actually leveled off in recent months.

    That matters because if prices and wages keep pushing each other up, the Federal Reserve — already under tremendous strain to rein in inflation — might be forced to move even faster to ramp up interest rates, throwing people out of work and thrusting the economy into a painful recession. Instead, slower wage growth could help bring down prices and ultimately mean less sting for the average worker.

    “If we have a wage-price spiral, the Fed really has to slam on the brakes,” said Dean Baker, a senior economist at the progressive Center for Economic and Policy Research. “You can’t have that if wage growth is slowing, and it clearly is.”

    “This takes an enormous amount of pressure off the Fed,” Baker said.

    For now, that’s cold comfort to millions of Americans who are seeing less and less money left over in their wallets after their monthly expenses. The trend has contributed to a dour national mood that could feed fears of an impending economic slump and doom Democrats’ prospects at the polls in November.

    The latest consumer price index report showed that prices skyrocketed by 1.3 percent in June alone from the previous month, partially reflecting a jump in gas prices that has since begun to ease. Senior administration officials told reporters on a call before the data was released that this would mean that any top-line inflation number is overstating what Americans are experiencing now.

    But while administration officials had hoped for good news in so-called core inflation, which excludes the more volatile food and energy prices, costs there also accelerated.

    The Fed generally pays more attention to core inflation than to the top-line number, because it’s considered a better indicator of where prices are headed, though Chair Jerome Powell has warned that rising gas prices might fuel expectations of higher inflation.

    The central bank also looks at wages.

    Average wages this year are up more than 5 percent from a year ago, the fastest pace since Ronald Reagan’s presidency. But that has caused concern at the Fed that the trend might accelerate and feed back into price increases, which have already been eating away at those impressive gains. The steady decrease in the speed at which wages are rising could allay those fears.

    In a memo to reporters, White House National Economic Council Director Brian Deese and Council of Economic Advisers Chair Cecilia Rouse noted that average hourly earnings grew at a 4.2 percent annualized rate in the three months ending in June, down from 4.8 percent the previous quarter and 6.1 percent in the last quarter of 2021. The picture for wages when adjusted for inflation “is terrible right now,” said Jason Furman, former chief economist for President Barack Obama and a professor at Harvard University. That’s because people are getting raises much more slowly than prices are rising.

    But the slowdown in wage increases “might mean the Fed needs to raise less aggressively, so it can do a better job of preserving jobs,” Furman said.

    Slowing wage data has increased optimism among some economists that the Fed will be able to avoid causing a recession. But an important component of that outlook is that inflation will still need to come down.

    The central bank and other forecasters still expect some of the big drivers of price spikes — like supply chain snarls — to eventually fade, while global prices for food and oil might stay high but stop rising. That too could help the Fed avoid having to cause a significant increase in unemployment in its battle against inflation. But nothing is guaranteed.

    Arindrajit Dube, a professor at the University of Massachusetts Amherst and a research associate at the National Bureau of Economic Research, said wages now seem to be rising at a reasonable rate that isn’t problematic from an inflation perspective.

    “But if wage growth slows down a little and inflation stays high, that’s not good for workers,” he said. “Threading the needle is what we’d like to see happen.”

    From the Fed’s perspective, officials don’t want to see inflation become a more permanent feature of the economy through pay raises.

    “If it’s not built into wages, then it’s unlikely to be a long-run entrenched phenomenon,” Dube said.

  • 1 месяц назад 13.07.2022Economy
    U.S. inflation reached a new 40-year high in June of 9.1%

    Surging prices for gas, food and rent catapulted U.S. inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Reserve, with higher borrowing costs to follow.

    Consumer prices soared 9.1% compared with a year earlier, the government said Wednesday, the biggest 12-month increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices rose 1.3% from May to June, another substantial increase, after prices had jumped 1% from April to May.

