BUSINESS INSIDER
"US reverses position and agrees to put money towards a fund that would help poorer nations address climate change"
Story by hgetahun@insider.com (Hannah Getahun)
20 NOVEMBER 2022
* Developed countries at the UN COP 27 summit agreed to create a "loss and damage" climate change fund.
* The fund would compensate less developed countries bearing the brunt of climate change.
* The agreement comes after 30 years of pushback from countries like the US.
World leaders from developed nations, including the United States, agreed Sunday to set up a fund for poorer nations at the United Nations COP 27 climate summit in Egypt, reversing on 30 years of hesitation to set up such a fund, the New York Times reported.
According to the Times, the final agreement for a "loss and damage fund" would require 24 countries to work together to arrange the details of who will contribute to the fund, who will receive funds, and where the money would go — the US is looking to exclude China as one of the developing countries that could benefit from the fund.
There are some 35,000 people attending the United Nations COP27 climate summit in Egypt.
The event is a mix of countries' pavilions, speeches, and, of course, negotiations.
Some of the basics, like access to food and drinks, caused a lot of grumbling.
Spending 12 days in Sharm el-Sheikh, Egypt, to cover the United Nations climate summit requires getting comfortable with contradictions.
Long stretches of highway separate the luxury coastal resorts, with their green grass and water fountains, from the dusty desert and many half-constructed buildings.
The ease of jumping on electric buses that shuttle COP27 attendees to the Tonino Lamborghini International Convention Center, where the summit being is held, abruptly ends once you enter the sprawling campus.
It took me a solid three days to get comfortable navigating it.
Small protests are allowed inside, where UN rules apply, but outside and across the rest of Egypt, political dissent is effectively banned.
Then there's the substance of UN talks themselves.
Climate diplomats are trying to strengthen global efforts to reduce greenhouse-gas emissions even as some of the countries they represent are pushing oil-and-gas expansion in the name of energy security.
That's the case in Europe, which is searching for alternative suppliers to Russia following its invasion of Ukraine.
It also adds a stipulation that developing countries cannot sue developed countries for these payments.
COP 27, or the Conference of the Parties, is an annual summit put on by the UN to address the adverse impacts of climate change.
Following the UN Framework Convention on Climate Change in 1992, the COP began meeting every year since in 1994, making this summit the 27th.
Since the 1992 convention, developing countries have demanded that a "loss and damage fund," facilitated by the UN, be implemented.
The decision will pave the way for developing countries, who are often the least responsible for the effects of climate change, to be compensated for losses and damages that they have endured as a result of the richest countries emitting the most greenhouse gases.
Dozens of developing nations, including small island nation like Vanuatu and much of Africa, pressed the rest of the world during the two-week summit in order to make headway on the fund.
These countries were successful in getting it on the official agenda for the first time at an annual COP summit, the Times reported, signaling the urgency of the agreement.
Pakistan, a country that experienced record-setting deadly flooding at the end of summer this year, was one of the countries that pushed for the fund.
Before this year's summit, Scotland was the only developed nation that offered to begin putting money towards the "loss and damage" of other nations.
Other countries, including the US, have side-stepped the agreement in order to avoid legal repercussions — a fear that experts have said is misplaced.
However, developing nations in Europe changed course during this year's climate talks, pledging millions of dollars to assist developing nations combat damages and loss as a result of climate-induced natural disasters, the Times reported.
After some pushback, the US soon agreed to the fund.
"The announcement offers hope to vulnerable communities all over the world who are fighting for their survival from climate stress," Sherry Rehman, Pakistan's minister for climate change, told the Times.
https://www.msn.com/en-us/news/world/us ... 37d7a1c923
THE ECONOMY
Re: THE ECONOMY
REUTERS
"US VP Harris announces $20 million new clean energy funding for Mekong region"
Story by Poppy McPherson
20 NOVEMBER 2022
BANGKOK (Reuters) - U.S Vice President Kamala Harris announced $20 million in new funding for clean energy projects in the Mekong region, during the last day of her tour of Thailand on Sunday following a regional summit.
She spoke to civil society and business leaders in Bangkok after the close of a meeting of the 21-member APEC bloc a day earlier.
"Bold climate action is not only necessary to protect the people of our planet and our natural resources, but it is also powerful driver of economic growth," she said.
In an earlier news release, she said the administration would request funding from Congress for the Japan-U.S.-Mekong Power Partnership (JUMPP), through which the two countries partner with regional nations to promote sustainable energy.
"In particular we know that the climate crisis presents a real threat to the communities who depend on the Mekong River."
"In Thailand, in Vietnam, Laos."
(Reporting by Poppy McPherson; Editing by Christopher Cushing)
https://www.msn.com/en-us/news/world/us ... fa669cc380
"US VP Harris announces $20 million new clean energy funding for Mekong region"
Story by Poppy McPherson
20 NOVEMBER 2022
BANGKOK (Reuters) - U.S Vice President Kamala Harris announced $20 million in new funding for clean energy projects in the Mekong region, during the last day of her tour of Thailand on Sunday following a regional summit.
She spoke to civil society and business leaders in Bangkok after the close of a meeting of the 21-member APEC bloc a day earlier.
"Bold climate action is not only necessary to protect the people of our planet and our natural resources, but it is also powerful driver of economic growth," she said.
In an earlier news release, she said the administration would request funding from Congress for the Japan-U.S.-Mekong Power Partnership (JUMPP), through which the two countries partner with regional nations to promote sustainable energy.
"In particular we know that the climate crisis presents a real threat to the communities who depend on the Mekong River."
"In Thailand, in Vietnam, Laos."
(Reporting by Poppy McPherson; Editing by Christopher Cushing)
https://www.msn.com/en-us/news/world/us ... fa669cc380
Re: THE ECONOMY
"Showered with subsidies, GlobalFoundries, Micron eye cuts"
Larry Rulison, Albany, New York Times Union
Updated: Nov. 18, 2022
ALBANY — Call it the two-faced industry.
Sometimes the computer-chip sector can be a bit like Janus, the Greek god with two faces — and two personalities.
One face is optimistic and looking forward. The other is pessimistic and looking backward.
While the chip industry — from Albany Nanotech to GlobalFoundries — has made the Capital Region and parts of upstate New York into a technology hub that is rivals places like Austin, Texas, and Portland, Ore., it can also be cruel and even vicious at times.
Just months after President Joe Biden signed the $52 billion CHIPS Act that will provide billions of dollars to chipmakers to build new factories in the United States and expand existing facilities — and just weeks after U.S. Senate Majority Leader Charles Schumer and Gov. Kathy Hochul celebrated a landmark deal to convince Micron Technology to build a massive new factory outside of Syracuse, the industry is starting to signal that it needs to put the brakes on spending.
GlobalFoundries and others have said they plan job cuts and hiring freezes.
And Micron says it will cut memory chip production by 20 percent, along with pulling back on capital spending.
The situation is raising eyebrows because of the number of incentives New York state and the federal government are offering these companies to build upstate.
The chipmakers lobbied for the billions, saying the industry needed to expand its manufacturing in the U.S. to counter China — especially since China has been threatening to invade the island nation of Taiwan where most of the world's most advanced chips, including those used to power Apple's iPhone, are made.
Those government incentives, which have yet to be handed out, include billions in grants available through the CHIPS Act, and $10 billion in tax breaks offered through the Hochul administration.
But that's just how the chip industry works.
When you operate factories that cost up to $10 billion each, the easiest way to go bankrupt is to operate them at full capacity when demand is falling.
When the chip industry is doing well, a chip factory is like printing money.
But when the chip industry is doing poorly — a humming factory is like setting money on fire.
Right now, the chip industry is facing a tough outlook for the first half of 2023 as customer demand for chips, especially for smartphones, is softening due to persistent price inflation, high energy prices, a recent pummeling of technology company stocks and a crisis in the crypto market.
