THE ECONOMY

thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

CNBC

"Fed’s Mary Daly says tapering of bond purchases may start this year"


Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED TUE, JUL 13 2021

KEY POINTS

* San Francisco Fed President Mary Daly told CNBC that asset purchases could be curtailed by late this year or early in 2022.

* Daly added she remains convinced that the recent spate of inflation will prove temporary.


San Francisco Federal Reserve President Mary Daly told CNBC on Tuesday that a strong economic recovery will allow the central bank to slow its asset purchases, possibly near the end of 2021.

Markets have been looking for clearer guidance from the Fed on when it will begin to reduce, or taper, the minimum $120 billion it is buying in Treasurys and mortgage-backed securities.

While Daly did not give an exact timeline, she said the time for tapering is drawing near.

“It is appropriate to start talking about tapering asset purchases, taking some of the accommodation that we have been providing to the economy down,” she told CNBC’s Steve Liesman.

“We’ll still be in a very accommodative position with a low funds rate, but we don’t need all the tools we see the economy get its own footing.”


This is “absolutely the time to start doing that, having those conversations,” she added.

“My own view is we’ll probably be in a good position to taper at the end of this year or
early next.”

The Fed has resisted calls from some big names in the market to pull back on the purchases, which are known also as quantitative easing.

Among the concerns from investors including Paul Tudor Jones and corporate officials such as Bank of America President Brian Moynihan was that the Fed is allowing the economy to run too hot and is risking inflation.

Daly spoke just a few hours after the Labor Department said headline inflation rose 5.4% year over year in June, a number above market expectations and hottest since before the worst of the 2008 financial crisis.


However, she remains convinced — like many other Fed officials — that the current inflation pressures won’t last as the economy returns to normal.

“Right now, it really remains steady in the boat, don’t read too much signal out of any month of data and let’s get through this volatile period so we can really see where the economy is,” she said.

https://www.cnbc.com/2021/07/13/feds-ma ... -year.html
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"U.S. consumer prices post largest gain in 13 years; inflation has likely peaked"


By Lucia Mutikani

JULY 13, 2021

WASHINGTON (Reuters) - U.S. consumer prices increased by the most in 13 years in June amid supply constraints and a continued rebound in the costs of travel-related services from pandemic-depressed levels as the economic recovery gathered momentum.

With used cars and trucks accounting for more than one-third of the surge in prices reported by the Labor Department on Tuesday, economists continued to believe that higher inflation was transitory, aligning with Federal Reserve Chair Jerome Powell’s long-standing views.

The yield on the benchmark 10-year Treasury note briefly shot up before retreating as investors concluded that the U.S. central bank would likely maintain its ultra easy monetary policy stance for a while.

Powell will present the semiannual Monetary Policy Report to the U.S. Congress on Wednesday.

“June’s CPI numbers looked scary, but once again, we see that it was mainly temporary price increases that pumped up the figures,” said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia.

“Overall, this report is consistent with inflation cooling off later this year.”

The consumer price index increased 0.9% last month, the largest gain since June 2008, after advancing 0.6% in May.

Economists polled by Reuters had forecast the CPI would climb 0.5%.

Used cars and trucks prices accelerated 10.5%.

That was the biggest jump since January 1953 when the government started tracking the series.


Used cars and trucks have been the major driver of inflation in recent months.

They surged a record 45.2% on a year-on-year basis.

A global semiconductor shortage has undercut motor vehicle production.

New motor vehicle prices also rose solidly.

Demand is mostly being driven by rental companies, desperate to restock after offloading their fleets at the height of the pandemic.

Industry data suggest used car and truck prices will soon cool off.

But there are signs that inflation is spreading beyond the sectors at the center of the economy’s reopening, with consumers paying more for food, gasoline, rents and apparel last month.

That could sharpen criticism of the very accommodative monetary and fiscal policies.

COVID-19 vaccinations, low interest rates and nearly $6 trillion in government relief since the pandemic started in the United States in March 2020 are fueling demand, straining the supply chain.


White House officials are cautiously optimistic that the current increase in prices will be transitory, citing a continued drop in forward prices for lumber and other goods that experienced sharp increases as a result of supply chain bottlenecks.

