POLITICS

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BUSINESS INSIDER

"The US economy will grind to a halt in the 2nd half of 2023 and the following year won't be much better, BofA says as it slashes its growth forecast"


bevans@insider.com (Brian Evans)

20 JUNE 2022

* Bank of America analysts expect US economic growth to slow to near zero by the second half of 2023.

* While the risk of a recession this year is low, BofA sees a 40% probability starting next year.

* And 2024 isn't looking much better, as analysts see only "a modest rebound" by then.


Bank of America has sounded the alarm on the US economy, predicting growth will stall next year and that the likelihood of a recession will surge.

In a note published on Friday — two days after the Federal Reserve hiked interest rates by 75 basis points — analysts said the Fed was too slow to aggressively tackle inflation, which is running at a 40-year high, and abruptly scrambling to get on top of it.

Now the bank sees GDP growth slowing to nearly zero by the second half of 2023 because of the influence of tighter financial conditions.

While the risk of recession this year is low, Bank of America sees a 40% probability starting next year.

And 2024 isn't looking much better, as analysts see only "a modest rebound" by then.

"Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up," the note said.

Despite the Fed's more hawkish stance, the bank doesn't see inflation cooling enough to get down to the central bank's 2% target.

Instead, it will persist around 3%, it said.

While supply problems and demand for goods will ease, inflation expectations are anchoring at higher levels and wage pressures will likely be tough to reverse.

But the Fed is perhaps finally catching up to properly attack inflation, Bank of America said, and Wednesday's rate hike was a strong step in the right direction.

Still, analysts aren't confident the Fed will know what to do after it completes its tightening cycle.

While policymakers' forecasts suggest a rate cut in 2024, Bank of America doesn't think so: "Our baseline forecast assumes the Fed will be like a deer in the headlights: unsure over whether to react to very weak growth or still high inflation."

Even with its gloomy outlook, the bank said it's vulnerable to downside risk, noting external shocks from the Ukraine war, energy prices, and sanctions extending to Russian supporters like China.

The main domestic risk to the forecast is if the Fed is commits to lowering inflation to its 2% target because getting to there would require policy that's so tight it would trigger a recession.

For his part, Fed Chair Jerome Powell reiterated the central bank's posture Friday, telling conference attendees that "my colleagues and I are acutely focused on returning inflation to our 2% objective."

If the Fed does induce a recession, there is one bright spot, Bank of America said: "It is easier for the Fed to manage a sharp slowdown if Fed policy is the cause of the slowdown."

"For the same reasons we think that if there is a recession it will be mild."

https://www.msn.com/en-us/money/markets ... d0b53c3122
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Re: POLITICS

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FOX BUSINESS NEWS

"Obama called gas tax holiday a ‘gimmick’ back in 2008 as Biden now says he’s considering it"


Landon Mion

21 JUNE 2022

President Joe Biden said Monday he is considering creating a federal gas tax holiday, which could save Americans as much as 18.4 cents per gallon, although his ex-boss, former President Barack Obama, called such a move a "gimmick" on the campaign trail back in 2008.

Biden told reporters after taking a walk along the beach near his vacation home in Delaware that he will decide by the end of the week whether to pause the federal gas tax.

"Yes, I’m considering it," Biden said.

"I hope to have a decision based on the data — I’m looking for by the end of the week."

The president's comments paint a stark contrast to presidential candidate and then-Illinois Sen. Obama's words from 2008.

Biden's former boss said at the time that a gas tax holiday was a "gimmick" to save Americans half a tank of gas over the summer so that lawmakers could "say that they did something."


"We don't know that the oil companies will actually pass on the savings," Obama said at a speech in North Carolina in April 2008.

"So you're saving 5% in terms of the gas tax."

"It's not clear what would prevent the oil companies from just jacking up prices 5%."

"So you end up giving them more money."

"And we've drained the Highway Trust Fund."

"Now, this is the problem with Washington."

"We're facing a situation where oil prices could hit $200 a barrel."

"Oil companies like Shell and BP just reported record profits for the quarter and we're arguing over a gimmick to save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say that they did something," he continued.


The idea to pause the federal gas tax was supported by two opponents in the 2008 presidential race — former GOP Arizona Sen. John McCain and former Democratic New York Sen. Hillary Clinton.

Biden also said during his remarks Monday that members of his team will meet with major oil company CEOs this week to discuss rising prices at the pump.

His administration is evaluating options to alleviate the burden of record-high gas prices.