SEMI, a semiconductor industry trade group based in Washington, D.C., is forecasting chip shipments to go into negative territory in 2023 but rebound in 2024 and 2025 to 6 percent annual growth.
"The growth is expected to temper in 2023 due to challenging macroeconomic conditions but is forecast to rebound in the years that follow on strong demand for semiconductors used in data center, automotive and industrial applications," SEMI wrote in a research note.
GlobalFoundries says it informed its employees across the globe that it has instituted a hiring freeze and will be looking to eliminate jobs.
Micron said it will need to cut the production of memory chips at its existing chip fabs by 20 percent while also cutting its capital spending on things like new manufacturing equipment.
(Micron refers to these chips in general terms as "bits")
“Micron is taking bold and aggressive steps to reduce bit supply growth to limit the size of our inventory," Micron CEO Sanjay Mehrotra said Wednesday.
"We will continue to monitor industry conditions and make further adjustments as needed."
It is unclear if these actions will ultimately result in delays to its plans to spend $100 billion on a new factory in the Syracuse suburb of Clay that could one day employ as many as 9,000 people.
The company, the only major memory chipmaker based in the U.S., still forecasts higher-than-average growth once chip demand improves.
"Despite the near-term cyclical challenges, we remain confident in the secular demand drivers for our markets, and in the long term, expect memory and storage revenue growth to outpace that of the rest of the semiconductor industry,” Mehrotra said.
Robert Maire, a chip industry analyst who runs a firm called Semiconductor Advisors in New York City, said Micron had already signaled significant cuts to capital expenditures earlier this year, and this latest announcement could mean it "will all but go to zero" for the time being.
The oversupply of memory chips, Maire said in a research note published Wednesday, is due in large part to technological advances that make memory chips more powerful than previous generations.
There is no need for end-users to buy new chips right now.
"This fact is also the same with every other memory maker from Samsung (the largest memory chipmaker in the world) on down, so we will be floating in excess memory chips for a long time until demand picks up to absorb the excess supply brought about by technology advancements," Maire added.
Maire believes that job cuts could follow at Micron, mirroring steps taken at GlobalFoundries as well as at Intel, which is based in Silcon Valley and is the world's largest chipmaker.
And there could be delays in Micron's new factory planned for Idaho where it is headquartered, which could delay plans to begin construction in Clay in 2024.
Chipmakers call their factories "fabs," as in fabrication facilities.
"Micron's new fab in Boise will clearly be delayed as need for additional capacity is nonexistent over the next several years," Maire continued.
"The fab after Boise, in New York, will clearly be pushed back even further."
Micron spokeswoman Erica Pompen said that Micron is still on track to invest $100 billion in the new Clay factory, with $20 billion of that coming by the end of the decade.
"Although the near-term demand environment for memory and storage is challenged, memory market revenue is expected to double by 2030," Pompen said.
"New wafer production capacity for memory will therefore be required to meet long-term demand."
Empire State Development, the state agency that negotiated New York's subsidy package with Micron — which is valued at $5.5 billion — is not worried about Micron's recent belt-tightening because it believes in Micron's long-term prospects.
And the tax breaks that Micron is eligible for are performance-based, meaning they aren't given to the company unless it meets job creation and other investment requirements.
"The global outlook, especially in the long term will far outweigh any short-term fluctuations in the market," said Kristin Devoe, an ESD spokeswoman.
"Attracting and growing this industry within our state continues to be a sound investment, and we are confident that Micron and other companies in the semiconductor industry that are considering locating or expanding here will thrive in New York.”
GlobalFoundries CEO Thomas Caulfield told analysts last week that the company's plans to build a second fab at its headquarters in Saratoga County, where it has an existing factory, are dependent on customer demand and long-term orders that have yet to be found.
GlobalFoundries employs 3,000 people at the Luther Forest Technology Campus in Malta.
A second fab at the location would add an additional 1,000 jobs.
"That's the part we're all working on now to make sure we can go secure that demand, that certainty of business so that we make these investments with confidence and we make these investments with the right returns that any business would want," Caulfield said.
https://www.timesunion.com/business/art ... 09a3f12c1f
Larry Rulison, Albany, New York Times Union
Updated: Nov. 18, 2022
ALBANY — Call it the two-faced industry.
Sometimes the computer-chip sector can be a bit like Janus, the Greek god with two faces — and two personalities.
One face is optimistic and looking forward. The other is pessimistic and looking backward.
While the chip industry — from Albany Nanotech to GlobalFoundries — has made the Capital Region and parts of upstate New York into a technology hub that is rivals places like Austin, Texas, and Portland, Ore., it can also be cruel and even vicious at times.
Just months after President Joe Biden signed the $52 billion CHIPS Act that will provide billions of dollars to chipmakers to build new factories in the United States and expand existing facilities — and just weeks after U.S. Senate Majority Leader Charles Schumer and Gov. Kathy Hochul celebrated a landmark deal to convince Micron Technology to build a massive new factory outside of Syracuse, the industry is starting to signal that it needs to put the brakes on spending.
GlobalFoundries and others have said they plan job cuts and hiring freezes.
And Micron says it will cut memory chip production by 20 percent, along with pulling back on capital spending.
The situation is raising eyebrows because of the number of incentives New York state and the federal government are offering these companies to build upstate.
The chipmakers lobbied for the billions, saying the industry needed to expand its manufacturing in the U.S. to counter China — especially since China has been threatening to invade the island nation of Taiwan where most of the world's most advanced chips, including those used to power Apple's iPhone, are made.
Those government incentives, which have yet to be handed out, include billions in grants available through the CHIPS Act, and $10 billion in tax breaks offered through the Hochul administration.
But that's just how the chip industry works.
When you operate factories that cost up to $10 billion each, the easiest way to go bankrupt is to operate them at full capacity when demand is falling.
When the chip industry is doing well, a chip factory is like printing money.
But when the chip industry is doing poorly — a humming factory is like setting money on fire.
Right now, the chip industry is facing a tough outlook for the first half of 2023 as customer demand for chips, especially for smartphones, is softening due to persistent price inflation, high energy prices, a recent pummeling of technology company stocks and a crisis in the crypto market.
SEMI, a semiconductor industry trade group based in Washington, D.C., is forecasting chip shipments to go into negative territory in 2023 but rebound in 2024 and 2025 to 6 percent annual growth.
"The growth is expected to temper in 2023 due to challenging macroeconomic conditions but is forecast to rebound in the years that follow on strong demand for semiconductors used in data center, automotive and industrial applications," SEMI wrote in a research note.
GlobalFoundries says it informed its employees across the globe that it has instituted a hiring freeze and will be looking to eliminate jobs.
Micron said it will need to cut the production of memory chips at its existing chip fabs by 20 percent while also cutting its capital spending on things like new manufacturing equipment.
(Micron refers to these chips in general terms as "bits")
“Micron is taking bold and aggressive steps to reduce bit supply growth to limit the size of our inventory," Micron CEO Sanjay Mehrotra said Wednesday.
"We will continue to monitor industry conditions and make further adjustments as needed."
It is unclear if these actions will ultimately result in delays to its plans to spend $100 billion on a new factory in the Syracuse suburb of Clay that could one day employ as many as 9,000 people.
The company, the only major memory chipmaker based in the U.S., still forecasts higher-than-average growth once chip demand improves.
"Despite the near-term cyclical challenges, we remain confident in the secular demand drivers for our markets, and in the long term, expect memory and storage revenue growth to outpace that of the rest of the semiconductor industry,” Mehrotra said.
Robert Maire, a chip industry analyst who runs a firm called Semiconductor Advisors in New York City, said Micron had already signaled significant cuts to capital expenditures earlier this year, and this latest announcement could mean it "will all but go to zero" for the time being.
The oversupply of memory chips, Maire said in a research note published Wednesday, is due in large part to technological advances that make memory chips more powerful than previous generations.
There is no need for end-users to buy new chips right now.
"This fact is also the same with every other memory maker from Samsung (the largest memory chipmaker in the world) on down, so we will be floating in excess memory chips for a long time until demand picks up to absorb the excess supply brought about by technology advancements," Maire added.
