The Washington Post
"Biden has a story to tell about the economy. Inflation gets in the way."
Story by Dan Balz
14 APRIL 2024
President Biden has a story he wants to tell voters about the economy, one of consistent job growth over the course of his presidency and of a pandemic recovery that has led the world.
Inflation keeps getting in the way.
Last week’s inflation report showed consumer prices rising 3.5 percent from March 2023 to March 2024.
This continued a string of surprises this year, suggesting a resurgence in inflation after signs had pointed in the other direction.
Biden administration officials have noted that the inflation rate has fallen since its earlier peak, but the latest numbers show it has not fully cooled.
For now, it is moving in the wrong direction and remains above the Federal Reserve’s target of 2 percent.
Despite unemployment at a half-century low, the president’s economic job approval is net negative by a significant margin.
The RealClearPolitics average shows that he is net negative by 18 percentage points on his handling of the economy and by 27 percentage points on how he’s dealt with inflation.
Political strategists in both parties have reported that voters repeatedly point to higher prices as a source of their unhappiness about the state of the country.
The cost of everyday items — gasoline, food, housing — hits them constantly.
It’s hard to persuade voters to look on the sunny side when they are feeling the squeeze of higher prices on their household budgets.
Voters’ common refrain is summed up as: Things cost too much.
Gasoline prices are rising once again, a typical occurrence as summer approaches.
Although they are below their peak during the Biden presidency, they are significantly higher than when he took office.
In early 2021, average gas price was $2.42.
Today it is about $3.50, according to the U.S. Energy Information Agency.
Food prices are taking another bite out of household incomes.
From 2019 to 2023, food prices rose by 25 percent, according to the U.S. Department of Agriculture.
Food costs accounted for 11.3 percent of disposable income in 2022, according to the most recent USDA analysis.
That is the highest it has been since 1991, when families spent 11.4 percent of disposable income on food.
A dozen eggs now cost, on average, about $2.99, according to one indicator.
That compares to an inflation-adjusted $2.09 per dozen in 2020.
Higher interest rates have meant more costly home mortgages.
Mortgage rates began to ease but that has stalled or even begun to reverse.
The Wall Street Journal carried a story on Friday that looked at the impact on middle-income families.
The headline read: “Stay Put or Pay Up: Home Buyers Lose Hope for Lower Rates.”
The story said that, in March, a median-income family could afford a house costing no more than $416,000, given current interest rates and assuming a down payment of 20 percent.
Three years ago, when mortgage rates were lower, that family could have bought a house valued at $561,000.
Other unexpected and unavoidable costs are hitting family pocketbooks.
Car insurance is one example, with rates up 22.2 percent in the past year, the biggest increase since 1976.
In Nevada, a presidential battleground state, auto insurance rates were up 38 percent over the previous year, according to a CNN report.
My colleague Heather Long posted on X earlier this year that, as of February, household repair costs had risen 18 percent over the previous year and nonprescription drugs were up 9 percent.
Both, she noted on the social media platform formerly known as Twitter, were the highest such increases ever recorded.
Biden issued a statement last week after the March consumer price index report.
He stressed that inflation had declined by more than 60 percent from its peak but said, “We have more to do to lower costs for hard-working families.”
He added, “Fighting inflation remains my top economic priority.”
But presidents have few weapons in the fight against inflation.
Jason Furman, an economist at Harvard University and chairman of the Council of Economic Advisers in the Obama administration, said 90 percent of controlling inflation is the job of the Federal Reserve.
“The White House mostly has to figure out the best message to get through it, without a lot of tools to change the reality,” he said.
Biden has pushed policies aimed at lowering the cost of prescription drugs and he has gone after junk fees that companies add to things like airline tickets, car rentals and event tickets.
He announced initiatives to provide assistance for home buyers in his State of the Union address, but they are going nowhere.
Twice this past week, the administration announced actions to reduce student debt, efforts aimed to shore up support among younger voters.
But those policies affect the pocketbooks only of those who qualify while adding future costs to the government.
And they have drawn criticism for helping some who went to college at the expense of others who never went to college.
The Fed would cut interest rates for two reasons — to head off a recession if one was looming or because inflation had eased enough to give officials confidence that lower rates would not reignite another inflationary round.
Neither condition exists right now.
There is no recession on the horizon, after a long period of predictions that interest rate hikes could or would bring about a recession.
And now prices are rising more rapidly than expected.
Economists think it’s doubtful there will be a rate cut in June, as had been assumed a few months ago.
A reduction in rates in September, though perhaps warranted economically by then, could be too close to the election, leaving Federal Reserve Board Chair Jerome H. Powell open to criticism that the Fed was acting to help Biden politically.
The 2024 election will be fought over more than economic issues.
The biggest political story of the past week was the decision by the Arizona Supreme Court to resurrect an 1864 law that bans abortions except in the case of a danger to the life of the mother and that imposes penalties on those who provide abortions.
The decision will ensure that abortion will be a key issue in one of the most important battlegrounds in November, with the likelihood of an abortion referendum on the ballot.
Vice President Harris, who has led the administration’s messaging on abortion for the past two years, flew to Arizona on Friday to highlight the state court action.
Biden has also made clear he will continue to focus on former president Donald Trump as a threat to democracy.
Trump has said a second term would be an opportunity for retribution against his adversaries, and he has never retreated from his false claim that the 2020 election was stolen.
In the 2022 midterm elections, pre-election polls suggested that inflation and the economy were the biggest issues on the minds of voters, which led to predictions of sweeping Republican gains.
In the end, however, abortion and threats to democracy combined to motivate Democratic voters.
Republicans came out of the midterms disappointed, gaining only a tiny majority in the House, failing to take control of the Senate and losing several contested elections for governor.
Biden hopes that may be the case again this November.
But for him, the uptick in the inflation rate has come at just the wrong moment.
Many Americans are saying they think things were better economically under Trump.
The current president doesn’t have much time to change those perceptions — even as he tries to force the election onto other terrain.
https://www.msn.com/en-us/money/markets ... 7f47&ei=26
POLITICS
Re: POLITICS
Axios
"Biden's new take on inflation: Trump would be worse"
Story by Hans Nichols
14 APRIL 2024
The White House is rolling out its latest response to high inflation: It will be much worse if former President Trump is elected.
Why it matters:
President Biden and his top economic advisers know that inflation has given voters bad vibes that have become a hurdle to his re-election — and that there's not a lot they can do to lower it before November.