The cost of gas began to soar last fall and continued to rise following Russia's invasion of Ukraine in late February.

The nationwide average for gas prices currently sits at $4.98 a gallon, according to AAA.

Before this year, the highest national gas price average ever recorded by AAA was $4.114 per gallon in July 2008.

The president accused oil refiners of driving up gas prices in letters sent last week to seven refinery operators, including ExxonMobil and BP.

"The sharp rise in gasoline prices is not driven only by rising oil prices, but by an unprecedented disconnect between the price of oil and the price of gas," Biden's letters read.

But oil refiners have said their ability to produce additional gas and diesel fuel is limited.

The American Petroleum Institute and American Fuel & Petrochemical Manufacturers sent a joint letter to Biden on Wednesday saying that refineries are already operating close to their maximum capacity and nearly half of the capacity taken off-line was because of the facilities converting to renewable energy production.

"Today’s situation did not materialize overnight and will not be quickly solved," the letter read.

"To protect and foster U.S. energy security and refining capacity, we urge to you to take steps to encourage more domestic energy production, including new infrastructure and reducing regulatory burdens."

The Penn Wharton Budget Model published estimates Wednesday revealing that gas tax holidays in Georgia, Maryland and Connecticut saved consumers money at the pump.

Most of the savings went to consumers, not service stations and others in the energy sector.

Treasury Secretary Janet Yellen said in Toronto on Monday at a joint press conference with Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland that consumers "are really hurting from higher gas prices" and suggested she is open to a gas tax holiday.

"It’s been a substantial burden on American households and I think, while not perfect, it is something that should be under some consideration as a policy to address it," Yellen said.

Energy Secretary Jennifer Granholm, however, said Sunday on CNN's "State of the Union" that "part of the challenge with the gas tax, of course, is that it funds the roads."

House Speaker Nancy Pelosi and Senate Minority Leader Mitch McConnell have each previously expressed skepticism about pausing the federal gas tax.

https://www.msn.com/en-us/news/politics ... d0b53c3122
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REUTERS

"U.S. home sales slide as prices break above $400,000 for first time"


By Lucia Mutikani

June 21, 2022

Summary

* Existing home sales fall 3.4% in May

* Median house price surges 14.8% to $407,600 from year ago

* Housing inventory falls 4.1% from year ago

* Chicago Fed National Activity Index falls to 0.01 in May


WASHINGTON, June 21 (Reuters) - U.S. existing home sales tumbled to a two-year low in May as prices jumped to a record high - topping the $400,000 mark for the first time - and mortgage rates increased further, pushing out entry-level buyers from the market.

Despite the fourth straight monthly drop in sales and declining affordability, reported by the National Association of Realtors on Tuesday, the housing market remains fairly hot, with properties typically staying on the market for a record low 16 days.

With supply still undesirably low, prices could remain elevated, though sellers are reducing the list price in some areas where bidding wars were prevalent.

"Existing home sales should continue to slow over the course of the year as mortgage rates move higher," said David Berson, chief economist at Nationwide in Columbus, Ohio.

"But in the absence of a deep and sustained economic downturn, home sales should not drop as they did in the housing bust - allowing prices to continue to move higher on average."

Existing home sales fell 3.4% to a seasonally adjusted annual rate of 5.41 million units last month, the lowest level since June 2020 when sales were rebounding from the COVID-19 lockdown slump.

Sales rose in the Northeast, but declined in the Midwest, the West and densely populated South.

Economists polled by Reuters had forecast sales would decrease to a rate of 5.40 million units.

They estimate that a housing market downturn would need sales to drop to between a rate of 4.0 million to 4.5 million.

Home resales, which account for the bulk of U.S. home sales, tumbled 8.6% on a year-on-year basis last month.

Sales in May were mostly closings on contracts signed one to two months ago, before mortgage rates started accelerating amid a surge in inflation expectations and the Federal Reserve's aggressive interest rate hikes.

The average contract rate on a 30-year fixed-rate mortgage jumped 55 basis points last week to a 13-1/2-year high of 5.78%, according to data from mortgage finance agency Freddie Mac.

That was the largest one-week increase since 1987.

The rate has surged more than 250 basis points since January.

The report joined housing starts, building permits and homebuilder sentiment in suggesting that the housing market was losing speed under the weight of higher borrowing costs.

It was also the latest indication that the U.S. central bank's rapid monetary policy tightening was slowing the overall economy.

That was underscored by a separate report from the Chicago Fed on Tuesday showing its National Activity Index fell to a reading of 0.01 in May from 0.40 in April, which it said "suggests economic growth declined in May."