Steel capacity had also risen substantially over the past few months, they said.

In the 12 months through June, the CPI jumped 5.4%.

That was the largest gain since August 2008 and followed a 5.0% increase in May.

Excluding the volatile food and energy components, the CPI accelerated 0.9% after increasing 0.7% in May.

The so-called core CPI surged 4.5% on a year-on-year basis, the largest rise since November 1991, after advancing 3.8% in May.

Stocks on Wall Street were mixed.

The dollar gained versus a basket of currencies.

Longer-dated U.S. Treasury prices rose.

TRANSITORY INCREASE

The U.S. central bank slashed its benchmark overnight interest rate to near zero last year and is pumping money into the economy through monthly bond purchases.

It has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average.


The Fed’s preferred inflation measure, the core personal consumption expenditures price index, jumped 3.4% in May, the largest gain since April 1992.

Minutes of the Fed’s June 15-16 policy meeting published last week showed “a substantial majority” of officials saw inflation risks “tilted to the upside,” and the central bank as a whole felt it needed to be prepared to act if those risks materialized.

Annual inflation rates have been boosted by the dropping of last spring’s weak readings from the CPI calculation.

June was likely the peak in these so-called base effects.

“The fact that the recent run-up in inflation has been dominated by a few categories should give the Fed leadership continued confidence in their view that it is mostly a transitory increase, a view which the market apparently shares,” said Michael Feroli, chief U.S. economist at JPMorgan in New York.

With nearly 160 million Americans immunized, demand for travel is picking up.

Lodging away from home including hotel and motel accommodation shot up 7.9%.

Prices for airline tickets rose 2.7%.

Though inflation has likely peaked, it is expected to remain elevated through part of 2022, as prices for many travel-related services are still below pre-pandemic levels.

But some factors boosting inflation could last beyond next year.

Rents rose solidly in June and could soar as workers return to offices, pulling people back to cities and other urban centers amid the subsiding pandemic in the United States.


Worker shortages, even as millions of Americans are unemployed, are also seen pushing up wages, and keeping inflation elevated.

Lack of affordable childcare is keeping some parents at home.

The pandemic also forced early retirements, reducing the labor pool.

“It is difficult to argue that everything will be back to normal in a few months,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles.

“Rent won’t remain tame once the government restrictions on eviction are over."

"The housing shortages will keep boosting rents.”


But the course of inflation will likely be determined by consumers’ and businesses’ perceptions.

“The big concern is that current high inflation gets built into consumers’ and businesses’ expectations, leading to higher long-run inflation, as happened in the 1970s,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.

“However, the temporary nature of current inflation pressures, and Fed watchfulness, should prevent this from happening.”

Reporting by Lucia Mutikani; Additional reporting by Andrea Shalal; Editing by Paul Simao and Andrea Ricci

https://www.reuters.com/article/us-usa- ... SKBN2EJ1BQ
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"U.S. June budget deficit falls to $174 billion"


By Reuters Staff

JULY 13, 2021

WASHINGTON (Reuters) - The U.S. government posted a June deficit of $174 billion, about a fifth of the June 2020 deficit of $864 billion, as a rebound in the labor market and an earlier tax deadline this year raised revenues, the U.S. Treasury said on Tuesday.

Receipts for June jumped 87% to $449 billion, in part a reflection of this year’s Internal Revenue Service income tax filing deadline being brought forward to May 17 compared to last year’s pandemic-induced delay to July 15.

The Treasury also said taxes withheld from wages increased by 33%, on an adjusted basis, to $240 billion during June compared to a year ago, while June corporate taxes rose to $79 billion from $11 billion last year.

Outlays for June dropped 44% from a year earlier to $623 billion, largely due to the outsized impact on the deficit a year earlier from the implementation of the Paycheck Protection Program, a subsidy to keep businesses afloat during the COVID-19 pandemic.

This reduction in costs helped lower the fiscal year-to-date deficit to $2.238 trillion from $2.744 trillion for the first nine months of the prior fiscal year, Treasury officials said.