So they're turning to a new line of attack: warning voters how much higher inflation could climb if Trump imposes new tariffs on China and gives more tax cuts to the wealthiest Americans.
"MAGAnomics is inflation-feeding welfare for the rich that raises taxes," White House deputy press secretary Andrew Bates writes in a new memo to Biden allies, out this morning.
"Not only will Bidenomics lower costs even more, but it will also attack inflation by undoing tax giveaways for rich special interests," Bates wrote.
Driving the news:
March's Consumer Price Index was full of bad news for Biden.
The headline number — inflation rising at a rate of 3.5% over 12 months — was higher than expected, undercutting Biden's argument that his policies are continuing to lower prices.
It also gave Trump an opening to attack Biden and the Federal Reserve.
"INFLATION is BACK—and RAGING!," the former president wrote in a Truth Social post.
Between the lines:
Perhaps a bigger concern for Biden: Oil prices have been creeping up all year — and could jump higher if Iran attacks Israel and Middle East supply routes are disrupted.
That would lead to high gas prices, an inflation reading the White House dreads.
Voters see it every day.
In swing states such as Nevada, average gas prices are at $4.62 per gallon, up 50 cents over the last month.
In Arizona, it's $4.14 per gallon, up 58 cents.
What they are saying:
After Wednesday's reading, Biden reiterated that "fighting inflation remains my top economic priority."
"We have a plan to deal with it, whereas the opposition ... talks about two things," he said.
"They just want to cut taxes for the wealthy and raise taxes on other people."
But Biden also acknowledged that March's CPI reading will delay the Fed's plan to start cutting interest rates.
That will translate into higher borrowing costs for consumers for longer.
Zoom out:
Throughout his presidency, Biden has adopted different approaches to inflation.
At first, he and his economic advisers insisted it was "transitory" and would naturally recede by itself.
He also blamed others for prices, first starting with snarled supply chains, then moving on to Putin's invasion of Ukraine, and most recently hitting corporations for so-called "shrinkflation."
Zoom in:
Economists fiercely debate how much Biden's first stimulus package, the $1.9 trillion American Rescue Plan, contributed to inflation.
Biden's main legislative attack on high prices — the Inflation Reduction Act (IRA) — included provisions to lower out-of-pocket costs for prescription drugs for seniors.
Policymakers generally agree that deficit spending leads to higher inflation.
The skyrocketing price tag of the IRA — its climate provisions could end up costing $1.2 trillion, three times higher than the original estimate — could end up increasing inflation, not reducing it.
What we're watching:
When inflation was spiking in the spring of 2022, the Biden administration hotly debated whether to lower some of Trump's China tariffs on some $300 billion consumer goods.
Biden is expected to formally extend most of Trump's tariffs this spring, but he can still tinker with the list and take some consumer goods off of it.
That could provide relief on some products.
https://www.msn.com/en-us/news/politics ... 7f47&ei=54
"Biden's new take on inflation: Trump would be worse"
Story by Hans Nichols
14 APRIL 2024
The White House is rolling out its latest response to high inflation: It will be much worse if former President Trump is elected.
Why it matters:
President Biden and his top economic advisers know that inflation has given voters bad vibes that have become a hurdle to his re-election — and that there's not a lot they can do to lower it before November.
So they're turning to a new line of attack: warning voters how much higher inflation could climb if Trump imposes new tariffs on China and gives more tax cuts to the wealthiest Americans.
"MAGAnomics is inflation-feeding welfare for the rich that raises taxes," White House deputy press secretary Andrew Bates writes in a new memo to Biden allies, out this morning.
"Not only will Bidenomics lower costs even more, but it will also attack inflation by undoing tax giveaways for rich special interests," Bates wrote.
Driving the news:
March's Consumer Price Index was full of bad news for Biden.
The headline number — inflation rising at a rate of 3.5% over 12 months — was higher than expected, undercutting Biden's argument that his policies are continuing to lower prices.
It also gave Trump an opening to attack Biden and the Federal Reserve.
"INFLATION is BACK—and RAGING!," the former president wrote in a Truth Social post.
Between the lines:
Perhaps a bigger concern for Biden: Oil prices have been creeping up all year — and could jump higher if Iran attacks Israel and Middle East supply routes are disrupted.
That would lead to high gas prices, an inflation reading the White House dreads.
Voters see it every day.
In swing states such as Nevada, average gas prices are at $4.62 per gallon, up 50 cents over the last month.
In Arizona, it's $4.14 per gallon, up 58 cents.
What they are saying:
After Wednesday's reading, Biden reiterated that "fighting inflation remains my top economic priority."
"We have a plan to deal with it, whereas the opposition ... talks about two things," he said.
"They just want to cut taxes for the wealthy and raise taxes on other people."
But Biden also acknowledged that March's CPI reading will delay the Fed's plan to start cutting interest rates.
That will translate into higher borrowing costs for consumers for longer.
Zoom out:
Throughout his presidency, Biden has adopted different approaches to inflation.
At first, he and his economic advisers insisted it was "transitory" and would naturally recede by itself.
He also blamed others for prices, first starting with snarled supply chains, then moving on to Putin's invasion of Ukraine, and most recently hitting corporations for so-called "shrinkflation."
Zoom in:
Economists fiercely debate how much Biden's first stimulus package, the $1.9 trillion American Rescue Plan, contributed to inflation.
Biden's main legislative attack on high prices — the Inflation Reduction Act (IRA) — included provisions to lower out-of-pocket costs for prescription drugs for seniors.
Policymakers generally agree that deficit spending leads to higher inflation.
The skyrocketing price tag of the IRA — its climate provisions could end up costing $1.2 trillion, three times higher than the original estimate — could end up increasing inflation, not reducing it.
What we're watching:
When inflation was spiking in the spring of 2022, the Biden administration hotly debated whether to lower some of Trump's China tariffs on some $300 billion consumer goods.
Biden is expected to formally extend most of Trump's tariffs this spring, but he can still tinker with the list and take some consumer goods off of it.
That could provide relief on some products.
https://www.msn.com/en-us/news/politics ... 7f47&ei=54
Re: POLITICS
The Daily Mail
"US sends in amphibious warship USS Bataan and support vessels with 2,500 Marines on board into the Eastern Mediterranean and places military bases in Iraq on full alert as Iran attacks Israel"
Story by Joe Hutchison For Dailymail.Com and Bill Lowther In Washington For The Mail On Sunday
14 APRIL 2024
The US have sent the war ship Bataan as well as two support ships with 2,500 Marines onboard into the Eastern Mediterranean after Iran launched a drone attack on Israel.