A zero value for the monthly index has been associated with the economy expanding at trend growth.

Fears of a recession have been mounting in the wake of the Fed's decision last week to raise its policy rate by three-quarters of a percentage point, its biggest hike since 1994.

The Fed has increased its benchmark overnight interest rate by 150 basis points since March.

U.S. stocks on Wall Street rebounded on Tuesday from recent sharp losses.

The dollar fell against a basket of currencies.

U.S. Treasury yields rose.

SLOWING MIGRATION

The housing market is the sector most sensitive to interest rates.

Its slowdown could help to bring housing supply and demand back into alignment and slow price growth.

The median existing house price raced 14.8% from a year earlier to an all-time high of $407,600 in May, crossing the $400,000 level for the first time.

The $250,000-$500,000 price bracket accounted for 42.0% of the houses sold last month, with the $500,000-$750,000 segment making up 19.3%.

Only 19.5% of the homes sold were in the sought-after $100,000-$250,000 price range.

Double-digit price growth was registered in the South and West.

But the pandemic-driven migration to some areas in the South is slowing, which could help tame the price appreciation.

"The affordability migration will lose some steam now that interest rates have risen, which will make it a bit tougher to sell homes in those higher-price markets," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.

There were 1.16 million previously owned homes on the market, following a seasonal monthly bump of 12.6%.

Supply remained 4.1% down year-on-year.

The steady monthly improvement could continue, with government data last week showing housing completions in May increased to the highest level since 2007.

At May's sales pace, it would take 2.6 months to exhaust the current inventory of existing homes, up from 2.5 months a year ago.

A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

Eighty-eight percent of homes sold in May were on the market for less than a month.

First-time buyers accounted for just 27% of sales, which economists said also explained why double-digit home price growth persists even as discounts become more common.

All-cash sales made up 25% of transactions - those are mostly Wall Street institutions taking advantage of the rising demand for renting.

Reporting by Lucia Mutikani; Editing by Dan Burns and Paul Simao

https://www.reuters.com/markets/us/us-e ... 022-06-21/
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REUTERS

"Germany risks recession as Russian gas crisis deepens"


By Rachel More and Stine Jacobsen

June 21, 2022

Summary

* More Europeans activate first stage of gas crisis plans

* Surging gas price adds to policymakers' inflation headache

* Slowing flows hinder efforts to refill storage for winter

* 'We have a problem', says German regulator


BERLIN/COPENHAGEN, June 21 (Reuters) - Germany faces certain recession if faltering Russian gas supplies stop completely, an industry body warned on Tuesday, and Italy said it would consider offering financial backing to help companies refill gas storage to avoid a deeper crisis in winter.

European Union states from the Baltic Sea in the north to the Adriatic in the south have outlined measures to cope with a supply crisis after Russia's invasion of Ukraine put energy at the heart of an economic battle between Moscow and the West.

The EU relied on Russia for as much as 40% of its gas needs before the war - rising to 55% for Germany - leaving a huge gap to fill in an already tight global gas market.

Some countries have responded by temporarily reversing plans to shut coal power plants.

Gas prices have hit record levels, driving a surge in inflation and adding to challenges for policymakers trying to haul Europe back from an economic precipice.

Germany's BDI industry association on Tuesday cut its economic growth forecast for 2022 to 1.5% from the 3.5% expected before the war began on Feb. 24.

It said a halt in Russian gas deliveries would make recession in Europe's largest economy inevitable.

Russian gas is still being pumped via Ukraine but at a reduced rate.

The Nord Stream 1 pipeline under the Baltic, a vital supply route to Germany, is working at just 40% capacity.

Moscow says Western sanctions are hindering repairs; Europe says this is a pretext to reduce flows.

German Economy Minister Robert Habeck said the reduced supplies amounted to an economic attack and part of Russian President Vladimir Putin's plan to stir up fear.

"This is a new dimension," Habeck said.

"This strategy cannot be allowed to succeed."

The slowdown has hampered Europe's efforts to refill storage facilities, now about 55% full, to meet an EU-wide target of 80% by October and 90% by November, a level that would help see the bloc through winter if supplies were disrupted further.

On Tuesday, Italy's government announced initial measures to boost gas storage after energy company Eni reported a shortfall in flows from Russia for more than a week.

Ecological Transition Minister Roberto Cingolani said in a statement the government planned to purchase coal if it needed to use coal-fired power plants to save gas.