Maire believes that job cuts could follow at Micron, mirroring steps taken at GlobalFoundries as well as at Intel, which is based in Silcon Valley and is the world's largest chipmaker.
And there could be delays in Micron's new factory planned for Idaho where it is headquartered, which could delay plans to begin construction in Clay in 2024.
Chipmakers call their factories "fabs," as in fabrication facilities.
"Micron's new fab in Boise will clearly be delayed as need for additional capacity is nonexistent over the next several years," Maire continued.
"The fab after Boise, in New York, will clearly be pushed back even further."
Micron spokeswoman Erica Pompen said that Micron is still on track to invest $100 billion in the new Clay factory, with $20 billion of that coming by the end of the decade.
"Although the near-term demand environment for memory and storage is challenged, memory market revenue is expected to double by 2030," Pompen said.
"New wafer production capacity for memory will therefore be required to meet long-term demand."
Empire State Development, the state agency that negotiated New York's subsidy package with Micron — which is valued at $5.5 billion — is not worried about Micron's recent belt-tightening because it believes in Micron's long-term prospects.
And the tax breaks that Micron is eligible for are performance-based, meaning they aren't given to the company unless it meets job creation and other investment requirements.
"The global outlook, especially in the long term will far outweigh any short-term fluctuations in the market," said Kristin Devoe, an ESD spokeswoman.
"Attracting and growing this industry within our state continues to be a sound investment, and we are confident that Micron and other companies in the semiconductor industry that are considering locating or expanding here will thrive in New York.”
GlobalFoundries CEO Thomas Caulfield told analysts last week that the company's plans to build a second fab at its headquarters in Saratoga County, where it has an existing factory, are dependent on customer demand and long-term orders that have yet to be found.
GlobalFoundries employs 3,000 people at the Luther Forest Technology Campus in Malta.
A second fab at the location would add an additional 1,000 jobs.
"That's the part we're all working on now to make sure we can go secure that demand, that certainty of business so that we make these investments with confidence and we make these investments with the right returns that any business would want," Caulfield said.
https://www.timesunion.com/business/art ... 09a3f12c1f
Re: THE ECONOMY
CNBC
"Fed’s Mester wants more progress on inflation before ending interest rate hikes"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, NOV 21 2022
KEY POINTS
* Cleveland Fed President Loretta Mester said Monday that recent data has been encouraging, but that the progress is only a start.
* However, Mester said she’s on board with smaller interest rate increases than the Fed has been implementing lately.
Cleveland Federal Reserve President Loretta Mester said Monday inflation will need to show more signs of progress before she’s ready to stop advocating for interest rate increases.
While acknowledging that recent data has been encouraging, the central bank official told CNBC that the progress is only a start.
“We’re going to have more work to do, because we need to see inflation really on a sustainable downward path back to 2%,” she said in a live “Closing Bell” interview with Sara Eisen.
“We’ve had some good news on the inflation front, but we need to see more good news and sustained good news to make sure that we are returning to price stability as soon as we can.”
Markets widely expect the Fed in December to approve its seventh rate hike of the year, but this time slowing down to a 0.5 percentage point increase from a string of four straight 0.75 percentage point moves.
Mester said she’s on board with the reduced pace.
“We’re at a point where we’re going to enter a restrictive stance of policy."
"At that point, I think it makes sense that we can slow down a bit the ... pace of increases,” she said.
“We’re still going to raise the funds rate, but we’re at a reasonable point now where we can be very deliberate in setting monetary policy.”
Multiple other Fed officials in recent days have voiced similar sentiments, essentially that the tempo can be slowed a bit but there’s still a need to continue tightening policy until inflation shows more signs of a letup.
Markets rallied in recent days following data showing the rate of price increases slower than estimates, though inflation is still running at a 7.7% annual rate as gauged by the consumer price index.
The Fed targets inflation at 2%.
In recent days, the Fed has faced some criticism that its focus on inflation could cause unnecessary damage to the economy.
Mester said the Fed is trying to bring down inflation “as painlessly as possible.”
“I don’t think we should underestimate the consequences of continued inflation in the long run for the health of the economy,” she said.
https://www.cnbc.com/2022/11/21/feds-me ... hikes.html
"Fed’s Mester wants more progress on inflation before ending interest rate hikes"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, NOV 21 2022
KEY POINTS
* Cleveland Fed President Loretta Mester said Monday that recent data has been encouraging, but that the progress is only a start.
* However, Mester said she’s on board with smaller interest rate increases than the Fed has been implementing lately.
Cleveland Federal Reserve President Loretta Mester said Monday inflation will need to show more signs of progress before she’s ready to stop advocating for interest rate increases.
While acknowledging that recent data has been encouraging, the central bank official told CNBC that the progress is only a start.
“We’re going to have more work to do, because we need to see inflation really on a sustainable downward path back to 2%,” she said in a live “Closing Bell” interview with Sara Eisen.
“We’ve had some good news on the inflation front, but we need to see more good news and sustained good news to make sure that we are returning to price stability as soon as we can.”
Markets widely expect the Fed in December to approve its seventh rate hike of the year, but this time slowing down to a 0.5 percentage point increase from a string of four straight 0.75 percentage point moves.
Mester said she’s on board with the reduced pace.
“We’re at a point where we’re going to enter a restrictive stance of policy."
"At that point, I think it makes sense that we can slow down a bit the ... pace of increases,” she said.
“We’re still going to raise the funds rate, but we’re at a reasonable point now where we can be very deliberate in setting monetary policy.”
Multiple other Fed officials in recent days have voiced similar sentiments, essentially that the tempo can be slowed a bit but there’s still a need to continue tightening policy until inflation shows more signs of a letup.
Markets rallied in recent days following data showing the rate of price increases slower than estimates, though inflation is still running at a 7.7% annual rate as gauged by the consumer price index.
The Fed targets inflation at 2%.
In recent days, the Fed has faced some criticism that its focus on inflation could cause unnecessary damage to the economy.
Mester said the Fed is trying to bring down inflation “as painlessly as possible.”
“I don’t think we should underestimate the consequences of continued inflation in the long run for the health of the economy,” she said.
https://www.cnbc.com/2022/11/21/feds-me ... hikes.html
Re: THE ECONOMY
REUTERS
"Fed's Mester says she supports smaller rate hike in December"
Reuters
November 21, 2022
Nov 21 (Reuters) - The Federal Reserve can downshift to smaller interest rate hike increments from next month as it fine-tunes its policy actions to help bring down high inflation while keeping the economy humming, Cleveland Fed President Loretta Mester said on Monday.
"I think we can slow down from the 75 at the next meeting."
"I don't have a problem with that, I do think that's very appropriate," Mester said in an interview with broadcaster CNBC.
"But I do think we're going to have to let the economy tell us going forward what pace we have to be at."
The Fed earlier this month raised interest rates by 75 basis points for the fourth consecutive meeting, but since then a steady drumbeat of policymakers have signaled that they expect to shift to smaller increases in borrowing costs from now on to allow time for the economy to absorb the swiftest tightening of monetary policy in 40 years.
The central bank's benchmark overnight lending rate currently sits in a target range of 3.75%-4.00%.
Investors overwhelmingly expect a rate increase of 50 basis points at the Fed's next policy meeting on Dec. 13-14.
Mester noted that the Fed is now entering a more "deliberate" and "judicious" phase in weighing up its next moves as it sees if recent encouraging signs on inflation are the beginning of sustained improvement back toward the central bank's 2% goal, but warned that it should be prepared to act if price pressures do not sufficiently abate.
"Right now my forecast is that we're going to see some real, good progress on inflation next year," Mester said.
"We won't be back to 2%, but we'll see some meaningful progress next year."
"But if we don't see that, then we're going to have to make sure our policy really reacts to the incoming information."
"So I can't tell you today what the path going forward will be."