US Congressional sources say the amphibious war ship Bataan is leading a US naval task force in the Eastern Mediterranean.
The Bataan has two support ships and together they have about 2,500 Marines onboard.
The US also has several guided missile destroyers including the Carney in the area.
US bases in Iraq have been placed on full alert and will also attempt to shoot down missiles and drones aimed at Israel.
In addition, the US has two destroyers and a Cruiser in the Red Sea that are fully armed with anti-missile weapons and they too are under orders to shoot down any Israeli bound missiles or drones.
Iran launched the drones Saturday afternoon Eastern Standard Time, and they are expected to take hours to reach their target.
President Joe Biden said on Friday he expects Iran to attack Israel 'sooner than later' and said his message to Tehran was 'don't.'
'We are devoted to the defense of Israel.'
'We will support Israel and help defend Israel and Iran will not succeed,' Biden said after addressing a gathering of black leaders.
On Saturday afternoon, President Biden rushed back from Delaware for an emergency national security meeting on the matter.
Israel has an 'iron dome' security system which can shoot down enemy missiles, although it is unclear if it will be able to fend off the full force of Iran's attack.
Dozens of drones were seen flying from Iran over neighboring Iraq's Sulaymaniya province, according to three security sources.
Iran's Islamic Revolutionary Guard Corps said via state media that it had 'launched extensive drone strikes against targets in occupied territories.'
Iranian media reported that a second wave of drones has been launched, though details on their current location are not yet known.
The IDF's spokesperson, Rear Admiral Daniel Hagari, said it would take several hours for the drones to arrive in Israel, adding that sirens would be sounded in threatened areas.
The IDF said: 'The air defense array is on high alert at the same time as the Air Force planes and Navy ships that are on a mission to protect the country’s skies."
"The IDF is monitoring all targets.
'We ask the public to adhere to and follow the instructions of the Home Front Command and the official IDF announcements regarding the matter.'
Iran had threatened to hit back at Israel over an attack in Syria, which Tehran say was an Israeli airstrike on a Iranian diplomatic building in Damascus.
Iran's Supreme Leader Ali Khamenei vowed retribution in the wake of the Damascus attack, for which Tel-Aviv has yet to take responsibility.
The April 1 attack destroyed Iran's consulate building in the city and killed seven Revolutionary Guards, including the two generals.
Iran's supreme leader, Ayatollah Ali Khamenei, warned Wednesday that Israel 'must be punished and will be punished', days after one of his advisers said Israeli embassies are 'no longer safe'.
https://www.msn.com/en-us/news/world/us ... 7f47&ei=69
"US sends in amphibious warship USS Bataan and support vessels with 2,500 Marines on board into the Eastern Mediterranean and places military bases in Iraq on full alert as Iran attacks Israel"
Story by Joe Hutchison For Dailymail.Com and Bill Lowther In Washington For The Mail On Sunday
14 APRIL 2024
The US have sent the war ship Bataan as well as two support ships with 2,500 Marines onboard into the Eastern Mediterranean after Iran launched a drone attack on Israel.
US Congressional sources say the amphibious war ship Bataan is leading a US naval task force in the Eastern Mediterranean.
The Bataan has two support ships and together they have about 2,500 Marines onboard.
The US also has several guided missile destroyers including the Carney in the area.
US bases in Iraq have been placed on full alert and will also attempt to shoot down missiles and drones aimed at Israel.
In addition, the US has two destroyers and a Cruiser in the Red Sea that are fully armed with anti-missile weapons and they too are under orders to shoot down any Israeli bound missiles or drones.
Iran launched the drones Saturday afternoon Eastern Standard Time, and they are expected to take hours to reach their target.
President Joe Biden said on Friday he expects Iran to attack Israel 'sooner than later' and said his message to Tehran was 'don't.'
'We are devoted to the defense of Israel.'
'We will support Israel and help defend Israel and Iran will not succeed,' Biden said after addressing a gathering of black leaders.
On Saturday afternoon, President Biden rushed back from Delaware for an emergency national security meeting on the matter.
Israel has an 'iron dome' security system which can shoot down enemy missiles, although it is unclear if it will be able to fend off the full force of Iran's attack.
Dozens of drones were seen flying from Iran over neighboring Iraq's Sulaymaniya province, according to three security sources.
Iran's Islamic Revolutionary Guard Corps said via state media that it had 'launched extensive drone strikes against targets in occupied territories.'
Iranian media reported that a second wave of drones has been launched, though details on their current location are not yet known.
The IDF's spokesperson, Rear Admiral Daniel Hagari, said it would take several hours for the drones to arrive in Israel, adding that sirens would be sounded in threatened areas.
The IDF said: 'The air defense array is on high alert at the same time as the Air Force planes and Navy ships that are on a mission to protect the country’s skies."
"The IDF is monitoring all targets.
'We ask the public to adhere to and follow the instructions of the Home Front Command and the official IDF announcements regarding the matter.'
Iran had threatened to hit back at Israel over an attack in Syria, which Tehran say was an Israeli airstrike on a Iranian diplomatic building in Damascus.
Iran's Supreme Leader Ali Khamenei vowed retribution in the wake of the Damascus attack, for which Tel-Aviv has yet to take responsibility.
The April 1 attack destroyed Iran's consulate building in the city and killed seven Revolutionary Guards, including the two generals.
Iran's supreme leader, Ayatollah Ali Khamenei, warned Wednesday that Israel 'must be punished and will be punished', days after one of his advisers said Israeli embassies are 'no longer safe'.
https://www.msn.com/en-us/news/world/us ... 7f47&ei=69
Re: POLITICS
THE CAPE CHARLES MIRROR APRIL 12, 2024 AT 8:30 PM
Paul Plante says:
And here is an existential question for our times today – if back in 1924, men and women in America had become convinced at last, and with good logic, that government by professional politicians like Joe Biden was intolerably and hopelessly rotten and that the only remedy was to turn them out, and then make laws to prevent them coming back, how on earth is it that today, we are stuck with this piece of ignorant dead wood named Joseph Robinette Biden, Junior, as president?
Have we become stupid since then?
Have we become brain-dead as a people and as a nation?
