THE WASHINGTON EXAMINER
"Biden didn't disclose FBI search because he was focused on 'things that matter,' White House says"
Story by Katherine Doyle
31 JANUARY 2023
The White House defended its failure to disclose an FBI search of President Joe Biden’s think tank in the weeks after the president’s attorneys found classified documents at the site.
Biden’s communications director said the president was cooperating with federal authorities but that his focus remains on his policy agenda.
“While he absolutely takes this seriously and continues to cooperate, he’s also continuing to focus on the things that matter in people’s lives,” Kate Bedingfield said in an interview with CNN on Tuesday, noting how the scandal “hasn’t impacted his approval ratings.”
“We have released multiple statements from the White House, and President Biden’s personal attorney has released multiple statements over the last month walking through the process and agreeing to be fully, fully cooperative with the Justice Department,” Bedingfield said.
“We have been clear from the outset that the president will cooperate with every request the Justice Department has, and we put out multiple statements describing that process.”
The FBI’s search of the Penn Biden Center in mid-November was conducted with the cooperation of Biden’s aides and did not require a warrant, two sources told CBS News.
The outlet said it was not immediately known whether the agency found additional documents.
Neither Biden’s attorneys nor the Justice Department had publicly disclosed the FBI’s search of the president’s Washington think tank.
Yet when the FBI searched Biden’s Delaware home on Jan. 20, Biden’s personal attorney Bob Bauer disclosed the search the following day.
Aides had promised “exhaustive” transparency in the White House’s handling of the case, which became public in early January when Biden’s attorneys confirmed a news report that about 10 classified documents dating to the Obama administration had been found at the Penn Biden Center for Global Engagement.
The White House did not respond to a request for comment.
https://www.msn.com/en-us/news/politics ... 201e9ccd67
POLITICS
Re: POLITICS
CNBC
"Fed raises rates a quarter point, expects ‘ongoing’ increases"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, FEB 1 2023
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point and gave little indication it is nearing the end of this hiking cycle.
Aligning with market expectations, the rate-setting Federal Open Market Committee boosted the federal funds rate by 0.25 percentage point.
That takes it to a target range of 4.5%-4.75%, the highest since October 2007.
The move marked the eighth increase in a process that began in March 2022.
By itself, the funds rate sets what banks charge each other for overnight borrowing, but it also spills through to many consumer debt products.
The Fed is targeting the hikes to bring down inflation that, despite recent signs of slowing, is still running near its highest level since the early 1980s.
The post-meeting statement noted that inflation “has eased somewhat but remains elevated,” a tweak on previous language.
“Inflation data received over the past three months show a welcome reduction in the monthly pace of increases,” Fed Chairman Jerome Powell said in his post-meeting news conference.
“And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
Markets, however, were looking to this week’s meeting for signs that the Fed would be ending the rate increases soon.
But the statement provided no such signals.
At first, stocks fell in the wake of the announcement, with the Dow Jones Industrial Average tumbling more than 300 points.
However, the market rebounded during Powell’s press conference, after he acknowledged that “the disinflationary process” had started.
Major averages ultimately turned positive as market commentary focused on Powell’s somewhat optimistic comments on progress against inflation.
“We can now say I think for the first time that the disinflationary process has started,” Powell said, while also noting that it would be “very premature to declare victory or to think we really got this.”
Still, the Fed’s statement included language noting that the FOMC still sees the need for “ongoing increases in the target range.”
Market participants had been hoping for some softening of the phrase, but the statement, approved unanimously, kept it intact.
The statement altered one part when describing what will determine the future policy path.
Officials said they would determine the “extent” of future rate increases based on factors such as the effects so far of the rate hikes, the lags in which policy has an impact, and developments in financial conditions and the economy.
Previously, the statement said it would use those factors to determine the “pace” of future hikes, a possible nod that the committee sees an end to the increases somewhere, or at least a continuation of smaller moves ahead.
In 2022, the Fed approved four consecutive 0.75 percentage point moves before going to a smaller 0.5 percentage point increase in December.
In recent public statements, multiple officials said they think the central bank at least can scale back on the size of the hikes, without signaling when they could end.
While it was raising its benchmark rate, the committee characterized economic growth as “modest” though it noted only that unemployment “has remained low.”
The latest job market assessment omitted previous language that employment gains have been “robust.“
Otherwise, the statement remained intact from previous messages as the Fed continues its efforts to arrest inflation.
Fed firmly focused on inflation
Fed policy is thought to work on a lag – when the central bank raises rates, it takes time for the economy to adjust to tighter controls on money.
This particular round of inflation started due to Covid-related factors such as clogged supply chains and surging demand for goods over services.
The war in Ukraine aggravated rising gas prices, while unprecedented fiscal and monetary stimulus fueled increasing costs across a variety of goods and services.
Food prices have risen more than 10% over the past year.
Egg prices alone have soared 60%, butter is up more than 31% and lettuce has jumped 25%, according to Labor Department data through December.
Gas prices were ticking lower toward the end of 2022 but have popped higher in recent days, hitting $3.50 a gallon nationally for an increase of about 30 cents over the past month, according to AAA.
Fed officials have remained resolute about tackling inflation, though they have said recent numbers show pressures could be easing.
The consumer price index declined 0.1% in December on a monthly basis and is up 6.5% from a year ago – down from the peak of 9% last summer but still well above where the Fed feels comfortable.
Fed’s bond buying
Along with the rate hikes, the Fed has been reducing the holdings in its bond portfolio.
That has resulted in a reduction of about $445 billion since June, as the Fed has targeted a capped level of $95 billion in maturing bonds it is allowing to roll off each month rather than reinvest.
The balance sheet reduction has been the equivalent of about 2 percentage points of additional rate hikes, according to the San Francisco Fed.
The balance sheet is still at more than $8.4 trillion.
Markets are watching for where the Fed will finally end the increases.
At the December FOMC meeting, committee members indicated they see the “terminal rate,” or point where the Fed thinks policy is sufficiently restrictive, as 5.1%.
Markets are betting that number is closer to 4.75%, and they expect the Fed to start cutting rates later this year, after one more quarter-point increase in March.
Responding to a question from CNBC’s Steve Liesman, Powell said it’s “possible” that the funds rate could stay lower than 5%.
But he also said it’s unlikely the Fed would cut rates this year unless inflation comes down more rapidly.
https://www.cnbc.com/2023/02/01/fed-rat ... -hike.html
"Fed raises rates a quarter point, expects ‘ongoing’ increases"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, FEB 1 2023
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point and gave little indication it is nearing the end of this hiking cycle.
Aligning with market expectations, the rate-setting Federal Open Market Committee boosted the federal funds rate by 0.25 percentage point.
That takes it to a target range of 4.5%-4.75%, the highest since October 2007.
The move marked the eighth increase in a process that began in March 2022.
By itself, the funds rate sets what banks charge each other for overnight borrowing, but it also spills through to many consumer debt products.
The Fed is targeting the hikes to bring down inflation that, despite recent signs of slowing, is still running near its highest level since the early 1980s.
The post-meeting statement noted that inflation “has eased somewhat but remains elevated,” a tweak on previous language.