Cingolani also asked gas grid operator Snam to adopt measures to help bring gas stockpiles to around their targeted level for June.

The benchmark gas price for Europe was trading around 126 euros ($133) per megawatt hour (MWh), below this year's peak of 335 euros but up more than 300% from a year ago.

'WE HAVE A PROBLEM'

Countries other than Italy, including Austria, Denmark, Germany and the Netherlands, have activated the first early warning stage of a three-stage plan to cope with a gas supply crisis.

Germany's Bundesnetzagentur gas regulator outlined details of a new auction system to start in coming weeks, aimed at encouraging manufacturers to consume less gas.

The head of the Bundesnetzagentur questioned whether current gas deliveries would get the country through the winter.

Earlier, he said it was too soon to declare an all-out emergency, or the third stage of the crisis plan.

"As it stands today, we have a problem," Bundesnetzagentur President Klaus Mueller said on the sidelines of an industry event.

The CEO of Germany's largest power utility RWE Markus Krebber said Europe had little time to plan.

"How would we re-distribute the gas if we were fully cut off?"

"There is currently no plan ... at European level ... as every country is looking at their emergency plan," he told the same event.

Soaring European prices have attracted more liquefied natural gas (LNG) cargoes, but Europe lacks the infrastructure to meet all its needs from LNG, a market that was stretched even before the Ukraine war.

Disruptions to a major U.S. LNG producer added to the challenge.

Europe is seeking more pipeline supplies from its own producers, such as Norway, and other states, including Azerbaijan, but most producers are already pushing the limits of output.

Even small consumer Sweden has joined European allies in triggering the first stage of its energy crisis plan.

The state energy agency said supplies remained robust but it was signalling "to industry players and gas consumers connected to the western Swedish gas network, that the gas market is strained and a deteriorating gas supply situation may arise".

Sweden, where gas accounted for 3% of energy consumption in 2020, depends on piped gas supplies from Denmark, where storage facilities are now 75% full.

Denmark activated the first stage of its emergency plan on Monday.

Reporting by Rachel More and Paul Carrel in Berlin, Stine Jacobsen in Copenhagen, Nina Chestney in London, Giuseppe Fonte and Francesca Landini in Rome, Christoph Steitz and Vera Eckert in Frankfurt; Writing by Edmund Blair and Barbara Lewis; Editing by Carmel Crimmins, Mark Potter and David Gregorio

https://www.reuters.com/markets/europe/ ... 022-06-21/
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Re: POLITICS

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REUTERS

"Biden says U.S. gas tax holiday would have no major impact on highway funds"


Reuters

June 21, 2022

WASHINGTON, June 21 (Reuters) - U.S. President Joe Biden on Tuesday said a potential suspension of the federal gasoline tax would have some, but not significant, impact on highway funds.

Biden said he would decide by the end of the week on whether to ask Congress to suspend the tax to help with high gas prices.

The revenue from the gas tax is used to help fund highway and other transportation projects.

Reporting By Trevor Hunnicutt and Jarrett Renshaw; editing by Jonathan Oatis

https://www.reuters.com/markets/us/bide ... 022-06-21/
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REUTERS

"Deep rift lies behind Biden's criticism of oil and gas industry"


By Nandita Bose, Jarrett Renshaw

JUNE 22, 2022

WASHINGTON (Reuters) - U.S. President Joe Biden has publicly criticized oil and gas executives for banking big profits from high gasoline prices but he has rarely spoken directly to the heads of energy companies or their representatives, White House records and interviews with industry sources show.

Biden said at a labor union event this month that Exxon Mobil Corp “made more money than God this year” and sent a letter to seven oil and gas companies calling on them to increase production to help ease the burden on consumers.

His actual engagement with energy company officials is rare, however, according to the industry sources and records, a marked contrast to Biden’s meetings with top executives in retail, logistics and agriculture, as the government grapples with inflation at a 40-year high and supply chain snarls.


Gas prices on average at the pump have not been as high for decades, including during the late 1970s energy crisis.

The Biden White House’s testy relationship with the fossil fuel industry has grown even more complicated as Russia’s invasion of Ukraine cut global energy supplies and sent crude oil and natural gas prices skyrocketing.

Biden, who campaigned on a promise to reduce dependence on fossil fuels which contribute carbon emissions linked to climate change, is leaning on the industry to curb inflation.

Oil and gas companies are reaping higher profits than they have in decades and mostly returning that windfall to shareholders in the form of buybacks.