Are we moon-struck and dazed which made us believe that somehow, in some strange and mysterious and perhaps mystical or magical way, despite his proven record of nothingness and failure, that electing Joe Biden president would transform him from a loser into a brilliant and dynamic and forceful yet intelligent world leader?
If so, we were seriously deluded, weren’t we, given Joe Biden is anything but.
Or is it more a case that we have become so degenerated as a people in the last hundred years since 1924 that we see a mediocrity like Joe Biden as being the best among us?
Consider that in 2012, Sen. John McCain, who would know the difference, stated that Joe Biden has been consistently wrong on every national security issue that McCain had been involved in in the last 20 years or so, while in 2014, in a memoir by former Obama Defense Secretary Bob Gates, he slammed Joe’s foreign policy, saying therein: “I think he has been wrong on nearly every major foreign policy and national security issue over the past four decades.”
And look where Joe has steered the nation since then – into CHAOS and TURMOIL!
Boggles the mind, don’t it?
Stay tuned!
http://www.capecharlesmirror.com/paul-p ... ent-917356
Paul Plante says:
And here is an existential question for our times today – if back in 1924, men and women in America had become convinced at last, and with good logic, that government by professional politicians like Joe Biden was intolerably and hopelessly rotten and that the only remedy was to turn them out, and then make laws to prevent them coming back, how on earth is it that today, we are stuck with this piece of ignorant dead wood named Joseph Robinette Biden, Junior, as president?
Have we become stupid since then?
Have we become brain-dead as a people and as a nation?
Are we moon-struck and dazed which made us believe that somehow, in some strange and mysterious and perhaps mystical or magical way, despite his proven record of nothingness and failure, that electing Joe Biden president would transform him from a loser into a brilliant and dynamic and forceful yet intelligent world leader?
If so, we were seriously deluded, weren’t we, given Joe Biden is anything but.
Or is it more a case that we have become so degenerated as a people in the last hundred years since 1924 that we see a mediocrity like Joe Biden as being the best among us?
Consider that in 2012, Sen. John McCain, who would know the difference, stated that Joe Biden has been consistently wrong on every national security issue that McCain had been involved in in the last 20 years or so, while in 2014, in a memoir by former Obama Defense Secretary Bob Gates, he slammed Joe’s foreign policy, saying therein: “I think he has been wrong on nearly every major foreign policy and national security issue over the past four decades.”
And look where Joe has steered the nation since then – into CHAOS and TURMOIL!
Boggles the mind, don’t it?
Stay tuned!
http://www.capecharlesmirror.com/paul-p ... ent-917356
Re: POLITICS
CNBC
"Retail sales jumped 0.7% in March, much higher than expected"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, APR 15 2024
Rising inflation in March didn’t deter consumers, who continued shopping at a more rapid pace than anticipated, the Commerce Department reported Monday.
Retail sales increased 0.7% for the month, considerably faster than the Dow Jones consensus forecast for a 0.3% rise though below the upwardly revised 0.9% in February, according to Census Bureau data that is adjusted for seasonality but not for inflation.
The consumer price index increased 0.4% in March, the Labor Department reported last week in data that also was higher than the Wall Street outlook.
That means consumers more than kept up with the pace of inflation, which ran at a 3.5% annual rate for the month, below the 4% retail sales increase.
Excluding auto-related receipts, retail sales jumped 1.1%, also well ahead of the estimate for a 0.5% advance.
The core control group, which strips out several volatile measures and is in the formula to determine gross domestic product, also increased 1.1%
A rise in gas prices helped push the headline retail sales number higher, with sales up 2.1% on the month at service stations.
However, the biggest growth area for the month was online sales, up 2.7%, while miscellaneous retailers saw an increase of 2.1%.
Multiple categories did report declines in sales for the month: Sporting goods, hobbies, musical instruments and books posted a 1.8% decrease, while clothing stores were off 1.6%, and electronics and appliances saw a 1.2% drop.
Stock market futures added to gains following the report, while Treasury yields also pushed sharply higher.
The upbeat outlook for the Wall Street open came despite an escalation over the weekend in Middle East tensions as Iran launched aerial strikes on Israel.
Stocks surrendered gains later in the session as yields surged.
“Strong sales growth in March salvaged an otherwise mediocre quarter for retailers,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
“Q1 growth isn’t going to generate a round of high fives, but closing out the quarter on a strong note should allow them to breathe a sigh of relief and a glimmer of hope that momentum could carry through into the coming months.”
Resilient consumer spending has helped keep the economy afloat despite higher interest rates and concerns over stubborn inflation.
Consumer spending accounts for nearly 70% of U.S. economic output so it is critical to continued growth in gross domestic product.
Monday’s data comes with market concerns elevated over the path of monetary policy.
Federal Reserve officials have expressed caution about cutting interest rates while inflation pressures continue, and investors have been forced to reduce their expectation for easing in policy this year.
Stronger consumer spending could cause the Fed to hold off longer on cuts, said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
“Alongside the recent resurgence in employment growth, the continued resilience of consumption is another reason to suspect the Fed will wait longer before starting to cut interest rates, which now we think won’t happen until September,” Hunter said in a note after the retail sales release.
Market pricing, which has been highly volatile over the past several weeks, also is pointing to the first cut coming in September, according to the CME Group’s FedWatch gauge of futures prices.
In other economic news Monday, the Empire State Manufacturing index, which gauges activity in the New York region, increased in April from a month ago but remained in contraction territory.
The index hit -14.3, better than the -20.9 reading for March but below the Dow Jones estimate for -10.
The index measures the percentage of firms reporting expansion against contraction, so anything below zero represents contraction.
Shipments and delivery time readings saw a decline, while prices paid increased.
https://www.cnbc.com/2024/04/15/retail- ... ected.html
"Retail sales jumped 0.7% in March, much higher than expected"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, APR 15 2024
Rising inflation in March didn’t deter consumers, who continued shopping at a more rapid pace than anticipated, the Commerce Department reported Monday.
Retail sales increased 0.7% for the month, considerably faster than the Dow Jones consensus forecast for a 0.3% rise though below the upwardly revised 0.9% in February, according to Census Bureau data that is adjusted for seasonality but not for inflation.
The consumer price index increased 0.4% in March, the Labor Department reported last week in data that also was higher than the Wall Street outlook.
That means consumers more than kept up with the pace of inflation, which ran at a 3.5% annual rate for the month, below the 4% retail sales increase.
Excluding auto-related receipts, retail sales jumped 1.1%, also well ahead of the estimate for a 0.5% advance.