“Inflation data received over the past three months show a welcome reduction in the monthly pace of increases,” Fed Chairman Jerome Powell said in his post-meeting news conference.
“And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
Markets, however, were looking to this week’s meeting for signs that the Fed would be ending the rate increases soon.
But the statement provided no such signals.
At first, stocks fell in the wake of the announcement, with the Dow Jones Industrial Average tumbling more than 300 points.
However, the market rebounded during Powell’s press conference, after he acknowledged that “the disinflationary process” had started.
Major averages ultimately turned positive as market commentary focused on Powell’s somewhat optimistic comments on progress against inflation.
“We can now say I think for the first time that the disinflationary process has started,” Powell said, while also noting that it would be “very premature to declare victory or to think we really got this.”
Still, the Fed’s statement included language noting that the FOMC still sees the need for “ongoing increases in the target range.”
Market participants had been hoping for some softening of the phrase, but the statement, approved unanimously, kept it intact.
The statement altered one part when describing what will determine the future policy path.
Officials said they would determine the “extent” of future rate increases based on factors such as the effects so far of the rate hikes, the lags in which policy has an impact, and developments in financial conditions and the economy.
Previously, the statement said it would use those factors to determine the “pace” of future hikes, a possible nod that the committee sees an end to the increases somewhere, or at least a continuation of smaller moves ahead.
In 2022, the Fed approved four consecutive 0.75 percentage point moves before going to a smaller 0.5 percentage point increase in December.
In recent public statements, multiple officials said they think the central bank at least can scale back on the size of the hikes, without signaling when they could end.
While it was raising its benchmark rate, the committee characterized economic growth as “modest” though it noted only that unemployment “has remained low.”
The latest job market assessment omitted previous language that employment gains have been “robust.“
Otherwise, the statement remained intact from previous messages as the Fed continues its efforts to arrest inflation.
Fed firmly focused on inflation
Fed policy is thought to work on a lag – when the central bank raises rates, it takes time for the economy to adjust to tighter controls on money.
This particular round of inflation started due to Covid-related factors such as clogged supply chains and surging demand for goods over services.
The war in Ukraine aggravated rising gas prices, while unprecedented fiscal and monetary stimulus fueled increasing costs across a variety of goods and services.
Food prices have risen more than 10% over the past year.
Egg prices alone have soared 60%, butter is up more than 31% and lettuce has jumped 25%, according to Labor Department data through December.
Gas prices were ticking lower toward the end of 2022 but have popped higher in recent days, hitting $3.50 a gallon nationally for an increase of about 30 cents over the past month, according to AAA.
Fed officials have remained resolute about tackling inflation, though they have said recent numbers show pressures could be easing.
The consumer price index declined 0.1% in December on a monthly basis and is up 6.5% from a year ago – down from the peak of 9% last summer but still well above where the Fed feels comfortable.
Fed’s bond buying
Along with the rate hikes, the Fed has been reducing the holdings in its bond portfolio.
That has resulted in a reduction of about $445 billion since June, as the Fed has targeted a capped level of $95 billion in maturing bonds it is allowing to roll off each month rather than reinvest.
The balance sheet reduction has been the equivalent of about 2 percentage points of additional rate hikes, according to the San Francisco Fed.
The balance sheet is still at more than $8.4 trillion.
Markets are watching for where the Fed will finally end the increases.
At the December FOMC meeting, committee members indicated they see the “terminal rate,” or point where the Fed thinks policy is sufficiently restrictive, as 5.1%.
Markets are betting that number is closer to 4.75%, and they expect the Fed to start cutting rates later this year, after one more quarter-point increase in March.
Responding to a question from CNBC’s Steve Liesman, Powell said it’s “possible” that the funds rate could stay lower than 5%.
But he also said it’s unlikely the Fed would cut rates this year unless inflation comes down more rapidly.
https://www.cnbc.com/2023/02/01/fed-rat ... -hike.html
Re: POLITICS
REUTERS
"Fed delivers small rate increase; Powell suggests 'couple' more hikes coming"
By Howard Schneider and Ann Saphir
February 1, 2023
Summary
* U.S. central bank raises rates by quarter percentage point
* Debate now turns to when Fed will stop rate hikes
* Fed's Powell says more evidence of ebbing inflation needed
WASHINGTON, Feb 1 (Reuters) - The Federal Reserve said on Wednesday it had turned a key corner in the fight against high inflation, but that "victory" would still require its benchmark overnight interest rate to be increased further and remain elevated at least through 2023.
In announcing its latest policy decision, the U.S. central bank scaled back to a quarter-percentage-point rate increase after a year of larger hikes and swept aside in its statement the long list of reasons, from war to the pandemic, that were driving prices higher to say simply that "inflation has eased."
Yet policymakers also projected "ongoing increases" in borrowing costs would be needed, a still open-ended commitment that did not yet pinpoint when the rate hikes might stop, and pushed back against an expectation in financial markets that the Fed would pause soon and, indeed, cut rates later this year.
Investors nevertheless took a dovish cue from remarks by Fed Chair Jerome Powell, who referred repeatedly during a news conference to the "disinflationary" process that now appeared to be underway.
Equity markets rose as Powell spoke and investors slightly boosted bets for coming rate cuts.
Meanwhile, Powell insisted that rate cuts are not in the offing, and took pains to walk what has become an increasingly fine line between the flow of data showing inflation in steady decline with the need to keep the public and investors attuned to the fact that interest rates will continue rising.
"We can now say for the first time that the disinflationary process has started," Powell told reporters after the end of the Fed's latest two-day policy meeting, with goods prices slowing, pandemic-related shortages easing, and supply chains getting back to normal.
"This is a good thing."
'EARLY STAGES'
From a peak of nearly 7% in June, the Fed's preferred measure of inflation was 5% in December, still well above its 2% target but heading steadily in the right direction.
Yet "it's just the early stages," Powell said.
"We're going to be cautious about declaring victory and ... sending signals that we think that the game is won, because we've got a long way to go."
Important segments of the economy, including broad swaths of the service sector, have yet to see inflation slow, the Fed chief said, while a high level of job openings and still-strong wage increases showed the labor market was "extremely tight."
"The labor market continues to be out of balance," Powell said, flagging the fact that Fed officials feel it is likely that the unemployment rate will need to rise from its current low level of 3.5% for inflation to complete the journey back to the 2% level.
The Fed's statement on Wednesday marked its first explicit acknowledgment of slowing inflation after a year in which prices accelerated much faster than anticipated - requiring a series of rapid three-quarters-of-a-percentage point and half-percentage-point rate increases to match the outbreak of rising prices.
Dynamics that the Fed during the past year has said were driving prices higher, including the pandemic, were either dropped from the statement altogether or, in the case of the war in Ukraine, cited only as a source of "global uncertainty" rather than inflation.
The rate hikes imposed by the Fed since March have now totaled 4.5 percentage points, with the policy rate now in a range between 4.50% and 4.75%, the highest since 2007.
That is reflected in an array of consumer borrowing costs from home mortgages to car loans.
The full impact of that monetary policy tightening has yet to be felt in the economy, but has so far been absorbed without derailing the "modest" economic growth and "robust" job gains that the Fed cited in its latest statement.