Reporting by Lindsay Dunsmuir; Editing by Mark Porter and Andrea Ricci
https://www.reuters.com/markets/rates-b ... 022-11-21/
"Fed's Mester says she supports smaller rate hike in December"
Reuters
November 21, 2022
Nov 21 (Reuters) - The Federal Reserve can downshift to smaller interest rate hike increments from next month as it fine-tunes its policy actions to help bring down high inflation while keeping the economy humming, Cleveland Fed President Loretta Mester said on Monday.
"I think we can slow down from the 75 at the next meeting."
"I don't have a problem with that, I do think that's very appropriate," Mester said in an interview with broadcaster CNBC.
"But I do think we're going to have to let the economy tell us going forward what pace we have to be at."
The Fed earlier this month raised interest rates by 75 basis points for the fourth consecutive meeting, but since then a steady drumbeat of policymakers have signaled that they expect to shift to smaller increases in borrowing costs from now on to allow time for the economy to absorb the swiftest tightening of monetary policy in 40 years.
The central bank's benchmark overnight lending rate currently sits in a target range of 3.75%-4.00%.
Investors overwhelmingly expect a rate increase of 50 basis points at the Fed's next policy meeting on Dec. 13-14.
Mester noted that the Fed is now entering a more "deliberate" and "judicious" phase in weighing up its next moves as it sees if recent encouraging signs on inflation are the beginning of sustained improvement back toward the central bank's 2% goal, but warned that it should be prepared to act if price pressures do not sufficiently abate.
"Right now my forecast is that we're going to see some real, good progress on inflation next year," Mester said.
"We won't be back to 2%, but we'll see some meaningful progress next year."
"But if we don't see that, then we're going to have to make sure our policy really reacts to the incoming information."
"So I can't tell you today what the path going forward will be."
Reporting by Lindsay Dunsmuir; Editing by Mark Porter and Andrea Ricci
https://www.reuters.com/markets/rates-b ... 022-11-21/
Re: THE ECONOMY
REUTERS
"U.S. business equipment borrowings grew 6% in October- ELFA"
Reuters
November 21, 2022
Nov 21 (Reuters) - U.S. companies borrowed 6% more in October to finance equipment investments compared with a year earlier, industry body Equipment Leasing and Finance Association (ELFA) said on Monday.
The companies signed up for $11.3 billion in new loans, leases and lines of credit last month, compared with $10.7 billion a year earlier, according to ELFA.
Borrowings were up nearly 6% from January.
"We see the economic tightening as an opportunity for carriers to get back on track with normal equipment replacement cycles that have been postponed and explore new verticals," Finloc USA Inc's Chief Revenue Officer James Currier said in a statement.
"Business reorganizations will require lenders to adapt to changing practices and operations," Currier added.
ELFA, which reports economic activity for the nearly $1-trillion equipment finance sector, said credit approvals totaled 77%, marginally down from 77.3% in September.
The Washington-based body's leasing and finance index measures the volume of commercial equipment financed in the United States.
The index is based on a survey of 25 members, including Bank of America Corp, and financing affiliates or units of Caterpillar Inc, Dell Technologies Inc, Siemens AG, Canon Inc and Volvo AB.
The Equipment Leasing & Finance Foundation, ELFA's non-profit affiliate, said its confidence index in November stood at 43.7%, down from 45% in October.
A reading above 50 indicates a positive business outlook.
Reporting by Nathan Gomes in Bengaluru; Editing by Krishna Chandra Eluri
https://www.reuters.com/markets/us/us-b ... 022-11-21/
"U.S. business equipment borrowings grew 6% in October- ELFA"
Reuters
November 21, 2022
Nov 21 (Reuters) - U.S. companies borrowed 6% more in October to finance equipment investments compared with a year earlier, industry body Equipment Leasing and Finance Association (ELFA) said on Monday.
The companies signed up for $11.3 billion in new loans, leases and lines of credit last month, compared with $10.7 billion a year earlier, according to ELFA.
Borrowings were up nearly 6% from January.
"We see the economic tightening as an opportunity for carriers to get back on track with normal equipment replacement cycles that have been postponed and explore new verticals," Finloc USA Inc's Chief Revenue Officer James Currier said in a statement.
"Business reorganizations will require lenders to adapt to changing practices and operations," Currier added.
ELFA, which reports economic activity for the nearly $1-trillion equipment finance sector, said credit approvals totaled 77%, marginally down from 77.3% in September.
The Washington-based body's leasing and finance index measures the volume of commercial equipment financed in the United States.
The index is based on a survey of 25 members, including Bank of America Corp, and financing affiliates or units of Caterpillar Inc, Dell Technologies Inc, Siemens AG, Canon Inc and Volvo AB.
The Equipment Leasing & Finance Foundation, ELFA's non-profit affiliate, said its confidence index in November stood at 43.7%, down from 45% in October.
A reading above 50 indicates a positive business outlook.
Reporting by Nathan Gomes in Bengaluru; Editing by Krishna Chandra Eluri
https://www.reuters.com/markets/us/us-b ... 022-11-21/
Re: THE ECONOMY
CNBC
"Fed officials see smaller rate hikes coming ‘soon,’ minutes show"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, NOV 23 2022
KEY POINTS
* Federal Reserve officials expect to switch to smaller interest rate increases “soon,” according to minutes from the November meeting released Wednesday.
* Some officials expressed concern over the impact rate increases could have on financial stability and the economy.
* Markets have largely expected the Fed to dial down the intensity of its policy tightening, and the minutes helped confirm that.
Federal Reserve officials earlier this month agreed that smaller interest rate increases should happen soon as they evaluate the impact policy is having on the economy, meeting minutes released Wednesday indicated.
Reflecting statements that multiple officials have made over the past several weeks, the meeting summary pointed to smaller rate hikes coming.
Markets widely expect the rate-setting Federal Open Market Committee to step down to a 0.5 percentage point increase in December, following four straight 0.75 percentage point hikes.
Though hinting that less severe moves were ahead, officials said they still see few signs of inflation abating.
However, some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated.
“The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”
The minutes noted that the smaller hikes would give policymakers a chance to evaluate the impact of the succession of rate hikes.
The central bank’s next interest rate decision is Dec. 14.
The summary noted that a few members indicated that “slowing the pace of increase could reduce the risk of instability in the financial system.”
Others said they’d like to wait to ease up on the pace.
Officials said they see the balance of risks on the economy now skewed to the downside.
Focus on end rate, not just pace
Markets had been looking for clues about not only what the next rate hike might look like but also for how far policymakers think they’ll have to go next year to make satisfactory progress against inflation.
Officials at the meeting said it was just as important for the public to focus more on how far the Fed will go with rates rather “than the pace of further increases in the target range.”
The minutes noted that the ultimate rate is probably higher than officials had previously thought.
At the September meeting, committee members had penciled in a terminal funds rate around 4.6%; recent statements have indicated the level could exceed 5%.
Over the past few weeks, officials have spoken largely in unison about the need to keep up the inflation fight, while also indicating they can pull back on the level of rate hikes.
That means a strong likelihood of a 0.5 percentage point increase in December, but still an uncertain course after that.
Markets expect a few more rate hikes in 2023, taking the funds rate to around 5%, and then possibly some reductions before next year ends.
The post-meeting statement from the FOMC added a sentence that markets interpreted as a signal that the Fed will be doing smaller increases ahead.
That sentence read, “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.“
Investors saw it as a nod to a reduced intensity of hikes following four straight 0.75 percentage point increases that took the Fed’s benchmark overnight borrowing rate to a range of 3.75%-4%, the highest in 14 years.
When will the hikes end?
Several Fed officials have said in recent days that they anticipate a likely half-point move in December.
“They’re getting to a point where they don’t have to move so quickly."
"That’s helpful since they don’t know exactly how much tightening they’re going to have to do,” said Bill English, a former Fed official now with the Yale School of Management.