The core control group, which strips out several volatile measures and is in the formula to determine gross domestic product, also increased 1.1%
A rise in gas prices helped push the headline retail sales number higher, with sales up 2.1% on the month at service stations.
However, the biggest growth area for the month was online sales, up 2.7%, while miscellaneous retailers saw an increase of 2.1%.
Multiple categories did report declines in sales for the month: Sporting goods, hobbies, musical instruments and books posted a 1.8% decrease, while clothing stores were off 1.6%, and electronics and appliances saw a 1.2% drop.
Stock market futures added to gains following the report, while Treasury yields also pushed sharply higher.
The upbeat outlook for the Wall Street open came despite an escalation over the weekend in Middle East tensions as Iran launched aerial strikes on Israel.
Stocks surrendered gains later in the session as yields surged.
“Strong sales growth in March salvaged an otherwise mediocre quarter for retailers,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
“Q1 growth isn’t going to generate a round of high fives, but closing out the quarter on a strong note should allow them to breathe a sigh of relief and a glimmer of hope that momentum could carry through into the coming months.”
Resilient consumer spending has helped keep the economy afloat despite higher interest rates and concerns over stubborn inflation.
Consumer spending accounts for nearly 70% of U.S. economic output so it is critical to continued growth in gross domestic product.
Monday’s data comes with market concerns elevated over the path of monetary policy.
Federal Reserve officials have expressed caution about cutting interest rates while inflation pressures continue, and investors have been forced to reduce their expectation for easing in policy this year.
Stronger consumer spending could cause the Fed to hold off longer on cuts, said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
“Alongside the recent resurgence in employment growth, the continued resilience of consumption is another reason to suspect the Fed will wait longer before starting to cut interest rates, which now we think won’t happen until September,” Hunter said in a note after the retail sales release.
Market pricing, which has been highly volatile over the past several weeks, also is pointing to the first cut coming in September, according to the CME Group’s FedWatch gauge of futures prices.
In other economic news Monday, the Empire State Manufacturing index, which gauges activity in the New York region, increased in April from a month ago but remained in contraction territory.
The index hit -14.3, better than the -20.9 reading for March but below the Dow Jones estimate for -10.
The index measures the percentage of firms reporting expansion against contraction, so anything below zero represents contraction.
Shipments and delivery time readings saw a decline, while prices paid increased.
https://www.cnbc.com/2024/04/15/retail- ... ected.html
Re: POLITICS
REUTERS
"Strong US retail sales boost first-quarter growth estimates"
By Lucia Mutikani
April 15, 2024
Summary
* Retail sales increase 0.7% in March
* Core retail sales jump 1.1%; February sales revised up
* Business inventories rise 0.4% in February
WASHINGTON, April 15 (Reuters) - U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground.
The report from the Commerce Department on Monday, which followed news this month of robust employment gains in March and a pick-up in consumer inflation, bolstered expectations that the Federal Reserve could delay cutting interest rates until September.
Some economists see the window for lowering rates this year closing.
Strong retail sales prompted economists at Goldman Sachs to boost their gross domestic product (GDP) growth estimate for the first quarter to a 3.1% annualized rate from a 2.5% pace.
The economy grew at a 3.4% rate in the fourth quarter.
"The stronger economic activity remains, the slower inflation declines and the later the Fed responds with rate cuts," said Kathy Bostjancic, chief economist at Nationwide.
"The lack of moderation in consumer spending and inflation ... could push off rate reductions to next year."
Retail sales rose 0.7% last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show sales rebounding 0.9%, which was the largest gain in just over a year, instead of the previously reported 0.6%.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%. Sales jumped 4.0% on a year-on-year basis in March.
Despite higher inflation and borrowing costs, spending is continuing to hold up, confounding predictions of distress among lower-income households, thanks to the resilient labor market.
The latest Bank of America credit card data showed lower-income spending continues to outpace higher-income spending.
"An important reason is that, although lower-income consumers have been disproportionately affected by inflation, they have also been the biggest beneficiaries of the robust labor market," economists at Bank of America Securities wrote in a note.
"Lower-income workers have seen the largest cumulative wage gains since the start of the pandemic."
Job gains averaged 276,000 per month in the first quarter, compared to 212,000 in the October-December period.
Wage growth remains above 4.0% on a year-on-year basis.
Financial markets and most economists have pushed back their expectations for the first rate cut to September from June, and anticipate two rate cuts instead of the three envisaged by policymakers.
A few economists believe the U.S. central bank could still initiate its easing cycle in either June or July.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March 2022.
"A June cut is not out of the question, but the balance of risks is tilting toward the first rate cut coming later in the year," said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Stocks on Wall Street were trading largely higher, with investors keeping a wary eye on the Middle East.
The dollar rose against a basket of currencies.
Prices of U.S. Treasuries fell, with the yield on the benchmark 10-year note hitting a five-month high.
RESILIENT CONSUMERS
Sales last month were boosted by a 2.7% acceleration in online receipts, which followed a 0.2% gain in February.
Amazon held a spring sales promotion last month.
Sales at gasoline stations rose 2.1%, reflecting higher prices at the pump.
Building material and garden equipment store sales advanced 0.7%.
Sales at food services and drinking places, the only services component in the report, rose 0.4% after climbing 0.5% in February.
Economists view dining out as a key indicator of household finances.
But there were pockets of weakness.
Receipts at motor vehicles and parts dealers fell 0.7%.
Furniture store sales slipped 0.3%, likely as higher mortgage rates constrain home purchases.
A survey from the National Association of Home Builders on Monday showed confidence among single-family homebuilders was unchanged in April.
Sales at sporting goods, hobby, musical instrument and book stores dropped 1.8% last month.
That suggests households continue to focus on essentials and are cutting back on discretionary spending.
Receipts at electronics and appliance outlets decreased 1.2%, while those at clothing retailers fell 1.6%.
Retail sales excluding automobiles, gasoline, building materials and food services increased 1.1% in March - the biggest gain since January 2023.
Data for February was revised higher to show these so-called retail sales gaining 0.3% instead of the previously reported unchanged reading.
Core retail sales correspond most closely with the consumer spending component of GDP.
The jump in core retail sales in March and the upward revision in February erased the dip in January and led economists to expect that growth in consumer spending in the first quarter probably matched the fourth quarter's brisk pace of 3.3%.
That estimate does not take into account services, the biggest component of consumer spending, leaving an upside risk to both spending and GDP growth in the January-March quarter.