It is in part that resilience that has the central bank poised for "ongoing increases" in its policy interest rate.
With inflation still high and demand in the economy stronger than many anticipated, Powell said it remains unclear just how much higher rates will need to go.
As of December, Fed policymakers projected a peak policy rate in a range between 5.00% and 5.25%, consistent with what Powell said, as an aside during his news conference, were likely a "couple" more rate hikes to come.
Stocks, modestly lower ahead of the Fed rate decision, turned sharply higher as Powell spoke.
The benchmark S&P 500 index ended the day with just over a 1% gain.
At the same time, the yield on the 2-year Treasury note , the maturity most sensitive to Fed policy expectations, dropped abruptly and traded down more than 10 basis points at 4.10%.
The U.S. dollar slid against a basket of major trading partner currencies.
"If you were hoping for clear signs of an upcoming pause in interest rate hikes, you were left wanting."
"The Federal Reserve retained the phrase 'ongoing increases' in their statement, leaving their options open depending on what upcoming economic data says," said Greg McBride, chief financial analyst at Bankrate.
INFLATION TARGET REAFFIRMED
The Fed statement indicated that any future rate increases would be in quarter-percentage-point increments, dropping a reference to the "pace" of future increases and instead referring to the "extent" of rate changes.
Fed policymakers hope the central bank can continue nudging inflation lower without triggering a deep recession or causing a substantial rise in unemployment.
The Fed did not issue new economic projections from its policymakers on Wednesday, but did reaffirm its commitment to its 2% average inflation target as part of its annual review of operating principles.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Michael S. Derby; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 023-02-01/
"Fed delivers small rate increase; Powell suggests 'couple' more hikes coming"
By Howard Schneider and Ann Saphir
February 1, 2023
Summary
* U.S. central bank raises rates by quarter percentage point
* Debate now turns to when Fed will stop rate hikes
* Fed's Powell says more evidence of ebbing inflation needed
WASHINGTON, Feb 1 (Reuters) - The Federal Reserve said on Wednesday it had turned a key corner in the fight against high inflation, but that "victory" would still require its benchmark overnight interest rate to be increased further and remain elevated at least through 2023.
In announcing its latest policy decision, the U.S. central bank scaled back to a quarter-percentage-point rate increase after a year of larger hikes and swept aside in its statement the long list of reasons, from war to the pandemic, that were driving prices higher to say simply that "inflation has eased."
Yet policymakers also projected "ongoing increases" in borrowing costs would be needed, a still open-ended commitment that did not yet pinpoint when the rate hikes might stop, and pushed back against an expectation in financial markets that the Fed would pause soon and, indeed, cut rates later this year.
Investors nevertheless took a dovish cue from remarks by Fed Chair Jerome Powell, who referred repeatedly during a news conference to the "disinflationary" process that now appeared to be underway.
Equity markets rose as Powell spoke and investors slightly boosted bets for coming rate cuts.
Meanwhile, Powell insisted that rate cuts are not in the offing, and took pains to walk what has become an increasingly fine line between the flow of data showing inflation in steady decline with the need to keep the public and investors attuned to the fact that interest rates will continue rising.
"We can now say for the first time that the disinflationary process has started," Powell told reporters after the end of the Fed's latest two-day policy meeting, with goods prices slowing, pandemic-related shortages easing, and supply chains getting back to normal.
"This is a good thing."
'EARLY STAGES'
From a peak of nearly 7% in June, the Fed's preferred measure of inflation was 5% in December, still well above its 2% target but heading steadily in the right direction.
Yet "it's just the early stages," Powell said.
"We're going to be cautious about declaring victory and ... sending signals that we think that the game is won, because we've got a long way to go."
Important segments of the economy, including broad swaths of the service sector, have yet to see inflation slow, the Fed chief said, while a high level of job openings and still-strong wage increases showed the labor market was "extremely tight."
"The labor market continues to be out of balance," Powell said, flagging the fact that Fed officials feel it is likely that the unemployment rate will need to rise from its current low level of 3.5% for inflation to complete the journey back to the 2% level.
The Fed's statement on Wednesday marked its first explicit acknowledgment of slowing inflation after a year in which prices accelerated much faster than anticipated - requiring a series of rapid three-quarters-of-a-percentage point and half-percentage-point rate increases to match the outbreak of rising prices.
Dynamics that the Fed during the past year has said were driving prices higher, including the pandemic, were either dropped from the statement altogether or, in the case of the war in Ukraine, cited only as a source of "global uncertainty" rather than inflation.
The rate hikes imposed by the Fed since March have now totaled 4.5 percentage points, with the policy rate now in a range between 4.50% and 4.75%, the highest since 2007.
That is reflected in an array of consumer borrowing costs from home mortgages to car loans.
The full impact of that monetary policy tightening has yet to be felt in the economy, but has so far been absorbed without derailing the "modest" economic growth and "robust" job gains that the Fed cited in its latest statement.
It is in part that resilience that has the central bank poised for "ongoing increases" in its policy interest rate.
With inflation still high and demand in the economy stronger than many anticipated, Powell said it remains unclear just how much higher rates will need to go.
As of December, Fed policymakers projected a peak policy rate in a range between 5.00% and 5.25%, consistent with what Powell said, as an aside during his news conference, were likely a "couple" more rate hikes to come.
Stocks, modestly lower ahead of the Fed rate decision, turned sharply higher as Powell spoke.
The benchmark S&P 500 index ended the day with just over a 1% gain.
At the same time, the yield on the 2-year Treasury note , the maturity most sensitive to Fed policy expectations, dropped abruptly and traded down more than 10 basis points at 4.10%.
The U.S. dollar slid against a basket of major trading partner currencies.
"If you were hoping for clear signs of an upcoming pause in interest rate hikes, you were left wanting."
"The Federal Reserve retained the phrase 'ongoing increases' in their statement, leaving their options open depending on what upcoming economic data says," said Greg McBride, chief financial analyst at Bankrate.
INFLATION TARGET REAFFIRMED
The Fed statement indicated that any future rate increases would be in quarter-percentage-point increments, dropping a reference to the "pace" of future increases and instead referring to the "extent" of rate changes.
Fed policymakers hope the central bank can continue nudging inflation lower without triggering a deep recession or causing a substantial rise in unemployment.
The Fed did not issue new economic projections from its policymakers on Wednesday, but did reaffirm its commitment to its 2% average inflation target as part of its annual review of operating principles.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Michael S. Derby; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 023-02-01/
Re: POLITICS
REUTERS
"U.S. manufacturing sector sinks further in January - ISM"
Reuters
February 1, 2023
WASHINGTON, Feb 1(Reuters) - U.S. manufacturing contracted further in January as higher interest rates stifled demand for goods, but factories did not appear to be laying off workers in large numbers.
The Institute for Supply Management said on Wednesday that its manufacturing PMI dropped to 47.4 last month from 48.4 in December.
The third straight monthly contraction pushed the index to the lowest level since May 2020 and below the 48.7 mark viewed as consistent with a recession in the broader economy.
Economists polled by Reuters had forecast the index falling to 48.0.