“They emphasize policy works with lags, so it’s helpful to be able to go a little bit more slowly.“
Inflation data lately has been showing some encouraging signs while remaining well above the central bank’s 2% official target.
The consumer price index in October was up 7.7% from a year ago, the lowest reading since January.
However, a measure the Fed follows more closely, the personal consumption expenditures price index excluding food and energy, showed a 5.1% annual rise in September, up 0.2 percentage points from August and the highest reading since March.
Those reports came out after the November Fed meeting.
Several officials said they viewed the reports positively but will need to see more before they consider easing up on policy tightening.
The Fed has been the target lately of some criticism that it could be tightening too much.
The worry is that policymakers are too focused on backward-looking data and missing signs that inflation is ebbing and growth is slowing.
However, English expects the Fed officials to keep their collective foot on the brake until there are clearer signals that prices are falling.
He added that the Fed is willing to risk a slowing economy as it pursues its goal.
“They have risks in both directions, if doing too little and doing too much."
"They’ve been fairly clear that they view the risks of inflation getting out of the box and the need to do a really big tightening as the biggest risk,” he said.
“It’s a hard time to be [Fed Chairman Jerome] Powell.”
https://www.cnbc.com/2022/11/23/fed-min ... -2022.html
"Fed officials see smaller rate hikes coming ‘soon,’ minutes show"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, NOV 23 2022
KEY POINTS
* Federal Reserve officials expect to switch to smaller interest rate increases “soon,” according to minutes from the November meeting released Wednesday.
* Some officials expressed concern over the impact rate increases could have on financial stability and the economy.
* Markets have largely expected the Fed to dial down the intensity of its policy tightening, and the minutes helped confirm that.
Federal Reserve officials earlier this month agreed that smaller interest rate increases should happen soon as they evaluate the impact policy is having on the economy, meeting minutes released Wednesday indicated.
Reflecting statements that multiple officials have made over the past several weeks, the meeting summary pointed to smaller rate hikes coming.
Markets widely expect the rate-setting Federal Open Market Committee to step down to a 0.5 percentage point increase in December, following four straight 0.75 percentage point hikes.
Though hinting that less severe moves were ahead, officials said they still see few signs of inflation abating.
However, some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated.
“The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”
The minutes noted that the smaller hikes would give policymakers a chance to evaluate the impact of the succession of rate hikes.
The central bank’s next interest rate decision is Dec. 14.
The summary noted that a few members indicated that “slowing the pace of increase could reduce the risk of instability in the financial system.”
Others said they’d like to wait to ease up on the pace.
Officials said they see the balance of risks on the economy now skewed to the downside.
Focus on end rate, not just pace
Markets had been looking for clues about not only what the next rate hike might look like but also for how far policymakers think they’ll have to go next year to make satisfactory progress against inflation.
Officials at the meeting said it was just as important for the public to focus more on how far the Fed will go with rates rather “than the pace of further increases in the target range.”
The minutes noted that the ultimate rate is probably higher than officials had previously thought.
At the September meeting, committee members had penciled in a terminal funds rate around 4.6%; recent statements have indicated the level could exceed 5%.
Over the past few weeks, officials have spoken largely in unison about the need to keep up the inflation fight, while also indicating they can pull back on the level of rate hikes.
That means a strong likelihood of a 0.5 percentage point increase in December, but still an uncertain course after that.
Markets expect a few more rate hikes in 2023, taking the funds rate to around 5%, and then possibly some reductions before next year ends.
The post-meeting statement from the FOMC added a sentence that markets interpreted as a signal that the Fed will be doing smaller increases ahead.
That sentence read, “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.“
Investors saw it as a nod to a reduced intensity of hikes following four straight 0.75 percentage point increases that took the Fed’s benchmark overnight borrowing rate to a range of 3.75%-4%, the highest in 14 years.
When will the hikes end?
Several Fed officials have said in recent days that they anticipate a likely half-point move in December.
“They’re getting to a point where they don’t have to move so quickly."
"That’s helpful since they don’t know exactly how much tightening they’re going to have to do,” said Bill English, a former Fed official now with the Yale School of Management.
“They emphasize policy works with lags, so it’s helpful to be able to go a little bit more slowly.“
Inflation data lately has been showing some encouraging signs while remaining well above the central bank’s 2% official target.
The consumer price index in October was up 7.7% from a year ago, the lowest reading since January.
However, a measure the Fed follows more closely, the personal consumption expenditures price index excluding food and energy, showed a 5.1% annual rise in September, up 0.2 percentage points from August and the highest reading since March.
Those reports came out after the November Fed meeting.
Several officials said they viewed the reports positively but will need to see more before they consider easing up on policy tightening.
The Fed has been the target lately of some criticism that it could be tightening too much.
The worry is that policymakers are too focused on backward-looking data and missing signs that inflation is ebbing and growth is slowing.
However, English expects the Fed officials to keep their collective foot on the brake until there are clearer signals that prices are falling.
He added that the Fed is willing to risk a slowing economy as it pursues its goal.
“They have risks in both directions, if doing too little and doing too much."
"They’ve been fairly clear that they view the risks of inflation getting out of the box and the need to do a really big tightening as the biggest risk,” he said.
“It’s a hard time to be [Fed Chairman Jerome] Powell.”
https://www.cnbc.com/2022/11/23/fed-min ... -2022.html
Re: THE ECONOMY
REUTERS
"'Substantial majority' of Fed officials see slowdown in rate hikes 'soon'"
By Howard Schneider
November 23, 2022
WASHINGTON, Nov 23 (Reuters) - A "substantial majority" of policymakers at the Federal Reserve's meeting early this month agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes as debate broadened over the implications of the U.S. central bank's rapid tightening of monetary policy, according to the minutes from the session.
The readout of the Nov. 1-2 meeting, at which the Fed raised its policy rate by three-quarters of a percentage point for the fourth straight time, showed officials were largely satisfied they could move rates in smaller, more deliberate steps as the economy adjusted to more expensive credit and concerns about "overshooting" seemed to increase.
"A slower pace ... would better allow the (Federal Open Market) Committee to assess progress toward its goals of maximum employment and price stability," said the minutes, which were released on Wednesday.
"The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited."
More important than the size of coming rate increases, the minutes noted, was an emerging focus on just how high rates will need to rise to lower inflation - and the need to calibrate that carefully in coming months.
"With monetary policy approaching a sufficiently restrictive stance, participants emphasized that the level to which the Committee ultimately raised the target range ... and the evolution of the policy stance thereafter, had become more important considerations ... than the pace," the minutes stated.
That ultimate landing spot for policy will hinge heavily on the path of inflation in coming months, and whether recent lower-than-expected readings become an established trend down.
Fed staff economists raised their inflation projections for "coming quarters" and noted also that a recession in the next year was "almost as likely" as the baseline outlook for sluggish economic growth.
Still, the implication that policymakers were stepping down from their break-neck pace of rate hikes lifted U.S. stock prices and sent Treasury yields lower.
The benchmark S&P 500 index added to its gains earlier in the day and was last up about 0.6%, near its highest level in two months.
The yield on the 2-year Treasury note , the maturity most sensitive to Fed rate expectations, dropped to 4.49%. Longer-dated bond yields also fell.
The dollar, which has soared this year on the back of a pace of Fed tightening that other major central banks have been unable to match, slid against a basket of U.S. trading partner currencies.
Contracts tied to the Fed's policy rate showed investors maintaining bets for a half-percentage-point increase at the Dec. 13-14 policy meeting.
"Merely the fact that they're going to be slowing the pace confirms what the majority of people have been hoping to see," said Michael James, managing director of equity trading at Wedbush Securities.
EMERGING DEBATE
The minutes also showed an emerging debate within the Fed over the risks that rapid policy tightening could pose to economic growth and financial stability, even as policymakers acknowledged there had been little demonstrable progress on inflation and that rates still needed to rise.
While "a few participants" said slower rate hikes could reduce risks to the financial system, "a few other participants" noted that any slowing of the Fed's policy tightening pace should await "more concrete signs that inflation pressures were receding significantly."