The growth picture was further brightened by other data from the Census Bureau showing business inventories rose 0.4% in February after being unchanged in January.
"Given the various stimulus programs have stopped and money from them has been spent, consumer spending now rests firmly on incomes from paychecks, which continue to expand along with the labor market," said Robert Frick, corporate economist at Navy Federal Credit Union.
"This means a solid expansion should continue."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-r ... 024-04-15/
"Strong US retail sales boost first-quarter growth estimates"
By Lucia Mutikani
April 15, 2024
Summary
* Retail sales increase 0.7% in March
* Core retail sales jump 1.1%; February sales revised up
* Business inventories rise 0.4% in February
WASHINGTON, April 15 (Reuters) - U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground.
The report from the Commerce Department on Monday, which followed news this month of robust employment gains in March and a pick-up in consumer inflation, bolstered expectations that the Federal Reserve could delay cutting interest rates until September.
Some economists see the window for lowering rates this year closing.
Strong retail sales prompted economists at Goldman Sachs to boost their gross domestic product (GDP) growth estimate for the first quarter to a 3.1% annualized rate from a 2.5% pace.
The economy grew at a 3.4% rate in the fourth quarter.
"The stronger economic activity remains, the slower inflation declines and the later the Fed responds with rate cuts," said Kathy Bostjancic, chief economist at Nationwide.
"The lack of moderation in consumer spending and inflation ... could push off rate reductions to next year."
Retail sales rose 0.7% last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show sales rebounding 0.9%, which was the largest gain in just over a year, instead of the previously reported 0.6%.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%. Sales jumped 4.0% on a year-on-year basis in March.
Despite higher inflation and borrowing costs, spending is continuing to hold up, confounding predictions of distress among lower-income households, thanks to the resilient labor market.
The latest Bank of America credit card data showed lower-income spending continues to outpace higher-income spending.
"An important reason is that, although lower-income consumers have been disproportionately affected by inflation, they have also been the biggest beneficiaries of the robust labor market," economists at Bank of America Securities wrote in a note.
"Lower-income workers have seen the largest cumulative wage gains since the start of the pandemic."
Job gains averaged 276,000 per month in the first quarter, compared to 212,000 in the October-December period.
Wage growth remains above 4.0% on a year-on-year basis.
Financial markets and most economists have pushed back their expectations for the first rate cut to September from June, and anticipate two rate cuts instead of the three envisaged by policymakers.
A few economists believe the U.S. central bank could still initiate its easing cycle in either June or July.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March 2022.
"A June cut is not out of the question, but the balance of risks is tilting toward the first rate cut coming later in the year," said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Stocks on Wall Street were trading largely higher, with investors keeping a wary eye on the Middle East.
The dollar rose against a basket of currencies.
Prices of U.S. Treasuries fell, with the yield on the benchmark 10-year note hitting a five-month high.
RESILIENT CONSUMERS
Sales last month were boosted by a 2.7% acceleration in online receipts, which followed a 0.2% gain in February.
Amazon held a spring sales promotion last month.
Sales at gasoline stations rose 2.1%, reflecting higher prices at the pump.
Building material and garden equipment store sales advanced 0.7%.
Sales at food services and drinking places, the only services component in the report, rose 0.4% after climbing 0.5% in February.
Economists view dining out as a key indicator of household finances.
But there were pockets of weakness.
Receipts at motor vehicles and parts dealers fell 0.7%.
Furniture store sales slipped 0.3%, likely as higher mortgage rates constrain home purchases.
A survey from the National Association of Home Builders on Monday showed confidence among single-family homebuilders was unchanged in April.
Sales at sporting goods, hobby, musical instrument and book stores dropped 1.8% last month.
That suggests households continue to focus on essentials and are cutting back on discretionary spending.
Receipts at electronics and appliance outlets decreased 1.2%, while those at clothing retailers fell 1.6%.
Retail sales excluding automobiles, gasoline, building materials and food services increased 1.1% in March - the biggest gain since January 2023.
Data for February was revised higher to show these so-called retail sales gaining 0.3% instead of the previously reported unchanged reading.
Core retail sales correspond most closely with the consumer spending component of GDP.
The jump in core retail sales in March and the upward revision in February erased the dip in January and led economists to expect that growth in consumer spending in the first quarter probably matched the fourth quarter's brisk pace of 3.3%.
That estimate does not take into account services, the biggest component of consumer spending, leaving an upside risk to both spending and GDP growth in the January-March quarter.
The growth picture was further brightened by other data from the Census Bureau showing business inventories rose 0.4% in February after being unchanged in January.
"Given the various stimulus programs have stopped and money from them has been spent, consumer spending now rests firmly on incomes from paychecks, which continue to expand along with the labor market," said Robert Frick, corporate economist at Navy Federal Credit Union.
"This means a solid expansion should continue."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-r ... 024-04-15/
Re: POLITICS
REUTERS
"US lawmakers angry after Huawei unveils laptop with new Intel AI chip"
By Reuters
April 12, 2024
WASHINGTON, April 12 (Reuters) - Republican U.S. lawmakers on Friday criticized the Biden administration after sanctioned Chinese telecoms equipment giant Huawei unveiled a laptop this week powered by an Intel AI chip.
The United States placed Huawei on a trade restriction list in 2019 for violating Iran sanctions, part of a broader effort to hobble Beijing's technological advances.
Placement on the list means the company's suppliers have to seek a special, difficult-to-obtain license before shipping to it.
One such license, issued by the Trump administration, has allowed Intel to ship central processors to Huawei for use in laptops since 2020.
China hardliners had urged the Biden administration to revoke that license, but many grudgingly accepted that it would expire later this year and not be renewed.
Huawei's unveiling Thursday of its first AI-enabled laptop, the MateBook X Pro powered by Intel's new Core Ultra 9 processor, shocked and angered them, because it suggested to them that the Commerce Department had approved shipments of the new chip to Huawei.
“One of the greatest mysteries in Washington, DC is why the Department of Commerce continues to allow U.S. technology to be shipped to Huawei" Republican Congressman Michael Gallagher, who chairs the House of Representatives select committee on China, said in a statement to Reuters.
A source familiar with the matter said the chips were shipped under a preexisting license.
They are not covered by recent broad-cased restrictions on AI chip shipments to China, the source and another person said.
The Commerce Department and Intel declined to comment.
Huawei did not immediately respond to requests for comment.