A PMI reading below 50 indicates contraction in manufacturing, which accounts for 11.3% of the U.S. economy.
The Federal Reserve's fastest interest rate-hiking cycle since the 1980s as it fights inflation is undercutting demand for goods, which are mostly bought on credit.
The dollar's past appreciation against the currencies of the United States' main trade partners and a softening in global demand are also hurting manufacturing.
Spending is shifting back to services.
The weakness in the ISM mirrored a deterioration in the so-called hard manufacturing data.
Manufacturing production declined at a 2.5% annualized rate in the fourth quarter, data from the Fed showed last month.
The ISM survey's forward-looking new orders sub-index plunged to 42.5 in January from 45.1 in December.
It was the fifth straight month that this measure has contracted.
Weakening demand and improved raw material supplies have reduced the backlog of unfinished work at factories.
The survey's measure of supplier deliveries edged up to 45.6 from 45.1 in December.
A reading below 50 indicates faster deliveries to factories.
Stretched supply chains early in the COVID-19 pandemic as millions of Americans worked from home was one of the major drivers of inflation last year.
The combination of better supply and ebbing demand has resulted in a significant slowdown in consumer and wholesale inflation, with outright declines in monthly goods prices.
The ISM survey's measure of prices paid by manufacturers rose to 44.5 from 39.4 in December.
Despite demand being under pressure, factories are holding on to their workers, for now.
The ISM survey's measure of factory employment dipped to 50.6 from 50.8 in December.
But this gauge, which has swung up and down, has not been a good predictor of manufacturing payrolls in the government's closely watched employment report.
According to a Reuters survey of economists, manufacturing employment likely increased by 6,000 jobs in January after rising 8,000 in December.
Overall, nonfarm payrolls are forecast to have increased by 185,000 jobs last month.
The economy added 223,000 jobs in December.
January's employment report is due on Friday.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-m ... 023-02-01/
"U.S. manufacturing sector sinks further in January - ISM"
Reuters
February 1, 2023
WASHINGTON, Feb 1(Reuters) - U.S. manufacturing contracted further in January as higher interest rates stifled demand for goods, but factories did not appear to be laying off workers in large numbers.
The Institute for Supply Management said on Wednesday that its manufacturing PMI dropped to 47.4 last month from 48.4 in December.
The third straight monthly contraction pushed the index to the lowest level since May 2020 and below the 48.7 mark viewed as consistent with a recession in the broader economy.
Economists polled by Reuters had forecast the index falling to 48.0.
A PMI reading below 50 indicates contraction in manufacturing, which accounts for 11.3% of the U.S. economy.
The Federal Reserve's fastest interest rate-hiking cycle since the 1980s as it fights inflation is undercutting demand for goods, which are mostly bought on credit.
The dollar's past appreciation against the currencies of the United States' main trade partners and a softening in global demand are also hurting manufacturing.
Spending is shifting back to services.
The weakness in the ISM mirrored a deterioration in the so-called hard manufacturing data.
Manufacturing production declined at a 2.5% annualized rate in the fourth quarter, data from the Fed showed last month.
The ISM survey's forward-looking new orders sub-index plunged to 42.5 in January from 45.1 in December.
It was the fifth straight month that this measure has contracted.
Weakening demand and improved raw material supplies have reduced the backlog of unfinished work at factories.
The survey's measure of supplier deliveries edged up to 45.6 from 45.1 in December.
A reading below 50 indicates faster deliveries to factories.
Stretched supply chains early in the COVID-19 pandemic as millions of Americans worked from home was one of the major drivers of inflation last year.
The combination of better supply and ebbing demand has resulted in a significant slowdown in consumer and wholesale inflation, with outright declines in monthly goods prices.
The ISM survey's measure of prices paid by manufacturers rose to 44.5 from 39.4 in December.
Despite demand being under pressure, factories are holding on to their workers, for now.
The ISM survey's measure of factory employment dipped to 50.6 from 50.8 in December.
But this gauge, which has swung up and down, has not been a good predictor of manufacturing payrolls in the government's closely watched employment report.
According to a Reuters survey of economists, manufacturing employment likely increased by 6,000 jobs in January after rising 8,000 in December.
Overall, nonfarm payrolls are forecast to have increased by 185,000 jobs last month.
The economy added 223,000 jobs in December.
January's employment report is due on Friday.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-m ... 023-02-01/
Re: POLITICS
REUTERS
"U.S. job openings unexpectedly increase in December"
Reuters
February 1, 2023
WASHINGTON, Feb 1(Reuters) - U.S. job openings unexpectedly rose in December, showing demand for labor remains strong despite higher interest rates and mounting fears of a recession, potentially keeping the Federal Reserve on its policy tightening path.
Job openings, a measure of labor demand, increased 572,000 to 11.0 million on the last day of December, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday.
Economists polled by Reuters had forecast 10.250 million job openings.
Federal Reserve officials were due to wrap up a two-day policy meeting later on Wednesday.
The U.S. central bank is expected to raise its policy rate by 25 basis points.
The Fed last year raised its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007.
The Labor Department reported on Tuesday that wages and salaries increased in the fourth quarter at their slowest pace in a year.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-j ... 023-02-01/
"U.S. job openings unexpectedly increase in December"
Reuters
February 1, 2023
WASHINGTON, Feb 1(Reuters) - U.S. job openings unexpectedly rose in December, showing demand for labor remains strong despite higher interest rates and mounting fears of a recession, potentially keeping the Federal Reserve on its policy tightening path.
Job openings, a measure of labor demand, increased 572,000 to 11.0 million on the last day of December, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday.
Economists polled by Reuters had forecast 10.250 million job openings.
Federal Reserve officials were due to wrap up a two-day policy meeting later on Wednesday.
The U.S. central bank is expected to raise its policy rate by 25 basis points.
The Fed last year raised its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007.
The Labor Department reported on Tuesday that wages and salaries increased in the fourth quarter at their slowest pace in a year.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-j ... 023-02-01/
Re: POLITICS
REUTERS
"Exclusive: EV maker Rivian to cut 6% of jobs amid price war - internal memo"
By Abhirup Roy and Akash Sriram
February 1, 2023
SAN FRANCISCO, Feb 1 (Reuters) - Rivian Automotive is laying off 6% of its workforce in an effort to cut costs as the EV maker, already grappling with falling cash reserves and a weak economy, braces for an industry-wide price war.
The company is focusing resources on ramping up vehicle production and reaching profitability, Chief Executive R.J. Scaringe said in an email to employees on Wednesday announcing the job cuts.
Reuters obtained a copy of the email.
Layoffs at Rivian come amid falling EV prices kicked off by cuts made recently by Elon Musk-led Tesla and Ford Motor Co.
The price cuts by Tesla and Ford are expected to hurt EV upstarts such as Rivian, Lucid Group and British startup Arrival, which Monday said it would lay off half its staff.
Despite a blockbuster initial public offering in November 2021, Rivian's shares have fallen nearly 90% from their peak that month to Tuesday's close.
Rivian's stock was trading down 4% on Nasdaq on Wednesday, paring some losses after news of the job cuts.