Year-to-date receipts rose 35% from a year earlier to $3.056 trillion, while outlays grew 6% to $5.294 trillion.

Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci

https://www.reuters.com/article/us-usa- ... SKBN2EJ25K
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

CNBC

"Powell says the Fed is still a ways off from altering policy, expects inflation to moderate"


Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED WED, JUL 14 2021

KEY POINTS

* Federal Reserve Chairman Jerome Powell said Wednesday the economy is “a ways off” from where it needs to be for the central bank to change policy.

* “Conditions in the labor market have continued to improve, but there is still a long way to go,” he said, adding that inflation has “increased notably” due mostly to temporary factors.


Federal Reserve Chairman Jerome Powell said Wednesday that the economy needs to improve more before the central bank will change its ultra-easy monetary policy.

In remarks prepared for the House Financial Services Committee, the central bank chief noted improvements but said the labor market in particular is still well below where it was before the Covid-19 pandemic hit.

Powell noted that the Fed’s benchmark of “substantial further progress” toward full employment and stable prices remains “a ways off.”

He did remark that Fed officials at least are talking about reducing the pace of asset purchases.

On inflation, Powell said it “has increased notably and will likely remain elevated in coming months before moderating.”

But he stuck to his oft-stated belief that the current surge is temporary and will be offset as conditions return to normal.


He stressed that much of the current price pressure comes from a few industries such as used cars that are sensitive to temporary conditions.

Multiple members of the House committee pressed him on the current inflation trends.

“It’s all kind of the same story."

"It’s a shortage of semiconductors."

"There’s also very high demand for various reasons,” Powell said in response to a question from Rep. Madeleine Dean, R-Pa.

“It’s just a perfect storm of high demand and low supply and it should pass."

"Unless we think there’s gonna be a multi-year, many-year shortage of used cars in the United States, we should look at this as temporary."

"We very much think that it is.”


A question of ‘progress’

Pushed during the hearing to explain what “substantial further progress” will mean, Powell said that in regards to employment “it’s a very difficult thing to be precise about.”

“It really is a very broad range of things,” he added.


He said the Fed “will provide lots of notice” before it considers tightening policy.

Markets have been watching Fed communication for indications about when the central bank will begin tapering its minimum $120 billion a month in bond purchases as it keeps interest rates anchored near zero.

Powell noted that the two policy measures “along with our strong guidance on interest rates and on our balance sheet, will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete.”

The chair’s comments came as part of his mandated semiannual testimony to Congress on the state of monetary policy and the economy.

As he has in the past, Powell noted that the pandemic-related hit to the economy is falling on those least able to shoulder it.

“Conditions in the labor market have continued to improve, but there is still a long way to go,” he said.

“Job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish.”

While the unemployment rate has dropped to 5.9% from its pandemic high of 14.8%, the Fed is focused on an inclusive employment mandate across racial, gender and income groups.

“Despite substantial improvements for all racial and ethnic groups, the hardest-hit groups still have the most ground left to regain,” Powell said.


https://www.cnbc.com/2021/07/14/powell- ... erate.html
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"Biden backs $3.5 trln spending plan, Republicans blast massive package"


By Susan Cornwell, David Morgan

JULY 14, 2021

WASHINGTON (Reuters) -President Joe Biden made the case for his sweeping, two-track infrastructure initiative on Capitol Hill on Wednesday, a day after leading Senate Democrats agreed on a $3.5 trillion plan billed as the biggest boost in decades for U.S. families.

Biden joined fellow Democrats for a closed-door lunch where he sought their support and discussed strategy for passing both a $1.2 trillion bipartisan infrastructure deal to rebuild America's roads and bridges, and the larger Democratic package that also addresses climate change and the need for stronger social services.


“We’re going to get this done,” Biden said as he walked into the meeting with Democratic senators.

Republicans voiced immediate objections to the plan’s massive size, as did at least one key moderate Democrat whose support would be critical to passage.

Biden urged senators to think about how the package would affect average Americans, said Senator Chris Murphy.

“He just kept on telling us to think about his neighbors in Scranton,” Murphy said, referring to Biden’s Pennsylvania hometown.