The reaction is a sign of growing pressure on the Biden administration to do more to thwart Huawei's rise, nearly five years after it was added to a trade restriction list.
In August, it shocked the world with a new phone powered by a sophisticated chip manufactured by sanctioned Chinese chipmaker SMIC, becoming a symbol of China's technological resurgence despite Washington's ongoing efforts to cripple its capacity to produce advanced semiconductors.
At a Senate subcommittee hearing this week, Kevin Kurland, an export enforcement official, said Washington's restrictions on Huawei have had a "significant impact" on it access to U.S. technology.
He also stressed that the goal was not necessarily to stop Huawei from growing but to keep it from misusing U.S. technology for "malign activities."
But the remarks did little to stem frustration among Republican China hawks following the news about Huawei's new laptop.
"These approvals must stop," Republican congressman Michael McCaul said in a statement to Reuters.
"Two years ago, I was told licenses to Huawei would stop."
"Today, it doesn’t seem as though the policy has changed."
Reporting by Alexandra Alper and Karen Freifeld; Editing by Leslie Adler and Stephen Coates
https://www.reuters.com/technology/us-l ... 024-04-12/
"US lawmakers angry after Huawei unveils laptop with new Intel AI chip"
By Reuters
April 12, 2024
WASHINGTON, April 12 (Reuters) - Republican U.S. lawmakers on Friday criticized the Biden administration after sanctioned Chinese telecoms equipment giant Huawei unveiled a laptop this week powered by an Intel AI chip.
The United States placed Huawei on a trade restriction list in 2019 for violating Iran sanctions, part of a broader effort to hobble Beijing's technological advances.
Placement on the list means the company's suppliers have to seek a special, difficult-to-obtain license before shipping to it.
One such license, issued by the Trump administration, has allowed Intel to ship central processors to Huawei for use in laptops since 2020.
China hardliners had urged the Biden administration to revoke that license, but many grudgingly accepted that it would expire later this year and not be renewed.
Huawei's unveiling Thursday of its first AI-enabled laptop, the MateBook X Pro powered by Intel's new Core Ultra 9 processor, shocked and angered them, because it suggested to them that the Commerce Department had approved shipments of the new chip to Huawei.
“One of the greatest mysteries in Washington, DC is why the Department of Commerce continues to allow U.S. technology to be shipped to Huawei" Republican Congressman Michael Gallagher, who chairs the House of Representatives select committee on China, said in a statement to Reuters.
A source familiar with the matter said the chips were shipped under a preexisting license.
They are not covered by recent broad-cased restrictions on AI chip shipments to China, the source and another person said.
The Commerce Department and Intel declined to comment.
Huawei did not immediately respond to requests for comment.
The reaction is a sign of growing pressure on the Biden administration to do more to thwart Huawei's rise, nearly five years after it was added to a trade restriction list.
In August, it shocked the world with a new phone powered by a sophisticated chip manufactured by sanctioned Chinese chipmaker SMIC, becoming a symbol of China's technological resurgence despite Washington's ongoing efforts to cripple its capacity to produce advanced semiconductors.
At a Senate subcommittee hearing this week, Kevin Kurland, an export enforcement official, said Washington's restrictions on Huawei have had a "significant impact" on it access to U.S. technology.
He also stressed that the goal was not necessarily to stop Huawei from growing but to keep it from misusing U.S. technology for "malign activities."
But the remarks did little to stem frustration among Republican China hawks following the news about Huawei's new laptop.
"These approvals must stop," Republican congressman Michael McCaul said in a statement to Reuters.
"Two years ago, I was told licenses to Huawei would stop."
"Today, it doesn’t seem as though the policy has changed."
Reporting by Alexandra Alper and Karen Freifeld; Editing by Leslie Adler and Stephen Coates
https://www.reuters.com/technology/us-l ... 024-04-12/
Re: POLITICS
CNBC
"Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, APR 16 2024
KEY POINTS
* Fed Chair Jerome Powell said the U.S. economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
* “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said during a central banking forum.
Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.
“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.
Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.
Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years.
That was the result of 11 consecutive rate hikes that began in March 2022.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said.
“That said, we think policy is well positioned to handle the risks that we face.”
Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”
The comments follow inflation data through the first three months of 2024 that has been higher than expected.
A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.
Treasury yields rose as Powell spoke.
The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points.
The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.
https://www.cnbc.com/2024/04/16/powell- ... -goal.html
"Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, APR 16 2024
KEY POINTS
* Fed Chair Jerome Powell said the U.S. economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
* “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said during a central banking forum.
Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.
“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.
Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.
Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years.
That was the result of 11 consecutive rate hikes that began in March 2022.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said.
“That said, we think policy is well positioned to handle the risks that we face.”
Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”
The comments follow inflation data through the first three months of 2024 that has been higher than expected.
A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.
Treasury yields rose as Powell spoke.
The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points.
The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.
https://www.cnbc.com/2024/04/16/powell- ... -goal.html
Re: POLITICS
REUTERS
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/
Re: POLITICS
REUTERS
"Fed's Powell says restrictive rates policy needs more time to work"
By Howard Schneider and Ann Saphir
April 16, 2024
WASHINGTON, April 16 (Reuters) - Top U.S. central bank officials including Federal Reserve Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer and further dashing investors' hopes for meaningful reductions in borrowing costs this year.
Fed policymakers have said since the start of the year that rate cuts are contingent on gaining "greater confidence" that inflation is moving towards the central bank's 2% goal, but readings over the past few months show price pressures may even be moving in the opposite direction.
"The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence," Powell told a forum in Washington, in what is likely to be his last public appearance before the April 30-May 1 policy meeting.
"Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he said.
U.S. central bankers are universally expected to leave rates unchanged at their upcoming meeting, but until early this month analysts and investors thought rate cuts would likely start with an initial quarter-percentage-point reduction at the Fed's June 11-12 meeting, with two more cuts happening by the end of 2024.
Now the first cut is expected in September and the odds of a second cut are dwindling.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said.
"At the same time, we have significant space to ease should the labor market unexpectedly weaken."
In separate remarks earlier on Tuesday, Fed Vice Chair Philip Jefferson omitted any mention of rate cuts, and said the U.S. central bank was ready to keep its tight monetary policy in place "for longer" if inflation fails to slow as expected.
Jefferson noted the central bank was facing a strong economy and had seen little recent progress in bringing down inflation, excluding what had been a staple reference in Fed speeches to gaining "confidence" in lower inflation and then cutting rates.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said.