Industry executives complain Biden isn’t asking for help in the right way.

“Your administration has largely sought to criticize, and at times vilify, our industry,” Chevron CEO Michael Wirth wrote in an open letter to Biden released on Tuesday.

“The outreach from the administration is lacking,” said Frank Macchiarola, a senior policy executive at the American Petroleum Institute trade body.

Asked about the Chevron CEO’s letter, Biden said “I didn’t know they’d get their feelings hurt that easily.”

CARROT-AND-STICK APPROACH

The Biden administration has forged a carrot-and-stick relationship with many companies, criticizing some corporate practices and egging on unions while offering some industry-friendly changes and hands-on support on issues like backed-up ports.

Last year, the White House held four meetings with chief executives to tackle a supply chain crisis that led to a shortage of goods around the Christmas holidays.

Biden participated in three of those, according to White House records; none involved oil and gas companies.

White House officials worked closely with tech companies to curb misinformation about COVID-19, executives involved told Reuters.

Biden met retailers and infant formula manufacturers as his administration tackled a shortage of baby formula.

However, he has met only once with chief executives of Exxon, Chevron and ConocoPhillips, as part of a larger briefing of energy, manufacturing, shipping and banking to discuss the Ukraine crisis, a March event hosted by the Business Roundtable.

This month, when Exxon and Chevron requested a White House meeting for their chief executives, they saw Brian Deese, who heads Biden’s National Economic Council.

When asked by Reuters on June 20, if he will sit down with oil and gas CEO’s, Biden said, “No ... because my team is going to do that.”

The White House said in a statement to Reuters that in addition to the many meetings with Cabinet secretaries, oil industry executives have met with White House officials on more than a dozen separate occasions over the past year.

A White House official did not offer a breakdown of when the meetings were conducted and who participated in them.

“President Biden has made clear that he is prepared to use all the tools available to him to reduce gas prices for the American people,” the official said.

The departure of Cedric Richmond, director of the Office of Public Engagement, has coincided with less contact in the White House, industry officials said.

Biden’s climate adviser Gina McCarthy, who has regularly met with oil and gas industry officials in the past is not taking such meetings.

Biden directed U.S. Energy Secretary Jennifer Granholm to convene an emergency meeting with industry officials, which is scheduled for Thursday.

GAS PRICES ARE POLITICAL

Western sanctions imposed on Russia for its invasion of Ukraine led to low supplies of fuel and oil in Europe, forcing European nations to compete for barrels with the United States.

Crude prices have doubled since Biden took office, and gasoline prices have jumped to an all-time record.

American voters’ worries about the economy are their top concern, opinion polls show, and are a major drag on Democrat Biden’s popularity.

Blaming energy companies is unlikely to encourage them to spend more on increasing supplies, especially when Democrats and investors have spent the last few years pushing for lower carbon emissions, industry experts said.

The industry has favored Republicans in U.S. elections for decades.

Ed Hirs, an energy economist at University of Houston, said Biden’s open vilification of the oil industry represented an “old playbook” that rarely works and only ensures the two sides refuse to talk.

“I have not seen this much vitriol since the 1970s,” Hirs said.


Reporting by Nandita Bose and Jarrett Renshaw in Washington; Editing by Heather Timmons, David Gaffen and Grant McCool

https://www.reuters.com/article/usa-bid ... SL4N2Y7281
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REUTERS

"Fed's Evans: another big rate hike 'reasonable' for July"


By Ann Saphir

JUNE 22, 2022

(Reuters) - Chicago Federal Reserve Bank President Charles Evans on Wednesday signaled he would likely back another big interest rate hike in July unless inflation data improves, saying the Fed’s top priority is to “take the steam” out of price pressures.

“Seventy-five (basis points) is a very reasonable place to have a discussion,” Evans told reporters after a talk in Cedar Rapids, Iowa, when asked about his outlook for the Fed’s July policy decision.

“I think 75 would be in line with continued strong concerns that the inflation data isn’t coming down as quickly as we thought.”

The Fed raised rates by 75 basis points last week, to a target range of 1.5%-1.75%, and most policymakers see the policy rate at between 3.25%-3.5% by the end of the year.

Fast-rising rates do increase the risk of a downturn, Evans said.

“We’re obviously taking on risk when we want to slow demand, to keep it in line with supply,” Evans said.

“To think that we can fine tune something like this with tremendous precision -- I mean, we just don’t have that ability.”