“Think about whether what we’re doing is going to pass muster with the folks that he grew up with.”


An Ipsos poll conducted this month for Reuters found that most Americans want the kind of infrastructure improvements that are included in the Biden plan.

It also found that nearly two-thirds of the country supports increasing taxes on “the highest-earning Americans” to pay for the improvements.

Democrats face a tricky path ahead in getting the two measures approved by a narrowly divided Congress.

They will need the support of all 50 of their senators - plus Vice President Kamala Harris’ tie-breaking vote - to pass the $3.5 trillion over Republican opposition in the 100-seat Senate, using a maneuver called reconciliation that gets around the chamber’s normal 60-vote threshold to pass legislation.


Elements of the $3.5 trillion plan also would have to pass muster with the Senate parliamentarian, who has the power to rule specific provisions ineligible for inclusion under the special reconciliation rules for that legislation’s consideration.

While some of the more liberal Democrats on Wednesday said they had hoped for a bigger plan, they had yet to reject the $3.5 trillion deal.

“The need is so much greater than what we’re providing."

"But still, this is very significant,” Senator Mazie Hirono told reporters.

As the day wore on, Democrats across Capitol Hill tried to demonstrate unity over the 10-year investment framework.

House of Representatives Speaker Nancy Pelosi called it a “victory for the American people.”


And just as Biden was leaving the Capitol, he got a boost from the head of the Congressional Progressive Caucus, a nearly 100-member group of lawmakers whose support is essential.

“We are still looking at all the details but we certainly see this as important movement forward,” said Democratic Representative Pramila Jayapal, who heads the group.

Democratic Senator Joe Manchin, an outspoken moderate, stressed the need to offset the $3.5 trillion cost amid large budget deficits.

Manchin also fretted that the plan could eliminate subsidies for fossil fuels, a key demand from progressives worried about climate change.

“Anybody moving in a direction where they think they can walk away and not have any fossil in play, that’s just wrong."

"It won’t happen,” said the senator, who represents the coal-mining state of West Virginia.


Senate Finance Committee Chairman Ron Wyden, whose panel oversees tax legislation, said a Democratic plan to raise international taxes on corporations would raise “several hundred billion dollars” on its own.

REPUBLICANS SAY TOO PRICEY

Senate Republican Leader Mitch McConnell wasted no time in going on the attack.

“With inflation raging ... (the Democrats’ budget plan) is wildly, wildly out of proportion to what the country needs right now,” he told reporters.

U.S. consumer prices rose by the most in 13 years here last month amid supply constraints and a rebound in the costs of travel-related services from pandemic-depressed levels as the economic recovery gathered momentum, according to data released on Tuesday.

Republican Senator Rob Portman dismissed any notion that the level of spending being proposed would sink prospects for passage of the smaller, bipartisan bill.

A group he leads plans to provide details on the legislation in coming days.

Even if they pass the Senate, both measures would also need to make it through the House before going to Biden’s desk for signing into law.

The $3.5 trillion plan agreed to by senior Democrats and White House negotiators includes a significant expansion of the Medicare healthcare program for the elderly - a top goal of Senate Budget Committee Chairman Bernie Sanders, who joined Democratic Senate Majority Leader Chuck Schumer in unveiling the deal Tuesday night.

Senate Republicans, who assail Biden’s larger spending ambitions as unnecessary, have voiced qualified support for the narrower $1.2 trillion plan, which includes nearly $600 billion in new spending for roads, bridges, rail, public transit, water and broadband internet systems.

The Senate’s 50 Republicans are not expected to back the broader infrastructure effort, which would undo Republican then-President Donald Trump’s 2017 tax cuts by raising taxes on U.S. corporations and wealthy individuals.

Asked about the Democrats’ deal on Wednesday, Republican Senator Mitt Romney said in a brief interview in the Capitol, it was “stunning."

"It’s a shocking figure, particularly at a time when the economy is already heating."

"It seems that our Democrat friends may have lost their bearings.”