By the Fed's preferred measure, inflation continues to run at more than three times the central bank's 2% target.
While recent data suggest inflation has now peaked, a slowdown in price pressures will be gradual.
"The path forward for monetary policy is a battle between the 'various' and the 'several,'" said Brian Jacobsen, senior investment strategist with Allspring Global Investments in Menomonee Falls, Wisconsin.
"It was only 'various' officials that thought they should revise higher their terminal rate projections while several thought plowing ahead raised the risks of financial instability."
In its Nov. 2 policy statement, the Fed hinted at emerging concerns about the risks of policy tightening, saying the "pace of future increases" would "take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
"Many participants commented that there was significant uncertainty about the ultimate level of the federal funds rate needed to achieve the Committee's goals" the minutes said, language suggesting Fed officials were shifting focus from the size of individual rate hikes to trying to calibrate a stopping point.
At the meeting in December, in addition to a policy statement, the central bank will also release new policymaker projections for the path of interest rates, inflation and unemployment.
Reporting by Howard Schneider; Additional reporting by Lindsay Dunsmuir, Dan Burns and Chris Mikolajczak; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 022-11-23/
"'Substantial majority' of Fed officials see slowdown in rate hikes 'soon'"
By Howard Schneider
November 23, 2022
WASHINGTON, Nov 23 (Reuters) - A "substantial majority" of policymakers at the Federal Reserve's meeting early this month agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes as debate broadened over the implications of the U.S. central bank's rapid tightening of monetary policy, according to the minutes from the session.
The readout of the Nov. 1-2 meeting, at which the Fed raised its policy rate by three-quarters of a percentage point for the fourth straight time, showed officials were largely satisfied they could move rates in smaller, more deliberate steps as the economy adjusted to more expensive credit and concerns about "overshooting" seemed to increase.
"A slower pace ... would better allow the (Federal Open Market) Committee to assess progress toward its goals of maximum employment and price stability," said the minutes, which were released on Wednesday.
"The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited."
More important than the size of coming rate increases, the minutes noted, was an emerging focus on just how high rates will need to rise to lower inflation - and the need to calibrate that carefully in coming months.
"With monetary policy approaching a sufficiently restrictive stance, participants emphasized that the level to which the Committee ultimately raised the target range ... and the evolution of the policy stance thereafter, had become more important considerations ... than the pace," the minutes stated.
That ultimate landing spot for policy will hinge heavily on the path of inflation in coming months, and whether recent lower-than-expected readings become an established trend down.
Fed staff economists raised their inflation projections for "coming quarters" and noted also that a recession in the next year was "almost as likely" as the baseline outlook for sluggish economic growth.
Still, the implication that policymakers were stepping down from their break-neck pace of rate hikes lifted U.S. stock prices and sent Treasury yields lower.
The benchmark S&P 500 index added to its gains earlier in the day and was last up about 0.6%, near its highest level in two months.
The yield on the 2-year Treasury note , the maturity most sensitive to Fed rate expectations, dropped to 4.49%. Longer-dated bond yields also fell.
The dollar, which has soared this year on the back of a pace of Fed tightening that other major central banks have been unable to match, slid against a basket of U.S. trading partner currencies.
Contracts tied to the Fed's policy rate showed investors maintaining bets for a half-percentage-point increase at the Dec. 13-14 policy meeting.
"Merely the fact that they're going to be slowing the pace confirms what the majority of people have been hoping to see," said Michael James, managing director of equity trading at Wedbush Securities.
EMERGING DEBATE
The minutes also showed an emerging debate within the Fed over the risks that rapid policy tightening could pose to economic growth and financial stability, even as policymakers acknowledged there had been little demonstrable progress on inflation and that rates still needed to rise.
While "a few participants" said slower rate hikes could reduce risks to the financial system, "a few other participants" noted that any slowing of the Fed's policy tightening pace should await "more concrete signs that inflation pressures were receding significantly."
By the Fed's preferred measure, inflation continues to run at more than three times the central bank's 2% target.
While recent data suggest inflation has now peaked, a slowdown in price pressures will be gradual.
"The path forward for monetary policy is a battle between the 'various' and the 'several,'" said Brian Jacobsen, senior investment strategist with Allspring Global Investments in Menomonee Falls, Wisconsin.
"It was only 'various' officials that thought they should revise higher their terminal rate projections while several thought plowing ahead raised the risks of financial instability."
In its Nov. 2 policy statement, the Fed hinted at emerging concerns about the risks of policy tightening, saying the "pace of future increases" would "take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
"Many participants commented that there was significant uncertainty about the ultimate level of the federal funds rate needed to achieve the Committee's goals" the minutes said, language suggesting Fed officials were shifting focus from the size of individual rate hikes to trying to calibrate a stopping point.
At the meeting in December, in addition to a policy statement, the central bank will also release new policymaker projections for the path of interest rates, inflation and unemployment.
Reporting by Howard Schneider; Additional reporting by Lindsay Dunsmuir, Dan Burns and Chris Mikolajczak; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 022-11-23/
Re: THE ECONOMY
REUTERS
"U.S. weekly jobless claims at 3-month high; equipment spending resilient"
By Lucia Mutikani
November 23, 2022
Summary
* Weekly jobless claims increase 17,000 to 240,000
* Continuing claims rise 48,000 to 1.551 million
* Core capital goods orders rebound 0.7% in October
* Shipments of core capital goods surge 1.3%
WASHINGTON, Nov 23 (Reuters) - The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labor market conditions, which remain tight.
Economists urged against reading too much into the rise in weekly unemployment benefit claims reported by the Labor Department on Wednesday, noting the data tend to be volatile at the start of the holiday season as companies temporarily close or slow hiring.
Claims remain in line with pre-pandemic levels.
"It's certainly possible that layoffs are helping to boost increases in claims filings," said Isfar Munir, an economist at Citigroup in New York.
"While this could be interpreted as evidence of a softening labor market, we would caution against this."
"The holiday season introduces a great deal of volatility into this data."
"It may be hard to disentangle the impact of seasonal patterns versus layoffs until January."
Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 240,000 for the week ended Nov. 19, the highest level since mid-August.
Economists polled by Reuters had forecast 225,000 claims for the latest week.
Moody's Analytics estimates the break-even level for claims at around 270,000.
The jobs market has remained resilient in the face of the Federal Reserve's most aggressive interest rate-hiking cycle since the 1980s aimed at curbing high inflation by dampening demand in the economy.
Economists say massive swings because of the COVID-19 pandemic had distorted the seasonal adjustment factors, the model that the government uses to strip out seasonal fluctuations from the data.
According to Brean Capital Senior Economic Advisor Conrad DeQuadros, seasonally adjusting the raw claims data with the average of the adjustment factors for 2005 and 2011, years that the calendar aligned with in 2022, would have resulted in claims rising only 3,000 last week.
"Nonetheless, the claims data should be closely watched in the coming weeks to see if this rise in claims is anything other than noise or poor seasonal adjustment," DeQuadros said.
There has been an increase in layoffs in the technology sector, with Twitter, Amazon and Meta, the parent of Facebook, announcing thousands of job cuts this month.
Companies in interest-rate sensitive sectors like housing and finance have also been sending workers home.
Unadjusted claims shot up 47,909 to 248,185 last week.
They were boosted by a 5,024 jump in California, likely reflecting the technology sector job cuts.
There were also big increases in filings in Georgia, Illinois, Minnesota, Iowa, New York, Ohio and Michigan.
Economists, however, did not expect the technology sector layoffs would be a major drag on the labor market and the overall economy.
They noted businesses outside the technology and housing sectors were hoarding workers after difficulties finding labor in the aftermath of the COVID-19 pandemic.
This was acknowledged by some Fed officials in minutes of the U.S. central bank's Nov. 1-2 policy meeting published on Wednesday.
The minutes showed "these participants noted that this consideration had limited layoffs even as the broader economy had softened or that this behavior could limit layoffs if aggregate economic activity were to soften further."