    The ongoing price increases underscore the brutal impact that inflation has inflicted on many families, with the costs of necessities, in particular, rising much faster than average incomes. Lower-income and Black and Hispanic Americans have been hit especially hard, because a disproportionate share of their income goes toward such essentials as housing, transportation and food.

    Some economists have held out hope that inflation might be reaching or nearing a short-term peak. Gas prices, for example, have fallen from the eye-watering $5 a gallon reached in mid-June to an average of $4.66 nationwide as of Tuesday — still far higher than a year ago but a drop that could help slow inflation for July and possibly August.

    In addition, shipping costs and commodity prices have begun to fall. Pay increases have slowed. And surveys show that Americans’ expectations for inflation over the long run have eased — a trend that often points to more moderate price increases over time.

    Yet for now, the relentless spike in inflation has caused a steep drop in consumers’ confidence in the economy, sent President Joe Biden’s approval ratings tumbling and posed a major political threat to Democrats in the November congressional elections. Forty percent of adults said in a June AP-NORC poll that they thought tackling inflation should be a top government priority this year, up from just 14% who said so in December.

  • 1 месяц назад 08.07.2022Economy
    News The Buckshee

    The U.S. labor market is still booming, giving a much-needed boost to President Joe Biden’s insistence that the economy is strong despite talk of a looming recession. But Friday’s hot jobs report holds a potential drawback for the administration.

    Four months before the midterm congressional elections, White House officials are in the unthinkable position of hoping for a hiring slowdown, which would give the Federal Reserve less incentive to crank up interest rates to cool the economy.

    Employers added 372,000 jobs in June, well above economists’ expectations and down only slightly from 384,000 in May, the Labor Department said. That signals the job market remains resilient even as fears of recession grip both Wall Street and Washington.

    Robust job growth has been one of the few bright spots for Biden on a darkening economic horizon, and administration officials have repeatedly touted the numbers as evidence of the economy’s underlying strength. Yet slowing the labor market down is essential to helping tame consumer prices that are rising at a faster pace than most Americans have seen in their lifetimes.

    “They’re in a pickle, because they need inflation to come down, and inflation probably isn’t coming down until the labor market weakens significantly,” said Andy Laperriere, head of U.S. policy at Piper Sandler. “So regardless of whether this number looks good, bad or somewhere in the middle, it has to get worse in order for the Fed to feel like progress is being made on inflation and stop tightening.”

    Elevated inflation presents risks to any economic outcome. A sharp hiring slowdown would likely mean slower price spikes but fuel worries about an economic slump, while continued strong demand for workers would prompt the Fed to increase rates even higher to rein in inflation. That would raise the risk of a downturn that could be politically devastating for Biden and the Democrats.

    Atlanta Fed President Raphael Bostic in an appearance on CNBC pointed to the latest data as a sign of continued momentum in the labor market, arguing that it means the Fed could move forward with another supersized rate increase later this month and “not see a lot of protracted damage to the economy.”

    The unemployment rate stayed at 3.6 percent, near modern-era lows. Few people are losing jobs, although the percentage of those participating in the labor force ticked down to 62.2 percent, still stubbornly below its pre-pandemic level of 63.4 percent.

    “The job market is cooling, but it’s still red hot,” said Daniel Zhao, senior economist at Glassdoor.

    White House officials have said for months that employment growth would soon slow from the blistering pace seen earlier this year, when job gains averaged roughly 600,000 a month.

    “This has been the fastest and strongest jobs recovery in American history,” Biden said in a statement Friday. “Of course, having added a record number of new jobs, and achieved historically low levels of unemployment, additional job growth from this strong position will be slower. That is not a bad thing, because our economy should move to stable growth for the years ahead.”

    A senior White House official said it’s likely that job growth over the coming year will shift to something closer to that of 2019, when monthly gains averaged about 160,000 and the jobless rate was similarly low.

    “With the transition to a more sustainable pace of job growth, we will likely see fewer record job-creation numbers, but this won’t be cause for concern,” the official said on a call with reporters Thursday. “It will be a sign that we are successfully moving into the next phase of recovery.”