"We must focus our resources on ramp and our path to profitability," Scaringe said in the email, in which he apologized to employees for the necessity of the cuts.
A Rivian spokesman confirmed the email was sent, but declined further comment.
'BLEEDING CASH'
"They're bleeding cash and would like to grow at a much faster rate, but they continue to struggle with their EV production ramp and have been unable to meaningfully drive down unit costs," CFRA Research analyst Garrett Nelson said.
"We think that is what's behind this decision."
Rivian is focusing on ramping up production of its R1 trucks and EDV delivery vans for top shareholder Amazon.com, and launching its R2 platform, he said.
"The changes we are announcing today reflect this focused roadmap."
Irvine, California-based Rivian, which has about 14,000 employees, will let go of about 840 staff in a move that will not affect manufacturing operations at its plant in Normal, Illinois.
Rivian, which has been losing money on every vehicle it builds, narrowly missed its full-year production target of 25,000 vehicles last year as it dealt with supply-chain disruptions caused by the COVID-19 pandemic.
It had previously halved that target.
To further conserve its cash, Rivian late last year shelved plans to build delivery vans in Europe with Mercedes.
Rivian had earlier pushed back by a year to 2026 the planned launch of a smaller R2 vehicle family at the $5 billion plant it is building in Georgia.
Last July, Rivian, which is scheduled to report fourth-quarter results on Feb. 28, laid off staff and suspended some programs as part of a broader restructuring.
The company has a market valuation of $17.8 billion.
Its cash and cash equivalents stood at $13.27 billion as of Sept. 30, 2022, down from over $18 billion a year earlier.
Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco Editing by Ben Klayman and Nick Zieminski
https://www.reuters.com/business/autos- ... 023-02-01/
"Exclusive: EV maker Rivian to cut 6% of jobs amid price war - internal memo"
By Abhirup Roy and Akash Sriram
February 1, 2023
SAN FRANCISCO, Feb 1 (Reuters) - Rivian Automotive is laying off 6% of its workforce in an effort to cut costs as the EV maker, already grappling with falling cash reserves and a weak economy, braces for an industry-wide price war.
The company is focusing resources on ramping up vehicle production and reaching profitability, Chief Executive R.J. Scaringe said in an email to employees on Wednesday announcing the job cuts.
Reuters obtained a copy of the email.
Layoffs at Rivian come amid falling EV prices kicked off by cuts made recently by Elon Musk-led Tesla and Ford Motor Co.
The price cuts by Tesla and Ford are expected to hurt EV upstarts such as Rivian, Lucid Group and British startup Arrival, which Monday said it would lay off half its staff.
Despite a blockbuster initial public offering in November 2021, Rivian's shares have fallen nearly 90% from their peak that month to Tuesday's close.
Rivian's stock was trading down 4% on Nasdaq on Wednesday, paring some losses after news of the job cuts.
"We must focus our resources on ramp and our path to profitability," Scaringe said in the email, in which he apologized to employees for the necessity of the cuts.
A Rivian spokesman confirmed the email was sent, but declined further comment.
'BLEEDING CASH'
"They're bleeding cash and would like to grow at a much faster rate, but they continue to struggle with their EV production ramp and have been unable to meaningfully drive down unit costs," CFRA Research analyst Garrett Nelson said.
"We think that is what's behind this decision."
Rivian is focusing on ramping up production of its R1 trucks and EDV delivery vans for top shareholder Amazon.com, and launching its R2 platform, he said.
"The changes we are announcing today reflect this focused roadmap."
Irvine, California-based Rivian, which has about 14,000 employees, will let go of about 840 staff in a move that will not affect manufacturing operations at its plant in Normal, Illinois.
Rivian, which has been losing money on every vehicle it builds, narrowly missed its full-year production target of 25,000 vehicles last year as it dealt with supply-chain disruptions caused by the COVID-19 pandemic.
It had previously halved that target.
To further conserve its cash, Rivian late last year shelved plans to build delivery vans in Europe with Mercedes.
Rivian had earlier pushed back by a year to 2026 the planned launch of a smaller R2 vehicle family at the $5 billion plant it is building in Georgia.
Last July, Rivian, which is scheduled to report fourth-quarter results on Feb. 28, laid off staff and suspended some programs as part of a broader restructuring.
The company has a market valuation of $17.8 billion.
Its cash and cash equivalents stood at $13.27 billion as of Sept. 30, 2022, down from over $18 billion a year earlier.
Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco Editing by Ben Klayman and Nick Zieminski
https://www.reuters.com/business/autos- ... 023-02-01/
Re: POLITICS
REUTERS
"Intel slashes employee, exec pay amid PC market downturn"
By Stephen Nellis
February 1, 2023
Jan 31 (Reuters) - Intel Corp said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.
The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company's hourly workforce's pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.
Intel spokesperson Addy Burr said in a statement that the "changes are designed to impact our executive population more significantly and will help support the investments and overall workforce."
Intel last week said its profit margins were plunging as the PC market cools after several years of growth during the pandemic.
Gelsinger also conceded that Intel has "stumbled" and lost market share to rivals such as Advanced Micro Devices Inc, which on Tuesday reported quarterly sales that were above Wall Street's expectations.
The person familiar with Intel's pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company's top executives other than the CEO will get 15% cuts.
The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said.
Annual performance bonuses based Intel's overall financial performance will remain but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person added.
Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing and Jamie Freed
https://www.reuters.com/technology/inte ... 023-02-01/
"Intel slashes employee, exec pay amid PC market downturn"
By Stephen Nellis
February 1, 2023
Jan 31 (Reuters) - Intel Corp said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.
The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company's hourly workforce's pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.
Intel spokesperson Addy Burr said in a statement that the "changes are designed to impact our executive population more significantly and will help support the investments and overall workforce."
Intel last week said its profit margins were plunging as the PC market cools after several years of growth during the pandemic.
Gelsinger also conceded that Intel has "stumbled" and lost market share to rivals such as Advanced Micro Devices Inc, which on Tuesday reported quarterly sales that were above Wall Street's expectations.
The person familiar with Intel's pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company's top executives other than the CEO will get 15% cuts.
The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said.
Annual performance bonuses based Intel's overall financial performance will remain but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person added.
Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing and Jamie Freed
https://www.reuters.com/technology/inte ... 023-02-01/
Re: POLITICS
REUTERS
"U.S. investors have plowed billions into China's AI sector, report shows"
By Alexandra Alper
February 1, 2023
WASHINGTON, Feb 1 (Reuters) - U.S. investors including the investment arms of Intel Corp and Qualcomm Inc accounted for nearly a fifth of investments in Chinese artificial intelligence companies from 2015 to 2021, a report showed on Wednesday.
The document, released by CSET, a tech policy group at Georgetown University, comes amid growing scrutiny of U.S. investments in AI, Quantum and semiconductors, as the Biden administration prepares to unveil new restrictions on U.S. funding of Chinese tech companies.
According to the report, 167 U.S. investors took part in 401 transactions, or roughly 17% of the investments into Chinese AI companies in the period.
Those transactions represented a total $40.2 billion in investment, or 37% of the total raised by Chinese AI companies in the 6-year period.