With 1.9 job openings for every unemployed person in September, some of the workers being laid off could find new employment quickly.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
NOT IN RECESSION
The claims report also showed the number of people receiving benefits after an initial week of aid increased 48,000 to 1.551 million in the week ending Nov. 12.
The so-called continuing claims, a proxy for hiring, covered the period during which the government surveyed households for November's unemployment rate.
Continuing claims increased between the October and November survey periods.
Economists, however, forecast the unemployment rate unchanged at 3.7%.
There were also signs of resilience in business spending on equipment, one of the two pillars of support for the economy.
A separate report from the Commerce Department showed orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% in October.
These so-called core capital goods orders decreased 0.8% in September.
Shipments of core capital goods jumped 1.3% after dipping 0.1% in September.
The report added to strong retail sales last month in suggesting that the economy continued to expand, though risks of a recession next year are mounting as the Fed's rate hikes are seen stifling demand.
A survey from S&P Global on Wednesday showed its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, contracting further in November, with a measure of new orders dropping to its lowest level in 2-1/2 years.
"The recession is not here today, but we continue to believe that economic conditions will deteriorate in 2023," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.
"The recession will be a 'garden variety' downturn because there are no glaring household or corporate sector imbalances."
There was some rare goods news on the housing market, which has been pummeled by soaring mortgage rates.
A fourth report from the Commerce Department showed new home sales, which account for 12.5% of U.S. home sales, rebounded 7.5% to a seasonally adjusted annual rate of 632,000 units in October.
The National Association of Home Builders last week reported a sharp increase in builders offering incentives, including price cuts to sell homes.
"Although demand has fallen when compared to a year ago, many buyers are waiting in the wings for either a downward price adjustment or for mortgage rates to fall," said Orphe Divounguy, senior economist at Zillow in Seattle.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 022-11-23/
"U.S. weekly jobless claims at 3-month high; equipment spending resilient"
By Lucia Mutikani
November 23, 2022
Summary
* Weekly jobless claims increase 17,000 to 240,000
* Continuing claims rise 48,000 to 1.551 million
* Core capital goods orders rebound 0.7% in October
* Shipments of core capital goods surge 1.3%
WASHINGTON, Nov 23 (Reuters) - The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labor market conditions, which remain tight.
Economists urged against reading too much into the rise in weekly unemployment benefit claims reported by the Labor Department on Wednesday, noting the data tend to be volatile at the start of the holiday season as companies temporarily close or slow hiring.
Claims remain in line with pre-pandemic levels.
"It's certainly possible that layoffs are helping to boost increases in claims filings," said Isfar Munir, an economist at Citigroup in New York.
"While this could be interpreted as evidence of a softening labor market, we would caution against this."
"The holiday season introduces a great deal of volatility into this data."
"It may be hard to disentangle the impact of seasonal patterns versus layoffs until January."
Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 240,000 for the week ended Nov. 19, the highest level since mid-August.
Economists polled by Reuters had forecast 225,000 claims for the latest week.
Moody's Analytics estimates the break-even level for claims at around 270,000.
The jobs market has remained resilient in the face of the Federal Reserve's most aggressive interest rate-hiking cycle since the 1980s aimed at curbing high inflation by dampening demand in the economy.
Economists say massive swings because of the COVID-19 pandemic had distorted the seasonal adjustment factors, the model that the government uses to strip out seasonal fluctuations from the data.
According to Brean Capital Senior Economic Advisor Conrad DeQuadros, seasonally adjusting the raw claims data with the average of the adjustment factors for 2005 and 2011, years that the calendar aligned with in 2022, would have resulted in claims rising only 3,000 last week.
"Nonetheless, the claims data should be closely watched in the coming weeks to see if this rise in claims is anything other than noise or poor seasonal adjustment," DeQuadros said.
There has been an increase in layoffs in the technology sector, with Twitter, Amazon and Meta, the parent of Facebook, announcing thousands of job cuts this month.
Companies in interest-rate sensitive sectors like housing and finance have also been sending workers home.
Unadjusted claims shot up 47,909 to 248,185 last week.
They were boosted by a 5,024 jump in California, likely reflecting the technology sector job cuts.
There were also big increases in filings in Georgia, Illinois, Minnesota, Iowa, New York, Ohio and Michigan.
Economists, however, did not expect the technology sector layoffs would be a major drag on the labor market and the overall economy.
They noted businesses outside the technology and housing sectors were hoarding workers after difficulties finding labor in the aftermath of the COVID-19 pandemic.
This was acknowledged by some Fed officials in minutes of the U.S. central bank's Nov. 1-2 policy meeting published on Wednesday.
The minutes showed "these participants noted that this consideration had limited layoffs even as the broader economy had softened or that this behavior could limit layoffs if aggregate economic activity were to soften further."
With 1.9 job openings for every unemployed person in September, some of the workers being laid off could find new employment quickly.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
NOT IN RECESSION
The claims report also showed the number of people receiving benefits after an initial week of aid increased 48,000 to 1.551 million in the week ending Nov. 12.
The so-called continuing claims, a proxy for hiring, covered the period during which the government surveyed households for November's unemployment rate.
Continuing claims increased between the October and November survey periods.
Economists, however, forecast the unemployment rate unchanged at 3.7%.
There were also signs of resilience in business spending on equipment, one of the two pillars of support for the economy.
A separate report from the Commerce Department showed orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% in October.
These so-called core capital goods orders decreased 0.8% in September.
Shipments of core capital goods jumped 1.3% after dipping 0.1% in September.
The report added to strong retail sales last month in suggesting that the economy continued to expand, though risks of a recession next year are mounting as the Fed's rate hikes are seen stifling demand.
A survey from S&P Global on Wednesday showed its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, contracting further in November, with a measure of new orders dropping to its lowest level in 2-1/2 years.
"The recession is not here today, but we continue to believe that economic conditions will deteriorate in 2023," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.
"The recession will be a 'garden variety' downturn because there are no glaring household or corporate sector imbalances."
There was some rare goods news on the housing market, which has been pummeled by soaring mortgage rates.
A fourth report from the Commerce Department showed new home sales, which account for 12.5% of U.S. home sales, rebounded 7.5% to a seasonally adjusted annual rate of 632,000 units in October.
The National Association of Home Builders last week reported a sharp increase in builders offering incentives, including price cuts to sell homes.
"Although demand has fallen when compared to a year ago, many buyers are waiting in the wings for either a downward price adjustment or for mortgage rates to fall," said Orphe Divounguy, senior economist at Zillow in Seattle.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 022-11-23/
Re: THE ECONOMY
REUTERS
"Black Friday crowds thin despite deals"
By Arriana McLymore and Doyinsola Oladipo
November 25, 2022
RALEIGH, N.C./ NEW YORK, Nov 25 (Reuters) - Inflation-weary shoppers were expected to turn out in record numbers for deals on Black Friday.
But thin crowds were seen outside many stores in New York, Raleigh, Chicago and Los Angeles on what historically has been the busiest shopping day of the year.
Many who opened their wallets in the United States said their purchases were strategic, not impulsive or splurges.
"We've been waiting" for discounts, said Tulio Rose, 28, who picked up a big-screen TV at Best Buy in Los Angeles, while shopping with Barnisha Nill, 35.
They saved about $500 on the 85-inch Samsung TV for their new apartment.
An estimated 166.3 million people are planning to shop from Thanksgiving Day through Cyber Monday this year, according to the National Retail Federation, almost 8 million more than last year.
But with sporadic rain in some parts of the country, stores were less busy than usual on Black Friday.
"Usually at this time of the year you struggle to find parking."
"This year I haven't had an issue getting a parking spot," Marshal Cohen, chief industry adviser of the NPD Group Inc said.
"It's a lot of social shopping, everybody is only looking to get what they need."
"There is no sense of urgency," Cohen said based on his store checks in New York, New Jersey, Maryland and Virginia.
