REUTERS
"Strong US retail sales boost first-quarter growth estimates"
By Lucia Mutikani
April 15, 2024
Summary
* Retail sales increase 0.7% in March
* Core retail sales jump 1.1%; February sales revised up
* Business inventories rise 0.4% in February
WASHINGTON, April 15 (Reuters) - U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground.
The report from the Commerce Department on Monday, which followed news this month of robust employment gains in March and a pick-up in consumer inflation, bolstered expectations that the Federal Reserve could delay cutting interest rates until September.
Some economists see the window for lowering rates this year closing.
Strong retail sales prompted economists at Goldman Sachs to boost their gross domestic product (GDP) growth estimate for the first quarter to a 3.1% annualized rate from a 2.5% pace.
The economy grew at a 3.4% rate in the fourth quarter.
"The stronger economic activity remains, the slower inflation declines and the later the Fed responds with rate cuts," said Kathy Bostjancic, chief economist at Nationwide.
"The lack of moderation in consumer spending and inflation ... could push off rate reductions to next year."
Retail sales rose 0.7% last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show sales rebounding 0.9%, which was the largest gain in just over a year, instead of the previously reported 0.6%.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%. Sales jumped 4.0% on a year-on-year basis in March.
Despite higher inflation and borrowing costs, spending is continuing to hold up, confounding predictions of distress among lower-income households, thanks to the resilient labor market.
The latest Bank of America credit card data showed lower-income spending continues to outpace higher-income spending.
"An important reason is that, although lower-income consumers have been disproportionately affected by inflation, they have also been the biggest beneficiaries of the robust labor market," economists at Bank of America Securities wrote in a note.
"Lower-income workers have seen the largest cumulative wage gains since the start of the pandemic."
Job gains averaged 276,000 per month in the first quarter, compared to 212,000 in the October-December period.
Wage growth remains above 4.0% on a year-on-year basis.
Financial markets and most economists have pushed back their expectations for the first rate cut to September from June, and anticipate two rate cuts instead of the three envisaged by policymakers.
A few economists believe the U.S. central bank could still initiate its easing cycle in either June or July.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March 2022.
"A June cut is not out of the question, but the balance of risks is tilting toward the first rate cut coming later in the year," said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Stocks on Wall Street were trading largely higher, with investors keeping a wary eye on the Middle East.
The dollar rose against a basket of currencies.
Prices of U.S. Treasuries fell, with the yield on the benchmark 10-year note hitting a five-month high.
RESILIENT CONSUMERS
Sales last month were boosted by a 2.7% acceleration in online receipts, which followed a 0.2% gain in February.
Amazon held a spring sales promotion last month.
Sales at gasoline stations rose 2.1%, reflecting higher prices at the pump.
Building material and garden equipment store sales advanced 0.7%.
Sales at food services and drinking places, the only services component in the report, rose 0.4% after climbing 0.5% in February.
Economists view dining out as a key indicator of household finances.
But there were pockets of weakness.
Receipts at motor vehicles and parts dealers fell 0.7%.
Furniture store sales slipped 0.3%, likely as higher mortgage rates constrain home purchases.
A survey from the National Association of Home Builders on Monday showed confidence among single-family homebuilders was unchanged in April.
Sales at sporting goods, hobby, musical instrument and book stores dropped 1.8% last month.
That suggests households continue to focus on essentials and are cutting back on discretionary spending.
Receipts at electronics and appliance outlets decreased 1.2%, while those at clothing retailers fell 1.6%.
Retail sales excluding automobiles, gasoline, building materials and food services increased 1.1% in March - the biggest gain since January 2023.
Data for February was revised higher to show these so-called retail sales gaining 0.3% instead of the previously reported unchanged reading.
Core retail sales correspond most closely with the consumer spending component of GDP.
The jump in core retail sales in March and the upward revision in February erased the dip in January and led economists to expect that growth in consumer spending in the first quarter probably matched the fourth quarter's brisk pace of 3.3%.
That estimate does not take into account services, the biggest component of consumer spending, leaving an upside risk to both spending and GDP growth in the January-March quarter.
The growth picture was further brightened by other data from the Census Bureau showing business inventories rose 0.4% in February after being unchanged in January.
"Given the various stimulus programs have stopped and money from them has been spent, consumer spending now rests firmly on incomes from paychecks, which continue to expand along with the labor market," said Robert Frick, corporate economist at Navy Federal Credit Union.
"This means a solid expansion should continue."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-r ... 024-04-15/
THE ECONOMY
Re: THE ECONOMY
CNBC
"Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, APR 16 2024
KEY POINTS
* Fed Chair Jerome Powell said the U.S. economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
* “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said during a central banking forum.
Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.
“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.
Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.
Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years.
That was the result of 11 consecutive rate hikes that began in March 2022.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said.
“That said, we think policy is well positioned to handle the risks that we face.”
Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”
The comments follow inflation data through the first three months of 2024 that has been higher than expected.
A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.
Treasury yields rose as Powell spoke.