In his last public remarks, on Feb. 22, Jefferson included what had been a staple of recent Fed communications - that "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year," a nod to the possibility of reducing the Fed's benchmark overnight interest rate from the current 5.25%-5.50% range to account for a slowing pace of price increases.
'MEASURED HAWKISH RESET'
Analysts and investors have been steadily marking down the likelihood and timing of Fed rate cuts as policymakers struggle to reconcile a gravity-defying economy with their assessment that monetary policy is "restrictive" and inflation likely on its way down.
Both of those ideas have been called into question by job growth, retail spending, inflation and other data that continue to challenge the Fed's sense that the economy was gliding towards lower demand, slower growth, and price increases nearing the 2% target.
Just over five weeks ago, Powell told a U.S. Senate panel that the Fed was "not far" from gaining the confidence in falling inflation needed to cut interest rates.
Powell not only omitted that characterization on Tuesday, but he also did not repeat his prior view, laid out after the Fed's March 19-20 meeting, that data in January and February had not changed the "overall story" of gradually slowing inflation.
Instead, he said the Fed's preferred measure of underlying inflation - the year-over-year change in the core personal consumption expenditures price index - likely rose 2.8% in March, unchanged from February, with three-month and six-month average measures "actually above that level."
"We view this as a measured hawkish reset of policy communication to a more neutral posture with less of an immediate bias to cut rates, though the basic idea of wanting to get more confidence inflation is moving lower before cutting rates remains intact," said Krishna Guha, vice chairman at Evercore ISI.
"But what has not changed is Powell's read of the underlying economics, and this prevents us from reading him too hawkish overall."
When inflation was in fast decline last year, Powell was reluctant to declare the fight against it won even as policymakers laid the groundwork for rate reductions beginning this year.
Officials at the Fed's March 19-20 meeting said they still expected to cut the policy rate by three-quarters of a percentage point by the end of 2024.
Powell at the time said disappointing inflation data in January and February "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%."
Yet the bumps continued through March, enough so that some officials at the last Fed meeting worried monetary policy was not having the sort of impact that would be typically expected from the highest interest rates in a quarter of a century.
Data since then have shown a massive 303,000 jobs were added in March, the pace of consumer price increases accelerated, and even low-income households continued to spend.
The strength of the economy, policymakers suggest, is one reason they could wait to cut rates and be sure inflation will resume its decline.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Dan Burns and Paul Simao
https://www.reuters.com/markets/us/feds ... 024-04-16/
"Fed's Powell says restrictive rates policy needs more time to work"
By Howard Schneider and Ann Saphir
April 16, 2024
WASHINGTON, April 16 (Reuters) - Top U.S. central bank officials including Federal Reserve Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer and further dashing investors' hopes for meaningful reductions in borrowing costs this year.
Fed policymakers have said since the start of the year that rate cuts are contingent on gaining "greater confidence" that inflation is moving towards the central bank's 2% goal, but readings over the past few months show price pressures may even be moving in the opposite direction.
"The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence," Powell told a forum in Washington, in what is likely to be his last public appearance before the April 30-May 1 policy meeting.
"Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he said.
U.S. central bankers are universally expected to leave rates unchanged at their upcoming meeting, but until early this month analysts and investors thought rate cuts would likely start with an initial quarter-percentage-point reduction at the Fed's June 11-12 meeting, with two more cuts happening by the end of 2024.
Now the first cut is expected in September and the odds of a second cut are dwindling.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said.
"At the same time, we have significant space to ease should the labor market unexpectedly weaken."
In separate remarks earlier on Tuesday, Fed Vice Chair Philip Jefferson omitted any mention of rate cuts, and said the U.S. central bank was ready to keep its tight monetary policy in place "for longer" if inflation fails to slow as expected.
Jefferson noted the central bank was facing a strong economy and had seen little recent progress in bringing down inflation, excluding what had been a staple reference in Fed speeches to gaining "confidence" in lower inflation and then cutting rates.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said.
In his last public remarks, on Feb. 22, Jefferson included what had been a staple of recent Fed communications - that "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year," a nod to the possibility of reducing the Fed's benchmark overnight interest rate from the current 5.25%-5.50% range to account for a slowing pace of price increases.
'MEASURED HAWKISH RESET'
Analysts and investors have been steadily marking down the likelihood and timing of Fed rate cuts as policymakers struggle to reconcile a gravity-defying economy with their assessment that monetary policy is "restrictive" and inflation likely on its way down.
Both of those ideas have been called into question by job growth, retail spending, inflation and other data that continue to challenge the Fed's sense that the economy was gliding towards lower demand, slower growth, and price increases nearing the 2% target.
Just over five weeks ago, Powell told a U.S. Senate panel that the Fed was "not far" from gaining the confidence in falling inflation needed to cut interest rates.
Powell not only omitted that characterization on Tuesday, but he also did not repeat his prior view, laid out after the Fed's March 19-20 meeting, that data in January and February had not changed the "overall story" of gradually slowing inflation.
Instead, he said the Fed's preferred measure of underlying inflation - the year-over-year change in the core personal consumption expenditures price index - likely rose 2.8% in March, unchanged from February, with three-month and six-month average measures "actually above that level."
"We view this as a measured hawkish reset of policy communication to a more neutral posture with less of an immediate bias to cut rates, though the basic idea of wanting to get more confidence inflation is moving lower before cutting rates remains intact," said Krishna Guha, vice chairman at Evercore ISI.
"But what has not changed is Powell's read of the underlying economics, and this prevents us from reading him too hawkish overall."
When inflation was in fast decline last year, Powell was reluctant to declare the fight against it won even as policymakers laid the groundwork for rate reductions beginning this year.
Officials at the Fed's March 19-20 meeting said they still expected to cut the policy rate by three-quarters of a percentage point by the end of 2024.
Powell at the time said disappointing inflation data in January and February "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%."
Yet the bumps continued through March, enough so that some officials at the last Fed meeting worried monetary policy was not having the sort of impact that would be typically expected from the highest interest rates in a quarter of a century.
Data since then have shown a massive 303,000 jobs were added in March, the pace of consumer price increases accelerated, and even low-income households continued to spend.
The strength of the economy, policymakers suggest, is one reason they could wait to cut rates and be sure inflation will resume its decline.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Dan Burns and Paul Simao
https://www.reuters.com/markets/us/feds ... 024-04-16/