At the American Dream mall in East Rutherford, New Jersey, there were no lines outside stores.
A Toys 'R' Us employee was handing out flyers with a list of the Black Friday "door buster" promotions.
However, those who did make it to the mall were surprised at the deals on offer.
"There's a lot of deals that weren't advertised."
"Some of the stores I got 50% off everything I bought," said Christine Chavez, 45.
She added that she is primarily gift shopping and picked up items from Victoria Secret and Torrid.
"I was hesitant to come to the mall, and I have to say I'm pleasantly surprised.”
Many shoppers looking for Apple's latest high-end phones returned empty handed from its stores this Black Friday as the technology company struggles with production snafus in China.
SOME PREFER SHOPPING ONLINE
At a Dollar Tree in Rockville, Maryland, shoppers said they were looking for specific items or picking up household items like sodas and dish sponges.
J.R. Moran, 49, gripped strands of red and green tinsel and felt antlers, which he planned to use for an "ugly sweater."
But he said he would make other holiday purchases online.
"Online shopping is more convenient nowadays," he said.
U.S. shoppers spent nearly 3% more online on Thanksgiving Day this year, a report from Adobe Analytics showed, with purchases made on mobile phones driving the increase.
Adobe Analytics, which measures e-commerce by tracking transactions at websites, has access to data covering purchases at 85% of the top 100 internet retailers in the United States.
A Dollar Tree shopper, Jen, who declined to give her last name, said her plan is to direct holiday spending primarily to things she and her loved ones need.
She joined together with others to purchase a $400 Le Creuset Dutch oven at regular price for her boyfriend.
Although she has money to spend from her new job as an e-commerce designer, she is "a little bit wary" of the likelihood of a recession, she said.
DEEPER DISCOUNTS
Retailers are offering steep discounts both online and in stores, which may pinch profit margins in the fourth quarter.
Consulting firm Kearney said its checks showed apparel retailers were the most active with sales, offering as much as 60% off on merchandise.
TV sets and electronics also saw strong discounts to tempt consumers who have been tightening their purse strings.
Walmart ramped up marketing for the holiday, purchasing ad space on Twitter and Instagram, during National Football League games and on billboards near New York City's Penn Station.
Amazon was offering a plethora of deals, including up to 42% off on Roomba vacuums, 45% off on Calvin Klein men's T-shirts and up to 50% off on Chromebooks from Lenovo, HP, Acer and ASUS.
"It's hard to tell how Black Friday is panning out so far," said Michael Brown, a partner at Kearney.
"We have to look at the whole holiday season."
"The slowness in purchasing might get pushed out to Cyber Monday or further."
Black Friday is expected to bring in $9 billion from online sales, a modest increase of 1% from last year, with shoppers now flocking to brick-and-mortar stores after a pandemic-led pause over the last two years.
Americans, especially from low-income households, are expected to pull back this year as inflation and higher energy prices pinch spending power.
Europe's retailers face a worsening cost-of-living crisis and the distraction of the soccer World Cup.
Reporting by Arriana McLymore in Raleigh, NC, Lisa Baertlein in Los Angeles, Doyinsola Oladipo in East Rutherford, New Jersey and Siddharth Cavale in New York; Additional reporting by Uday Sampath Kumar; Editing by Nick Zieminski and Daniel Wallis
https://www.reuters.com/business/retail ... 022-11-25/
"Black Friday crowds thin despite deals"
By Arriana McLymore and Doyinsola Oladipo
November 25, 2022
RALEIGH, N.C./ NEW YORK, Nov 25 (Reuters) - Inflation-weary shoppers were expected to turn out in record numbers for deals on Black Friday.
But thin crowds were seen outside many stores in New York, Raleigh, Chicago and Los Angeles on what historically has been the busiest shopping day of the year.
Many who opened their wallets in the United States said their purchases were strategic, not impulsive or splurges.
"We've been waiting" for discounts, said Tulio Rose, 28, who picked up a big-screen TV at Best Buy in Los Angeles, while shopping with Barnisha Nill, 35.
They saved about $500 on the 85-inch Samsung TV for their new apartment.
An estimated 166.3 million people are planning to shop from Thanksgiving Day through Cyber Monday this year, according to the National Retail Federation, almost 8 million more than last year.
But with sporadic rain in some parts of the country, stores were less busy than usual on Black Friday.
"Usually at this time of the year you struggle to find parking."
"This year I haven't had an issue getting a parking spot," Marshal Cohen, chief industry adviser of the NPD Group Inc said.
"It's a lot of social shopping, everybody is only looking to get what they need."
"There is no sense of urgency," Cohen said based on his store checks in New York, New Jersey, Maryland and Virginia.
At the American Dream mall in East Rutherford, New Jersey, there were no lines outside stores.
A Toys 'R' Us employee was handing out flyers with a list of the Black Friday "door buster" promotions.
However, those who did make it to the mall were surprised at the deals on offer.
"There's a lot of deals that weren't advertised."
"Some of the stores I got 50% off everything I bought," said Christine Chavez, 45.
She added that she is primarily gift shopping and picked up items from Victoria Secret and Torrid.
"I was hesitant to come to the mall, and I have to say I'm pleasantly surprised.”
Many shoppers looking for Apple's latest high-end phones returned empty handed from its stores this Black Friday as the technology company struggles with production snafus in China.
SOME PREFER SHOPPING ONLINE
At a Dollar Tree in Rockville, Maryland, shoppers said they were looking for specific items or picking up household items like sodas and dish sponges.
J.R. Moran, 49, gripped strands of red and green tinsel and felt antlers, which he planned to use for an "ugly sweater."
But he said he would make other holiday purchases online.
"Online shopping is more convenient nowadays," he said.
U.S. shoppers spent nearly 3% more online on Thanksgiving Day this year, a report from Adobe Analytics showed, with purchases made on mobile phones driving the increase.
Adobe Analytics, which measures e-commerce by tracking transactions at websites, has access to data covering purchases at 85% of the top 100 internet retailers in the United States.
A Dollar Tree shopper, Jen, who declined to give her last name, said her plan is to direct holiday spending primarily to things she and her loved ones need.
She joined together with others to purchase a $400 Le Creuset Dutch oven at regular price for her boyfriend.
Although she has money to spend from her new job as an e-commerce designer, she is "a little bit wary" of the likelihood of a recession, she said.
DEEPER DISCOUNTS
Retailers are offering steep discounts both online and in stores, which may pinch profit margins in the fourth quarter.
Consulting firm Kearney said its checks showed apparel retailers were the most active with sales, offering as much as 60% off on merchandise.
TV sets and electronics also saw strong discounts to tempt consumers who have been tightening their purse strings.
Walmart ramped up marketing for the holiday, purchasing ad space on Twitter and Instagram, during National Football League games and on billboards near New York City's Penn Station.
Amazon was offering a plethora of deals, including up to 42% off on Roomba vacuums, 45% off on Calvin Klein men's T-shirts and up to 50% off on Chromebooks from Lenovo, HP, Acer and ASUS.
"It's hard to tell how Black Friday is panning out so far," said Michael Brown, a partner at Kearney.
"We have to look at the whole holiday season."
"The slowness in purchasing might get pushed out to Cyber Monday or further."
Black Friday is expected to bring in $9 billion from online sales, a modest increase of 1% from last year, with shoppers now flocking to brick-and-mortar stores after a pandemic-led pause over the last two years.
Americans, especially from low-income households, are expected to pull back this year as inflation and higher energy prices pinch spending power.
Europe's retailers face a worsening cost-of-living crisis and the distraction of the soccer World Cup.
Reporting by Arriana McLymore in Raleigh, NC, Lisa Baertlein in Los Angeles, Doyinsola Oladipo in East Rutherford, New Jersey and Siddharth Cavale in New York; Additional reporting by Uday Sampath Kumar; Editing by Nick Zieminski and Daniel Wallis
https://www.reuters.com/business/retail ... 022-11-25/