It was not clear from the report, which pulled information from data provider Crunchbase, what percentage of the funding came from the U.S. firms.
Qualcomm Ventures and Intel Capital were involved in 13 and 11 investments in Chinese AI companies respectively, outpaced by GGV Capital which led U.S. firms with 43 total investments in the sector, the data showed.
The Biden administration is expected to unveil an executive order this year curbing some U.S. investments in sensitive Chinese tech industries, as hawks in Washington blame American investors for transferring capital and valuable know-how to Chinese tech companies that could help advance Beijing's military capabilities.
According to the report, U.S. investor GSR Ventures invested alongside China's IFlytek Co Ltd in a Chinese AI company after the speech recognition firm was added to a trade blacklist.
Silicon Valley Bank and Wanxiang American Healthcare investments group made investments in Chinese AI firms alongside China's Sensetime before the powerhouse in facial recognition technology was added to the same trade blacklist.
Both companies were added to the blacklist, which effectively bars them from receiving U.S. tech exports, in 2019 for alleged human rights violations related to the repression of Uighur Muslims.
Some of the largest investments include Goldman Sachs' solo investment in 1KMXC, an AI-enabled robotics company, as well as an investment by three U.S.-based VC firms in Geek+, an autonomous mobile robot company, the report showed.
Only one Chinese AI company that received funding from U.S. investors is involved in developing AI applications for military or public safety uses, according to CSET.
Reporting by Alexandra Alper; Editing by Stephen Coates
https://www.reuters.com/technology/us-i ... 023-02-01/
"U.S. investors have plowed billions into China's AI sector, report shows"
By Alexandra Alper
February 1, 2023
WASHINGTON, Feb 1 (Reuters) - U.S. investors including the investment arms of Intel Corp and Qualcomm Inc accounted for nearly a fifth of investments in Chinese artificial intelligence companies from 2015 to 2021, a report showed on Wednesday.
The document, released by CSET, a tech policy group at Georgetown University, comes amid growing scrutiny of U.S. investments in AI, Quantum and semiconductors, as the Biden administration prepares to unveil new restrictions on U.S. funding of Chinese tech companies.
According to the report, 167 U.S. investors took part in 401 transactions, or roughly 17% of the investments into Chinese AI companies in the period.
Those transactions represented a total $40.2 billion in investment, or 37% of the total raised by Chinese AI companies in the 6-year period.
It was not clear from the report, which pulled information from data provider Crunchbase, what percentage of the funding came from the U.S. firms.
Qualcomm Ventures and Intel Capital were involved in 13 and 11 investments in Chinese AI companies respectively, outpaced by GGV Capital which led U.S. firms with 43 total investments in the sector, the data showed.
The Biden administration is expected to unveil an executive order this year curbing some U.S. investments in sensitive Chinese tech industries, as hawks in Washington blame American investors for transferring capital and valuable know-how to Chinese tech companies that could help advance Beijing's military capabilities.
According to the report, U.S. investor GSR Ventures invested alongside China's IFlytek Co Ltd in a Chinese AI company after the speech recognition firm was added to a trade blacklist.
Silicon Valley Bank and Wanxiang American Healthcare investments group made investments in Chinese AI firms alongside China's Sensetime before the powerhouse in facial recognition technology was added to the same trade blacklist.
Both companies were added to the blacklist, which effectively bars them from receiving U.S. tech exports, in 2019 for alleged human rights violations related to the repression of Uighur Muslims.
Some of the largest investments include Goldman Sachs' solo investment in 1KMXC, an AI-enabled robotics company, as well as an investment by three U.S.-based VC firms in Geek+, an autonomous mobile robot company, the report showed.
Only one Chinese AI company that received funding from U.S. investors is involved in developing AI applications for military or public safety uses, according to CSET.
Reporting by Alexandra Alper; Editing by Stephen Coates
https://www.reuters.com/technology/us-i ... 023-02-01/
Re: POLITICS
REUTERS
"Fed's Powell says no rate cuts this year, and markets hear it differently"
By Ann Saphir and Lindsay Dunsmuir
February 2, 2023
Feb 2 (Reuters) - Federal Reserve Chair Jerome Powell had a clear message on Wednesday: as "gratifying" as it is that inflation has begun to slow, the central bank is nowhere near to reversing course or declaring victory.
"It's going to take some time" for disinflation to spread through the economy, Powell said in a news conference following the Fed's latest quarter-point interest rate increase.
He said he expects a couple more rate hikes still to go, and, "given our outlook, I just I don't see us cutting rates this year."
Investors ignored him, keeping bets on just one more rate hike ahead and piling further into bets that rates will be lower by year's end than they are now.
It's not obvious which view will prove right: neither the Fed nor markets have a great predictive record since the central bank's current round of rate hikes began last March.
Markets have repeatedly had to scrap bets for a quick pivot, pushing those expectations out farther as the central bank charged ahead with the most aggressive policy tightening in 40 years.
For their part, Fed policymakers each quarter through last year kept ratcheting up their own estimates for how high they'd push interest rates as inflation proved stronger and stickier than anticipated.
Not once did they signal rates would get cut this year.
How the current disconnect resolves will largely come down to whether inflation drops faster than the central bank expects, or labor markets soften further than it hopes.
"The actual outcome is data dependent, and we won't have the data to confirm or deny...until we are deeper into the first half of the year," said Tim Duy, chief U.S. economist at SGH Macro Advisors.
And as long as there's that uncertainty, it is in Powell's interest to try to keep financial markets from betting too hard on rate cuts that would loosen financial conditions, possibly undermining the Fed's hard-won progress against inflation.
Even simply acknowledging the possibility of a rate cut later in the year could undo some of the Fed's work, forcing more Fed tightening and making it even harder to avoid a recession.
Thus Powell's repeated assertions about not cutting rates, and indeed needing to take them at least above 5% as policymakers forecast in December.
"It is our judgment that we're not yet in a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes will be appropriate," Powell said.
But so far, said Kroll Institute's Global Chief Economist Megan Greene, "the markets aren't buying what the Fed is peddling."
The central bank's benchmark overnight lending rate is now 4.50%-4.75%.
Traders of interest-rate futures are pricing in one more 25 basis point increase in March before the Fed pauses to assess how its run-up in interest rates from near zero one year ago is slowing the economy.
Rate cuts, they expect, will start in September - a view Powell said Wednesday is driven by the expectation of fast-receding inflation.
Either cutting in September or waiting until next year, would be in the historical range.
Since the 1990s, the interlude between rate hikes and rate cuts has varied from as long as 18 months in 1997-1998 to as short as five months in 1995.
Inflation data is trending in the right way over the past three months.
By the Fed's preferred measure, inflation is now running at a 5.0% annual rate, still more than twice the central bank's 2% goal, but down from a high of 7% last summer.
Wage pressures are also easing, which could allow the Fed to reduce rates later this year as it tries to engineer an elusive 'soft landing,' where inflation comes down without severe harm to economic growth and employment.
DON'T WANT TO REV THE ECONOMY
The Fed is also wary of going too easy on inflation and cutting rates too soon.
Powell and others point to the last big inflation war the Fed fought, in the last 1970s and early 1980s, as a cautionary tale.