Reporting by David Morgan, Susan Cornwell, Richard Cowan, Trevor Hunnicutt and Susan Heavey; Editing by Scott Malone, Howard Goller and Jonathan Oatis

https://www.reuters.com/article/us-usa- ... SKBN2EK1Q2
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"Pelosi praises Senate budget plan as 'bold, essential investments'"


By Reuters Staff

JULY 14, 2021

WASHINGTON (Reuters) - U.S. House of Representatives Speaker Nancy Pelosi said on Wednesday that the $3.5 trillion Senate budget plan “will make bold, essential investments in our values as a nation.”

“The Senate budget will contain many of House Democrats’ top priorities, including transformative action on the investments needed to confront the climate crisis, to transform the care economy, and to expand access to health care with enhancements to ACA, Medicare and closing the Medicaid coverage gap,” Pelosi said in a letter to colleagues.

Reporting by Eric Beech and Doina Chiacu; Editing by Leslie Adler

https://www.reuters.com/article/us-usa- ... SKBN2EK2E7
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"Job gains strong, prices rising as U.S. recovery continues - Fed Beige Book"


Reuters

July 14, 2021

WASHINGTON, July 14 (Reuters) - A strengthening U.S. economy was spinning off broad-based job gains through early July that were particularly strong for lower-skilled occupations, the Federal Reserve reported Wednesday in its latest Beige Book compendium of reports about the economy.

But prices were also strong, rising "at an above-average pace," the Fed said, with its business contacts apparently uncertain that higher inflation would fade soon.

"While some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months," the Fed reported in its Beige Book report of anecdotes on economic conditions across the 12 regional reserve banks' districts.


The report was released as Fed Chair Jerome Powell was in the middle of the first of two days of semi-annual congressional testimony on the economy and monetary policy.

Powell pledged to keep the Fed's "powerful support" in place to complete the rebound from the coronavirus pandemic, but was peppered with pointed questions about the current hot streak of inflation.

Overall, the U.S. economy in the period from late May through early July was described in the Beige Book as displaying "moderate to robust growth," marking the report's strongest overall characterization of the national economy since early 2018.

But the report noted a heightened sense of concern among businesses that the supply chain disruptions that have become a staple of the economy's reopening from COVID-19-related shutdowns would persist for longer than officials had predicted.

"The outlook for demand improved further, but many contacts expressed uncertainty or pessimism over the easing of supply constraints," the report said.

All 12 districts reported employment gains, with a quarter of them characterizing the improvement in the labor market as "moderate or strong."

Wage growth was also widespread, with low-wage workers in particular seeing above-average pay increases as companies scramble to fill a record number of vacant jobs, and references to other perks such as bonuses were abundant across districts.

But a number of employers reported the draw of higher pay was not bringing in job seekers.

"One Kentucky restaurant reported offering a starting wage of $16 per hour and receiving no applicants," according to a report from the St. Louis Federal Reserve, whose president - James Bullard - is among the more hawkish policymakers.


Bullard, one of seven Fed officials to see interest rates needing to rise next year, has posited that the coronavirus pandemic and other factors - such as a booming stock market - may have changed the dynamics of labor supply, with some workers choosing to retire, for instance, rather than go back to work.

The Beige Book is produced eight times a year, published two weeks ahead of the conclusion of each meeting of the Federal Open Market Committee, the central bank's policy-setting panel.

The latest report was compiled by the Federal Reserve Bank of Boston based on information collected by July 2.

The FOMC next meets on July 27-28 and is expected to continue the debate joined at its June meeting over how much longer to keep its extraordinary support measures for the economy in place in the face of higher-than-expected inflation.

Reporting by Howard Schneider; Editing by Andrea Ricci

https://www.reuters.com/business/job-ga ... 021-07-14/
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

CNBC

"Yellen sees ‘several more months of rapid inflation’ before easing, worries about housing impact"


Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED THU, JUL 15 2021

KEY POINTS

* Treasury Secretary Janet Yellen told CNBC on Thursday that she expects the U.S. economy will see “several more months of rapid inflation.”

* She expects prices ultimately will fall back to more normal levels, and cited market-based inflation measures as proof that longer-term expectations remain in check.

* However, she expressed concern about the impact on lower-income homebuyers at a time when housing prices are soaring.