    Other recent economic data has pointed to a labor market leveling off, including moderating increases in average hourly earnings and a decline in job openings.

    The senior official also said the administration continues to be optimistic that the Fed can halt inflation without tipping the economy into a recession, pointing to continued strength in household balance sheets, as well as the labor market, which should support economic activity.

    For its part, the Fed is focused on moving quickly to slow the economy before households and businesses start to expect higher inflation to continue indefinitely, a key psychological piece to rising prices that can make them harder to tame.

    “The faster they do that, the less unemployment has to rise,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics and a former central bank official.

    He said the Fed doesn’t seem to believe it’s a foregone conclusion that it will need to use widespread job losses and pay cuts as a cudgel to bring down inflation, though Fed officials are forecasting unemployment will rise to at least 4 percent over the next couple of years. The key is the extent to which price spikes begin to ease on their own, as supply chains get unsnarled and food and energy prices stop their meteoric rise.

    Even absent the Fed’s actions, the private sector has regained the jobs it lost during the pandemic, so a slowdown would be expected, said Julia Pollak, chief economist at ZipRecruiter.

    “There’s been an unsustainable degree of churn in the labor market,” Pollak said. ”It’s put a huge strain on businesses. They’ve had to spend far more time on hiring and training than perhaps they can afford to.”

    A return to monthly job growth of 200,000 would still be a large number, she said, adding that while some industries may begin to cut back hiring — such as the mortgage sector — others, such as hospitality and leisure, will continue to add jobs.

  • 1 месяц, 4 недели назад 15.06.2022Economy
    Fed gets more aggressive in inflation battle

    The Federal Reserve on Wednesday pulled the trigger on its largest interest rate increase in nearly three decades and signaled that it would raise borrowing costs this year more than anticipated, with blistering-hot inflation showing no signs of abating.

    The Fed’s aggressive actions have raised fears that the central bank might cause a recession in its bid to tamp down the worst price spikes in four decades, though the policymakers themselves are hoping to avoid that outcome. But they are predicting some economic pain regardless, expecting the unemployment rate, now near modern-era lows at 3.6 percent, to tick up over the next few years.

    The Fed also projects the U.S. economy will grow 1.7 percent both in 2022 and 2023, a significant downgrade from the 2.8 percent and 2.2 percent rates they forecast for those years in March.

    The Fed’s moves are expected to darken an already grim national mood and could lead to a more serious electoral throttling for Democrats in the midterms. But the central bank is betting that more assertive steps now will prevent even more economic pain later.

    The policymakers had let it be known for weeks that they were planning to hike rates by half a percentage point, but after a widely watched inflation report on Friday came in worse than expected, they quickly pivoted to take more drastic action — a rare move by the central bank.

    After hiking rates by three-quarters of a percentage point on Wednesday, the Fed’s main policy rate sits between 1.5 percent and 1.75 percent, still near historic lows.

    Over the remaining four meetings this year, the policymakers expect to raise their key rate to between 3.25 percent and 3.5 percent — much higher than where they previously expected to go.

    Despite laying out a steeper path for interest rates, Fed officials don’t expect to kill price spikes this year, as Russia’s invasion of Ukraine and Covid-related lockdowns in China further inflame the consumer price inflation that gathered momentum last year. They now expect prices, as measured by the personal consumption expenditures price index, to increase 5.2 percent in 2022, compared to their earlier hopes for 4.3 percent.

    But they project inflation to drop to 2.6 percent in 2023. The Fed’s target rate is 2 percent.

  • Загрузить еще
The Fed’s global problem
The Federal Reserve’s efforts to fight inflation threaten to send the U.S. economy into a recession. They could also spark…
Biden enters the Always Be Closing phase of his first term
Somehow, someway, Joe Biden is back in the game. After enduring a brutal year dominated by economic angst, legislative setbacks…

Economy Biden enters the Always Be Closing phase of his first term