"Investors are inviting him to be Arthur Burns, and he doesn't want to accept that invitation," Dreyfus and Mellon Chief Economist Vincent Reinhart said of Powell.
It was on Fed Chair Burns' watch, in the 1970s, that the Fed repeatedly raised rates and then cut them to fight rising unemployment, only for prices to explode again and force more rate hikes.
His successor Paul Volcker ended up jacking rates to almost 20% to finally quash the inflation that Burns had let get out of hand.
The Fed, Powell said Wednesday, cannot risk doing too little.
"We have no incentive and no desire to overtighten, but if we feel like we've gone too far ... if inflation is coming down faster than we expect, then we have tools that would work on that," he said.
Then there's the thorny issue of financial conditions, a proxy for how easy it is to access credit and which the Fed watches closely to see how tight borrowing costs are in reality.
Financial conditions began to ease following the central bank's policy meeting last November and while Powell largely brushed off such concerns on Wednesday, the Fed can ill afford for them to ease further.
"This loosening of financial conditions is undoubtedly not what the Fed was aiming for, and we expect a cacophony of Fed speeches in the coming weeks will aim to reorient the Fed's message," said Gregory Daco, chief economist at EY Parthenon.
Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 023-02-02/
"Fed's Powell says no rate cuts this year, and markets hear it differently"
By Ann Saphir and Lindsay Dunsmuir
February 2, 2023
Feb 2 (Reuters) - Federal Reserve Chair Jerome Powell had a clear message on Wednesday: as "gratifying" as it is that inflation has begun to slow, the central bank is nowhere near to reversing course or declaring victory.
"It's going to take some time" for disinflation to spread through the economy, Powell said in a news conference following the Fed's latest quarter-point interest rate increase.
He said he expects a couple more rate hikes still to go, and, "given our outlook, I just I don't see us cutting rates this year."
Investors ignored him, keeping bets on just one more rate hike ahead and piling further into bets that rates will be lower by year's end than they are now.
It's not obvious which view will prove right: neither the Fed nor markets have a great predictive record since the central bank's current round of rate hikes began last March.
Markets have repeatedly had to scrap bets for a quick pivot, pushing those expectations out farther as the central bank charged ahead with the most aggressive policy tightening in 40 years.
For their part, Fed policymakers each quarter through last year kept ratcheting up their own estimates for how high they'd push interest rates as inflation proved stronger and stickier than anticipated.
Not once did they signal rates would get cut this year.
How the current disconnect resolves will largely come down to whether inflation drops faster than the central bank expects, or labor markets soften further than it hopes.
"The actual outcome is data dependent, and we won't have the data to confirm or deny...until we are deeper into the first half of the year," said Tim Duy, chief U.S. economist at SGH Macro Advisors.
And as long as there's that uncertainty, it is in Powell's interest to try to keep financial markets from betting too hard on rate cuts that would loosen financial conditions, possibly undermining the Fed's hard-won progress against inflation.
Even simply acknowledging the possibility of a rate cut later in the year could undo some of the Fed's work, forcing more Fed tightening and making it even harder to avoid a recession.
Thus Powell's repeated assertions about not cutting rates, and indeed needing to take them at least above 5% as policymakers forecast in December.
"It is our judgment that we're not yet in a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes will be appropriate," Powell said.
But so far, said Kroll Institute's Global Chief Economist Megan Greene, "the markets aren't buying what the Fed is peddling."
The central bank's benchmark overnight lending rate is now 4.50%-4.75%.
Traders of interest-rate futures are pricing in one more 25 basis point increase in March before the Fed pauses to assess how its run-up in interest rates from near zero one year ago is slowing the economy.
Rate cuts, they expect, will start in September - a view Powell said Wednesday is driven by the expectation of fast-receding inflation.
Either cutting in September or waiting until next year, would be in the historical range.
Since the 1990s, the interlude between rate hikes and rate cuts has varied from as long as 18 months in 1997-1998 to as short as five months in 1995.
Inflation data is trending in the right way over the past three months.
By the Fed's preferred measure, inflation is now running at a 5.0% annual rate, still more than twice the central bank's 2% goal, but down from a high of 7% last summer.
Wage pressures are also easing, which could allow the Fed to reduce rates later this year as it tries to engineer an elusive 'soft landing,' where inflation comes down without severe harm to economic growth and employment.
DON'T WANT TO REV THE ECONOMY
The Fed is also wary of going too easy on inflation and cutting rates too soon.
Powell and others point to the last big inflation war the Fed fought, in the last 1970s and early 1980s, as a cautionary tale.
"Investors are inviting him to be Arthur Burns, and he doesn't want to accept that invitation," Dreyfus and Mellon Chief Economist Vincent Reinhart said of Powell.
It was on Fed Chair Burns' watch, in the 1970s, that the Fed repeatedly raised rates and then cut them to fight rising unemployment, only for prices to explode again and force more rate hikes.
His successor Paul Volcker ended up jacking rates to almost 20% to finally quash the inflation that Burns had let get out of hand.
The Fed, Powell said Wednesday, cannot risk doing too little.
"We have no incentive and no desire to overtighten, but if we feel like we've gone too far ... if inflation is coming down faster than we expect, then we have tools that would work on that," he said.
Then there's the thorny issue of financial conditions, a proxy for how easy it is to access credit and which the Fed watches closely to see how tight borrowing costs are in reality.
Financial conditions began to ease following the central bank's policy meeting last November and while Powell largely brushed off such concerns on Wednesday, the Fed can ill afford for them to ease further.
"This loosening of financial conditions is undoubtedly not what the Fed was aiming for, and we expect a cacophony of Fed speeches in the coming weeks will aim to reorient the Fed's message," said Gregory Daco, chief economist at EY Parthenon.
Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 023-02-02/
Re: POLITICS
REUTERS
"U.S. weekly jobless claims drop to nine-month low; productivity gains speed"
By Lucia Mutikani
February 2, 2023
Summary
* Weekly jobless claims drop 3,000 to 183,000
* Continuing claims decrease 11,000 to 1.655 million
* Productivity accelerates at 3.0% rate in fourth quarter
* Unit labor costs grow at 1.1% pace
WASHINGTON, Feb 2 (Reuters) - The number of Americans filing new claims for unemployment benefits dropped to a nine-month low last week as the labor market remains resilient despite higher borrowing costs and mounting fears of a recession this year.
The surprise decline in weekly jobless claims reported by the Labor Department on Thursday raised cautious optimism that the economy could skirt a recession or just experience a shallow and short downturn.
Federal Reserve Chair Jerome Powell told reporters on Wednesday that "the economy can return to 2% inflation without a really significant downturn or a really big increase in unemployment."
"Some day soon economists will have to take down those calls for recession in 2023 because the labor market refuses to budge from the lowest unemployment rate in decades," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the lowest level since April 2022.
It was the third straight weekly decline in applications.
Economists polled by Reuters had forecast 200,000 claims for the latest week.
Unadjusted claims slipped 872 to 224,356 last week.
There were notable declines in applications in Kentucky, California and Ohio, which offset increases in Georgia and New York.
Claims have been running low this year, consistent with a persistently tight labor market.