Treasury Secretary Janet Yellen cautioned Thursday that prices could continue to rise for several more months, though she expects the recent startling inflation run to ease over time.

In a CNBC interview, the Cabinet official added that she worries about the problems inflation could pose for lower-income families looking to buy homes at a time when real estate values are surging.


“We will have several more months of rapid inflation,” Yellen told Sarah Eisen during a “Closing Bell” interview.

“So I’m not saying that this is a one-month phenomenon."

"But I think over the medium term, we’ll see inflation decline back toward normal levels."

"But, of course, we have to keep a careful eye on it.”

The consumer price index, which measures costs for a wide range of items, increased 5.4% in June, the fastest pace in nearly 13 years.

Excluding food and energy, the gauge rose 4.5%, the fastest acceleration in nearly 30 years.

Prices that goods and services producers receive for their products jumped 7.3%, a record for data going back to 2010.

Also, housing prices in the nation’s largest cities climbed nearly 15% in the most recent measurements from S&P CoreLogic Case-Shiller.

All of that has added up to concern that inflationary pressures could stall the aggressive U.S. economic recovery, with the housing escalation raising fears of a bubble.

“So I don’t think we’re seeing the same kinds of danger in this that we saw in the runup to the financial crisis in 2008,” Yellen said.

“It’s a very different phenomenon."

"But I do worry about affordability and the pressures that higher housing prices will create for families that are first-time homebuyers or have less income.”

Some positive signs

Though consumer surveys point to expectations of higher inflation ahead, Yellen said she is encouraged by market-based measures that suggest prices will cool over the longer term.

Despite the inflation fears, the 10-year Treasury yield, considered a benchmark for growth, has tumbled below 1.3% after rising a full percentage point to around 1.75% from October 2020 to March 2021.

Other gauges, such as a widely used market measure of the yield differences between 5- and 10-year Treasurys and inflation-indexed bonds of the same durations, have ticked lower from 13-year highs seen in May.

“Measures of inflation expectations I think still look quite well contained over the medium term,” Yellen said.

“Those expectations are actually a driver of price-setting behavior."

"And so it is important that we monitor it carefully."

"But I believe fundamentally, you know, that this is something that will settle down.”

On Treasury yields specifically, she said they are “the market expressing its views that inflation does remain under control.”

Yellen spoke as Federal Reserve Chairman Jerome Powell faced grilling this week from House and Senate lawmakers over whether historically easy Fed policy and aggressive congressional spending risked runaway inflation.

The Fed, which Yellen once chaired, has run its balance sheet above $8 trillion during the pandemic, while Congress is staring down its second consecutive year of a $3 trillion budget deficit.


Powell acknowledged that the Fed “is not comfortable” with the current rate of inflation, but he also expects that to subside as factors unique to the pandemic recede and conditions return to normal.

For her part, Yellen said spending associated with the White House-backed American Rescue Plan is helping the recovery.

“I think we’re seeing it having the desired effect as well as – preventing scarring and harm to families and their finances,” she said.


https://www.cnbc.com/2021/07/15/yellen- ... uyers.html
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"U.S. weekly jobless claims at 16-month low; shortages hamper manufacturing"


By Lucia Mutikani

JULY 15, 2021

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits fell to a 16-month low last week as the labor market gains traction, but worker shortages and bottlenecks in the supply chain are frustrating efforts by businesses to ramp up production to meet strong demand for goods and services.

Manufacturing production fell in June, with motor vehicle assembly tumbling amid a relentless global shortage of semiconductor chips, other data showed on Thursday.

The imbalance between supply and demand as the economy emerges from the COVID-19 pandemic is stoking inflation, with prices expected to remain high in the months ahead before moderating.

Federal Reserve Chair Jerome Powell told lawmakers on Thursday that he anticipated the shortages and high inflation would abate over time.

“The problem continues to be sourcing the input components and the skilled workers that remain in short supply, but there is evidence that the logjam is beginning to break up,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.

Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 360,000 for the week ended July 10, the lowest level since the middle of March in 2020, the Labor Department said.

Data for the prior week was revised to show 13,000 more applications received than previously reported.

Economists polled by Reuters had forecast 360,000 applications for the latest week.