Most Fed policymakers still believe a “soft landing” is possible, forecasting a slowdown in growth to just below its long-run trend of 1.8% next year, and an increase in the unemployment rate, now 3.6%, to 4.1% by 2024.

“The challenge for monetary policy that’s always trying to engineer a soft landing during a rising rate environment is something else happens and then that’s the additional shock that takes the economy down,” he said.

That was what happened in 1991, he said, when Iraq’s invasion of Kuwait tipped the economy into recession.


Russia’s war in Ukraine and China’s COVID lockdowns are among the risks, but that cannot stop the Fed from doing its job, he said.

“The first thing that we’re looking at is to make sure we take the steam out of the inflation pressures,” he said, adding that there is “tremendous” consensus at the Fed that rates need to be high enough to be modestly restrictive on growth.

Reporting by Ann Saphir; editing by Jonathan Oatis and Chizu Nomiyama

https://www.reuters.com/article/usa-fed ... SL1N2Y928O
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REUTERS

"Fed's Powell: committed to inflation fight, not trying to trigger recession"


By Ann Saphir and Lindsay Dunsmuir

June 22, 2022

June 22 (Reuters) - The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, U.S. central bank chief Jerome Powell said on Wednesday.

"We are not trying to provoke, and I don't think we will need to provoke, a recession," Powell said at a hearing before the U.S. Senate Banking Committee, although he acknowledged that a recession was "certainly a possibility" and events in the last few months around the world had made it more difficult to reduce inflation without causing one.

"It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all," Powell said.

The Fed in coming months will be looking for "compelling evidence" of slowing price pressures before it eases up on the interest rate increases it kicked off three months ago.

Inflation continues to run at least three times higher than the Fed's targeted level of 2%.

A gauge of price increases that excludes volatile food and energy costs may have eased somewhat last month, Powell testified, but Russia's invasion of Ukraine and COVID-19 lockdowns in China are putting continued upward pressure on inflation.

One week ago, the Fed raised its benchmark overnight interest rate by three-quarters of a percentage point - its biggest hike since 1994 - to a range of 1.50% to 1.75%, and signaled rates would rise to 3.4% by the end of this year.

That steep rate hike path, designed to slow the economy, has sparked widespread concern about a recession and a weakening of labor markets, which Powell on Wednesday said were unsustainably hot.

On Wednesday, Powell reiterated that ongoing increases in the Fed's policy rate would be appropriate, with the exact pace dependent on the economic outlook.

He declined to rule out a 100-basis-point move if it proved warranted.

"Inflation has obviously surprised to the upside over the past year, and further surprises could be in store," he said, repeating that policymakers would need to be nimble in response to the incoming data.

'COUGHING UP BONES'

Since the June 14-15 policy meeting, a number of Powell's fellow policymakers have lined up behind his comments last week that the central bank will very likely need to raise rates by either 50 or 75 basis points at its next meeting in July.

Earlier on Wednesday, Philadelphia Fed President Patrick Harker said incoming data would govern which of the two options to deliver.

Chicago Fed President Charles Evans signaled later on Wednesday that he also is comfortable for now with continued rapid rate hikes, even as he nodded to the rising recession risk.

"To think that we can fine tune something like this with tremendous precision -- I mean, we just don't have that ability," Evans said.

Even so, he added, there's "tremendous" consensus at the Fed for getting rates into modestly restrictive territory.

"The first thing that we're looking at is to make sure we take the steam out of the inflation pressures," he said.

But in an indication of how inflation has emerged as a thorny political issue that threatens to tip the balance of power in Congress to Republicans in elections this November, Powell found himself under fire from both the left and right.

Senator Elizabeth Warren, a Democrat representing Massachusetts, took the Fed to task for pushing through rate hikes that raised the risk of a recession that could put millions out of work.

Republican Senator John Kennedy of Louisiana, in one of the more heated criticisms of the Fed's response to inflation, said inflation was hitting his constituents "so hard they are coughing up bones."


Overall, Powell did not stray far from his remarks in his news conference that followed the Fed's latest policy meeting, but his assertion that financial conditions had "tightened significantly" seems significant and may herald a slower pace of rate hikes, Karim Basta, chief economist at III Capital Management, wrote in a note.

Interest rate futures ticked higher through the course of Powell's appearance, as traders moderated expectations for additional big rate increases at the Fed's remaining four policy meetings of the year.

Economists polled by Reuters before the appearance see the Fed delivering another 75-basis-point interest rate hike in July, followed by a half-percentage-point rise in September, with no scaling back to quarter-percentage-point moves until November at the earliest.