The government reported on Wednesday that there were 11 million job openings at the end of December, with 1.9 openings for every unemployed person.
"The labor market has yet to respond meaningfully to a rapid increase in interest rates," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
Outside the technology industry and interest-rate sensitive sectors like housing and finance, employers have been reluctant to lay off workers after struggling to find labor during the pandemic, and also because they are optimistic economic conditions will improve later this year.
An Institute for Supply Management report on Wednesday said manufacturers "are indicating that they are not going to substantially reduce head counts as they are positive about the second half of the year."
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
TIGHT LABOR MARKET
The U.S. central bank on Wednesday raised its policy rate by 25 basis points to the 4.50%-4.75% range, and promised "ongoing increases" in borrowing costs.
The claims report showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 11,000 to 1.655 million during the week ending Jan. 21.
That partially revised the increases logged in the prior two weeks in the so-called continuing claims.
The claims data has no bearing on January's employment report, scheduled for release on Friday, as it falls outside the survey period.
According to a Reuters poll of economists, nonfarm payrolls likely increased by 185,000 jobs last month.
The economy created 223,000 jobs in December.
The unemployment rate is seen rising to 3.6% from a more than 50-year low of 3.5% in December.
The raft of layoffs in the technology sector pushed up job cuts in January.
A separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers surged 136% to 102,943.
That was the highest January total since 2009.
The technology sector accounted for 41% of the job cuts, with 41,829 layoffs.
Retailers announced 13,000 job cuts, while financial firms planned to lay off 10,603 workers.
"It is difficult to completely square the seemingly contrasting messages from the jobless claims data and the Challenger job cuts data," said Daniel Silver, an economist at JPMorgan in New York.
"One possible explanation for the recent divergence is that people are getting laid off, but they are not filing for unemployment insurance."
"This may be because people are easily able to find new work or because severance payments are delaying eligibility for unemployment benefits."
Despite labor market tightness, wage inflation is slowing and could continue doing so as a third report from the Labor Department showed worker productivity accelerating at a 3.0% annualized rate in the fourth quarter, the fastest in a year, after rising at a 1.4% pace in the third quarter.
Productivity fell at a 1.5% rate from a year ago and dropped 1.3% in 2022.
But that was largely because of distortions caused by the COVID-19 pandemic.
Productivity was up 5.1% from the fourth quarter of 2019.
As result, unit labor costs - the price of labor per single unit of output - increased at a 1.1% rate.
That was the smallest gain since the first quarter of 2021 and followed a 2.0% pace of growth in the third quarter.
Though unit labor costs rose at a 4.5% rate from a year ago, they were below their peak of 7.0% over the 12 months through the second quarter of 2022.
"The upshot is that, even without a rise in the unemployment rate and with job openings suspiciously resilient, the labor market no longer appears to be a significant source of inflationary pressure," said Paul Ashworth, chief North America economist at Capital Economics in Toronto.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 023-02-02/
"U.S. weekly jobless claims drop to nine-month low; productivity gains speed"
By Lucia Mutikani
February 2, 2023
Summary
* Weekly jobless claims drop 3,000 to 183,000
* Continuing claims decrease 11,000 to 1.655 million
* Productivity accelerates at 3.0% rate in fourth quarter
* Unit labor costs grow at 1.1% pace
WASHINGTON, Feb 2 (Reuters) - The number of Americans filing new claims for unemployment benefits dropped to a nine-month low last week as the labor market remains resilient despite higher borrowing costs and mounting fears of a recession this year.
The surprise decline in weekly jobless claims reported by the Labor Department on Thursday raised cautious optimism that the economy could skirt a recession or just experience a shallow and short downturn.
Federal Reserve Chair Jerome Powell told reporters on Wednesday that "the economy can return to 2% inflation without a really significant downturn or a really big increase in unemployment."
"Some day soon economists will have to take down those calls for recession in 2023 because the labor market refuses to budge from the lowest unemployment rate in decades," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the lowest level since April 2022.
It was the third straight weekly decline in applications.
Economists polled by Reuters had forecast 200,000 claims for the latest week.
Unadjusted claims slipped 872 to 224,356 last week.
There were notable declines in applications in Kentucky, California and Ohio, which offset increases in Georgia and New York.
Claims have been running low this year, consistent with a persistently tight labor market.
The government reported on Wednesday that there were 11 million job openings at the end of December, with 1.9 openings for every unemployed person.
"The labor market has yet to respond meaningfully to a rapid increase in interest rates," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
Outside the technology industry and interest-rate sensitive sectors like housing and finance, employers have been reluctant to lay off workers after struggling to find labor during the pandemic, and also because they are optimistic economic conditions will improve later this year.
An Institute for Supply Management report on Wednesday said manufacturers "are indicating that they are not going to substantially reduce head counts as they are positive about the second half of the year."
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
TIGHT LABOR MARKET
The U.S. central bank on Wednesday raised its policy rate by 25 basis points to the 4.50%-4.75% range, and promised "ongoing increases" in borrowing costs.
The claims report showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 11,000 to 1.655 million during the week ending Jan. 21.
That partially revised the increases logged in the prior two weeks in the so-called continuing claims.
The claims data has no bearing on January's employment report, scheduled for release on Friday, as it falls outside the survey period.
According to a Reuters poll of economists, nonfarm payrolls likely increased by 185,000 jobs last month.
The economy created 223,000 jobs in December.
The unemployment rate is seen rising to 3.6% from a more than 50-year low of 3.5% in December.
The raft of layoffs in the technology sector pushed up job cuts in January.
A separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers surged 136% to 102,943.
That was the highest January total since 2009.
The technology sector accounted for 41% of the job cuts, with 41,829 layoffs.
Retailers announced 13,000 job cuts, while financial firms planned to lay off 10,603 workers.
"It is difficult to completely square the seemingly contrasting messages from the jobless claims data and the Challenger job cuts data," said Daniel Silver, an economist at JPMorgan in New York.
"One possible explanation for the recent divergence is that people are getting laid off, but they are not filing for unemployment insurance."
"This may be because people are easily able to find new work or because severance payments are delaying eligibility for unemployment benefits."
Despite labor market tightness, wage inflation is slowing and could continue doing so as a third report from the Labor Department showed worker productivity accelerating at a 3.0% annualized rate in the fourth quarter, the fastest in a year, after rising at a 1.4% pace in the third quarter.
Productivity fell at a 1.5% rate from a year ago and dropped 1.3% in 2022.
But that was largely because of distortions caused by the COVID-19 pandemic.
Productivity was up 5.1% from the fourth quarter of 2019.
As result, unit labor costs - the price of labor per single unit of output - increased at a 1.1% rate.
That was the smallest gain since the first quarter of 2021 and followed a 2.0% pace of growth in the third quarter.
Though unit labor costs rose at a 4.5% rate from a year ago, they were below their peak of 7.0% over the 12 months through the second quarter of 2022.
"The upshot is that, even without a rise in the unemployment rate and with job openings suspiciously resilient, the labor market no longer appears to be a significant source of inflationary pressure," said Paul Ashworth, chief North America economist at Capital Economics in Toronto.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 023-02-02/