Claims have struggled to make further progress since dropping below 400,000 in late May, even as at least 20 states led by Republican governors have pulled out of federal government-funded unemployment programs.

Unemployed people are required to file claims under the regular state programs to determine eligibility for federal benefits.

The early termination of the federal programs followed complaints by businesses that the benefits, including a $300 weekly check, were encouraging unemployed Americans to stay at home.

The economy is experiencing a shortage of workers, with a record 9.2 million job openings as of the end of May.

About 9.5 million people are officially unemployed.

The disconnect has also been blamed on lack of affordable child care, fears of contracting the coronavirus as well as pandemic-related career changes and retirements.

Evidence is mixed on whether the early termination of federal benefits, which started on June 12 and will run through July 31, is encouraging job seeking.

The expanded benefits will lapse on Sept. 6 for the rest of the country.

The number of people continuing to receive benefits after an initial week of aid fell 126,000 to 3.241 million in the week ended July 3.

Texas and Georgia accounted for the bulk of the decline in these so-called continuing claims, which are reported with a one-week lag.

“Claims in those two states, where top-off benefits ended June 26, fell to their lowest level since March 2020, suggesting the early end to benefits might be encouraging some people to return to work,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.

Florida and South Carolina, which have also terminated federal benefits early, reported big increases in continuing claims.

Some states that have not prematurely ended expanded benefits also saw declines in people on the jobless rolls.

At least 13.8 million people were collecting unemployment checks under all programs in late June.

Stocks on Wall Street were trading mostly lower.

The dollar rose against a basket of currencies.

U.S. Treasury yields fell.

SUPPLY CONSTRAINTS

In a separate report on Thursday, the Fed said manufacturing output dipped 0.1% in June after accelerating 0.9% in May.

It was pulled down by a 6.6% plunge in production at auto plants.


The global chip shortage is forcing automakers to adjust production schedules.

General Motors announced on Thursday that its Lansing Delta Township Assembly plant in Michigan and Spring Hill Assembly plant in Tennessee would take downtime from July 19 through July 26.

Auto production cuts have boosted demand for used cars and trucks, the major driver of consumer inflation in recent months.

Still, manufacturing, which accounts for 11.9% of the U.S. economy, grew at a 3.7% annualized rate in the second quarter after increasing at a 2.3% pace in the January-March period.

Demand is being fueled by COVID-19 vaccinations, low interest rates and nearly $6 trillion in government relief since the pandemic started in the United States in March 2020.

Though vaccinations are boosting spending on travel-related services and dining out among other activities, demand for goods remains robust and inventories are extremely low, which should keep manufacturing supported.

A third report from the New York Fed showed its measure of factory activity in New York state surged in July, with new orders and shipments rising strongly.

While a fourth report from the Philadelphia Fed showed a drop this month in its gauge of manufacturing in the region that covers factories in eastern Pennsylvania, southern New Jersey and Delaware, activity continued to expand at a solid clip.

“Anecdotal guidance suggests that supply issues could start to be resolved later this year and into 2022,” said Veronica Clark, an economist at Citigroup in New York.

“As long as indications of demand remain strong, we expect production to remain supported into 2022 as supply issues eventually ease.”

An easing of bottlenecks is expected to relieve some of the inflation pressure.

In a fifth report, the Labor Department said import prices rose 1.0% in June after surging 1.4% in May.

In the 12 months through June, import prices advanced 11.2% compared to 11.6% in May.

The government reported this week that consumer prices increased by the most in 13 years in June, while producer prices accelerated.


“The U.S. is experiencing cost-push inflation, which historically has proven more temporary than other causes of inflation, primarily demand pull,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao

https://www.reuters.com/article/us-usa- ... SKBN2EL1HD
thelivyjr
Site Admin
Posts: 73424
Joined: Thu Aug 30, 2018 1:40 p

Re: THE ECONOMY

Post by thelivyjr »

REUTERS

"Fed's Powell rapped on inflation, regulations in Senate hearing"


By Howard Schneider, Ann Saphir, Jonnelle Marte

JULY 15, 2021

WASHINGTON (Reuters) -U.S. Federal Reserve Chair Jerome Powell faced sharp questions about inflation and banking regulation in a hearing before the Senate Banking Committee on Thursday, issues likely at the forefront of his possible renomination to the top Fed post.