Fed officials' latest projections see economic growth slowing to below trend this year while the U.S. unemployment rate - currently 3.6% - starts to tick higher.

Meanwhile, they now expect inflation by year-end to drop only to 5.2% by their preferred measure, which registered 6.3% as of April.

Reporting by Dan Burns, Ann Saphir and Lindsay Dunsmuir; Editing by Chizu Nomiyama and Paul Simao

https://www.reuters.com/markets/us/fed- ... 022-06-22/
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USA TODAY

"Biden to propose three-month federal gas tax holiday to ease soaring prices at the pump"


Joey Garrison, USA TODAY

22 JUNE 2022

WASHINGTON — President Joe Biden will ask Congress on Wednesday to suspend the federal gas tax for the next three months in one of his administration's most aggressive and controversial efforts to give Americans immediate relief as gas prices soar above $5 a gallon in many states.

The president also plans to call on states and local governments to temporarily suspend their gas taxes, according to senior administration officials who discussed the push on the condition of anonymity ahead of a 2 p.m. ET speech when Biden will formally make his case.

A three-month federal gas tax holiday would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel that drivers pay when they fill their tanks.

The administration is billing the gas tax holiday as a way to provide some "breathing room" as it works to bring costs down over the long term.

The pause, which the White House envisions lasting through September, would require congressional approval.

Revenue from the federal gas tax funds the Highway Trust Fund, which is used to pay for transportation and mass transit projects.

Biden wants Congress to offset the loss of highway funds – estimated to be about $10 billion – with other federal tax revenue.

With the federal government's deficit down $1.6 trillion this year, the U.S. can afford to pause the gas tax, an administration official said.


Biden's push comes as he's struggled to rein in historic gas prices amid skyrocketing inflation that has taken a toll on his presidency ahead of the November midterm elections.

Suspending the gas tax is one of the quickest steps he can take to try to ease the pain for drivers.

The national average for a gallon of gas was $4.968 on Wednesday, according to AAA, jumping more than $1.50 since Russia's February invasion of Ukraine.

And yet a federal gas tax holiday, floated over the years but never enacted, has plenty of critics.

Larry Summers, former Treasury secretary in the Clinton administration and an economic advisor for President Barack Obama, this week called it "a gimmick" that doesn't solve the underlying issues causing the price spike.


Some economists warn it could drive up inflation once the holiday ends, deplete transportation funds and only reduce a fraction of the overall historic spike in gas prices.

Environmentalists have argued a gas tax holiday undermines the goal of moving toward clean energy.

There's also no guarantee Biden's gas tax holiday proposal will pass Congress, where Democrats would need 60 votes in the evenly divided Senate to overcome any filibuster from Republicans.

A coalition of Senate Democrats from battleground states – including Raphael Warnock, D-Ga., Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H. – in February proposed suspending the gas tax through the end of the year.

But the legislation faced resistance from Republicans who slammed it as a political stunt to help Democrats in the midterms.

The White House never rallied behind the legislation, which did not advance, but remained open to it publicly.

All 50 states, as well as the District of Columbia, impose a gasoline tax, with the revenue typically paying for transportation and other infrastructure projects.

The average state gas tax is about 29 cents nationwide, with California paying the highest rate and Alaska the lowest.

The White House wants states, as well as cities that have gas fees, to replicate Connecticut, New York, Maryland and other states that temporarily suspended gas taxes this spring amid rising inflation.

One common concern raised by critics of a federal gas tax holiday is that oil companies will pocket the tax cut.

But new research suggests that might not be the case.

The Wharton School of the University of Pennsylvania released budget estimates last week showing the majority of cost savings during gas tax holidays that Maryland, Connecticut and Georgia enacted this year went to consumers instead of gas companies or filling stations.

In Maryland, 72% of all tax savings passed to consumers, the study found.

In Georgia, it was between 58% and 65%, and in Connecticut between 71% and 87%.

The federal gas tax, created in 1932 during the Great Depression, has stayed at 18.4 cents a gallon since 1993.

Biden will also use his speech Wednesday to renew his call for oil companies to increase refinery capacity and output and for retailers to pass savings on to consumers as the price of oil.

The president has criticized oil company CEOs for collecting $35 billion in profits during the first quarter of 2022 as gas prices spiked.

Energy Secretary Jennifer Granholm is set to meet with oil company executives later this week.

The Biden administration projects consumers could save $1 per gallon if retailers and oil companies take action and state gas taxes and the federal gas tax are suspended.