Powell delivered the same pledge of “powerful support” to complete the U.S. economic recovery as he did on Wednesday before the House Financial Services Committee, an indication he sees no need to rush the withdrawal of support from the economy because of a recent jump in inflation.

Republicans on the panel, however, picked up where their House colleagues left off, challenging Powell on whether a sharp acceleration in inflation will, as the Fed expects, prove temporary or not.

“The Fed’s current paradigm almost guarantees the Fed will be behind the curve,” in keeping inflation anchored at the central bank’s 2% average target, said Pennsylvania Republican Pat Toomey.

The central bank’s ongoing $120 billion in monthly bond purchases, particularly of mortgage-backed securities, “is puzzling,” he added, at a time when house prices are rocketing higher.

The comments from Toomey and other Republicans highlighted the political challenge the Fed is courting with a new framework that aims to allow inflation above its formal 2% target “for some time” in order to offset past years of weak inflation and allow more room for job growth.


The risk: If inflation takes root it might require more aggressive action by the Fed in the form of higher interest rates, derailing the very recovery the central bank aims to encourage.

Powell said he remains confident the recent rise in prices will ease on its own, a calculation important not just to Powell’s prospects, but for those of the Biden administration as well and for the recovery overall.

“We are experiencing a big uptick..."

"Night and day we are thinking about that and asking ourselves if we have the right frame of reference,” Powell acknowledged.


But overall he said the prices that are rising, such as for used cars, “have a story” related to the pandemic reopening and are “more idiosyncratic than broad.”

It’s a complicated case to make at a time when monthly inflation reports have run higher than expected - consumer prices in June rose at the fastest rate in 13 years - and when the Biden administration is trying to build a case for trillions of dollars in additional spending.

In the 1970s “high inflation crippled consumers with rapid and sudden price increases..."

"If we fail to take inflation seriously I am concerned our nation could be faced with the same challenges,” said Alabama Republican Richard Shelby.

“The Fed’s ability to maintain price stability is threatened.”

A PAIR OF ISSUES

Democrats by contrast honed in on Powell’s management of bank oversight and what they see as a weakening of regulations for the largest financial institutions.

The panel’s Democratic chair, Sherrod Brown of Ohio, in his opening statement and in questions to Powell argued the central bank under Powell had helped fuel bank dividends and stock buybacks at the expense of real economy investment.

“The Fed has rolled back important safeguards making it easier for the banks to pump up the price of their stock,” Brown said.


“Over the past four years I see one move after another to weaken regulation of Wall Street banks, and that worries me,” said Massachusetts Democrat Elizabeth Warren, one of 13 senators who voted against confirming Powell to his first term in 2018.

A bipartisan group of 84 voted to confirm him.

Powell pushed back, saying he felt the level of capital banks are currently required to set aside, and which is thus unavailable for dividend or other payments, is “about right.”

That pair of issues - Powell’s oversight of a possibly overheating economy, and his supervision of Wall Street - will be core to the Biden administration’s decision of whether to renominate Powell to a second 4-year term when his current one expires early next year.

The Senate Banking Committee would be the first stop in his confirmation.

Powell has made a point of building relationships on Capitol Hill - and particularly with the banking panel, which provides direct oversight in the form of twice-yearly monetary policy hearings.

A Reuters analysis of Powell’s meeting calendar shows that in his 3-1/2 years as Fed chair he has met personally with every current member of the banking committee, splitting the meetings evenly between Democrats and Republicans.

He has spent eight hours just with Brown.


That may have paid off in some good will.

Republican Senator John Kennedy of Louisiana thanked Powell for keeping the economy “in the middle of the road” through the pandemic, even if it was sometimes done with “spit and happy thoughts.”

Reporting by Howard Schneider, Ann Saphir and Jonnelle Marte; Editing by Toby Chopra and Andrea Ricci

https://www.reuters.com/article/us-usa- ... SKBN2EL1IN
Post Reply