In other efforts aimed at reducing gas prices, Biden ordered the release of up to 180 million barrels of oil from the Strategic Petroleum Reserve and lifted restrictions on biofuels such as E15 gasoline.

Reach Joey Garrison on Twitter @joeygarrison.

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Re: POLITICS

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THE BOSTON GLOBE

"Even Democrats now agree: Biden is too old for his job"


Opinion by Jeff Jacoby

22 June 2022

Playing the age card against an elderly opponent is a familiar maneuver in American politics.

Joe Biden knows all about that.

When he first ran for the US Senate from Delaware in 1972, he was a 29-year-old challenging an incumbent 33 years his senior.

Republican Senator Cale Boggs had first won election to Congress in 1946, and Biden did his best to paint his opponent, politely but pointedly, as washed up.


Boggs was a “helluva nice guy,” Biden would tell reporters, but he “has lost that twinkle in his eyes” and was “just not a fighter.”

He ran ads none-too-subtly painting the incumbent as a relic from a bygone era.

“In 1950 Cale Boggs hoped to make Americans safe from Stalin."

"In 1972 Joe Biden hopes to make Americans safe from criminals,” declared one ad.

“To Cale Boggs an unfair tax was the 1948 poll tax."

"To Joe Biden an unfair tax is the 1972 income tax,” said another.

Decades later, when Biden was Barack Obama’s running mate, it was John McCain whose age became a political issue.

In a TV spot, the Obama/Biden campaign played up McCain’s decades on Capitol Hill, jeering his supposed inability to send an e-mail or use a computer.

“Things have changed in the last 26 years,” intoned the narrator, “but McCain hasn’t.”


Now it’s Biden’s turn.

He is by a significant margin the oldest man ever elected president.

At 79, just 17 months in office, he is older than any of his predecessors were at the end of their presidency.

When Ronald Reagan stepped down after eight years in the White House, he was two weeks shy of his 78th birthday and showing unmistakable signs of decline and fatigue.

(Five years later, he would be diagnosed with Alzheimer’s.)

Biden, too, shows unmistakable signs of decline and fatigue, and it’s no longer taboo to say so.

To be sure, Republicans made much of Biden’s age during the presidential campaign.

But now even his Democratic supporters and allies talk about how much he has lost off his fastball.

In a Page 1 story last week, The New York Times noted that in interviews with dozens of Democratic officials across the country, “nearly all” said Biden’s age is causing “deep concern about his political viability.”


Writing in The Atlantic a few days later, Mark Leibovich remarked that if Biden had been an airline pilot, he would now be in his 15th year of retirement.

Had he been an air traffic controller, he would have had to retire at 56.

Federal regulations mandate compulsory departure times for those jobs because they are “life-and-death tasks that demand peak stamina and mental acuity."

"The pressure can be crushing [and] burnout is rampant.”

Needless to say, the presidency is an even higher-pressure, higher-demand, higher-stakes position.

Hence Leibovich’s bottom line: “Joe Biden should not run for reelection in 2024."

"He is too old.”

A growing number of voters agree.

In a Harvard-Harris poll last month, 62 percent of respondents said Biden “is showing he is too old to be president” and 53 percent said they have doubts about his mental fitness for office.

Among independents, those numbers were even higher — 72 percent (“too old”) and 61 percent (“doubts about his fitness”).

Politically and physically, this isn’t a problem from which Biden can recover.

There will be more and more moments in which he appears to be disoriented or abruptly loses his train of thought.

He will continue to make unscripted policy announcements that his staff will quickly walk back.

As it is, he does almost no extended interviews with journalists, and he holds far fewer press conferences than his last five predecessors.

That won’t change.


It is good that Biden’s fellow Democrats are now talking openly about the toll old age is taking on his abilities.

That will reduce the instinct to treat the issue as a partisan attack and make it easier for the party to begin searching for a younger standard-bearer for 2024.

It will also make it easier for Republicans to acknowledge that Donald Trump — who is only three years younger than Biden — is also too old to run for another term.

Like the incumbent he deposed to win a Senate seat, Biden may be a “helluva nice guy,” but he is visibly past his prime.

For the sake of his party and his country, he should take himself out of the 2024 race — not from a lack of ambition but from an abundance of statesmanship.


Jeff Jacoby is a Globe columnist. He can be reached at jeff.jacoby@globe.com. Follow him on Twitter @jeff_jacoby. To subscribe to Arguable, his weekly newsletter, visit bitly.com/Arguable.

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