The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points.
The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.
https://www.cnbc.com/2024/04/16/powell- ... -goal.html
"Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, APR 16 2024
KEY POINTS
* Fed Chair Jerome Powell said the U.S. economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
* “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said during a central banking forum.
Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.
“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.
Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.
Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years.
That was the result of 11 consecutive rate hikes that began in March 2022.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said.
“That said, we think policy is well positioned to handle the risks that we face.”
Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”
The comments follow inflation data through the first three months of 2024 that has been higher than expected.
A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.
Treasury yields rose as Powell spoke.
The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points.
The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.
https://www.cnbc.com/2024/04/16/powell- ... -goal.html
Re: THE ECONOMY
REUTERS
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/
Re: THE ECONOMY
REUTERS
"Fed's Powell says restrictive rates policy needs more time to work"
By Howard Schneider and Ann Saphir
April 16, 2024
WASHINGTON, April 16 (Reuters) - Top U.S. central bank officials including Federal Reserve Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer and further dashing investors' hopes for meaningful reductions in borrowing costs this year.
Fed policymakers have said since the start of the year that rate cuts are contingent on gaining "greater confidence" that inflation is moving towards the central bank's 2% goal, but readings over the past few months show price pressures may even be moving in the opposite direction.
"The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence," Powell told a forum in Washington, in what is likely to be his last public appearance before the April 30-May 1 policy meeting.
"Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he said.
U.S. central bankers are universally expected to leave rates unchanged at their upcoming meeting, but until early this month analysts and investors thought rate cuts would likely start with an initial quarter-percentage-point reduction at the Fed's June 11-12 meeting, with two more cuts happening by the end of 2024.
Now the first cut is expected in September and the odds of a second cut are dwindling.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said.
"At the same time, we have significant space to ease should the labor market unexpectedly weaken."
In separate remarks earlier on Tuesday, Fed Vice Chair Philip Jefferson omitted any mention of rate cuts, and said the U.S. central bank was ready to keep its tight monetary policy in place "for longer" if inflation fails to slow as expected.
Jefferson noted the central bank was facing a strong economy and had seen little recent progress in bringing down inflation, excluding what had been a staple reference in Fed speeches to gaining "confidence" in lower inflation and then cutting rates.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said.
In his last public remarks, on Feb. 22, Jefferson included what had been a staple of recent Fed communications - that "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year," a nod to the possibility of reducing the Fed's benchmark overnight interest rate from the current 5.25%-5.50% range to account for a slowing pace of price increases.
'MEASURED HAWKISH RESET'
Analysts and investors have been steadily marking down the likelihood and timing of Fed rate cuts as policymakers struggle to reconcile a gravity-defying economy with their assessment that monetary policy is "restrictive" and inflation likely on its way down.
Both of those ideas have been called into question by job growth, retail spending, inflation and other data that continue to challenge the Fed's sense that the economy was gliding towards lower demand, slower growth, and price increases nearing the 2% target.
Just over five weeks ago, Powell told a U.S. Senate panel that the Fed was "not far" from gaining the confidence in falling inflation needed to cut interest rates.
Powell not only omitted that characterization on Tuesday, but he also did not repeat his prior view, laid out after the Fed's March 19-20 meeting, that data in January and February had not changed the "overall story" of gradually slowing inflation.
Instead, he said the Fed's preferred measure of underlying inflation - the year-over-year change in the core personal consumption expenditures price index - likely rose 2.8% in March, unchanged from February, with three-month and six-month average measures "actually above that level."
"We view this as a measured hawkish reset of policy communication to a more neutral posture with less of an immediate bias to cut rates, though the basic idea of wanting to get more confidence inflation is moving lower before cutting rates remains intact," said Krishna Guha, vice chairman at Evercore ISI.
"But what has not changed is Powell's read of the underlying economics, and this prevents us from reading him too hawkish overall."
When inflation was in fast decline last year, Powell was reluctant to declare the fight against it won even as policymakers laid the groundwork for rate reductions beginning this year.
Officials at the Fed's March 19-20 meeting said they still expected to cut the policy rate by three-quarters of a percentage point by the end of 2024.
Powell at the time said disappointing inflation data in January and February "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%."
Yet the bumps continued through March, enough so that some officials at the last Fed meeting worried monetary policy was not having the sort of impact that would be typically expected from the highest interest rates in a quarter of a century.
Data since then have shown a massive 303,000 jobs were added in March, the pace of consumer price increases accelerated, and even low-income households continued to spend.
The strength of the economy, policymakers suggest, is one reason they could wait to cut rates and be sure inflation will resume its decline.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Dan Burns and Paul Simao
https://www.reuters.com/markets/us/feds ... 024-04-16/
"Fed's Powell says restrictive rates policy needs more time to work"
By Howard Schneider and Ann Saphir
April 16, 2024
WASHINGTON, April 16 (Reuters) - Top U.S. central bank officials including Federal Reserve Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer and further dashing investors' hopes for meaningful reductions in borrowing costs this year.
Fed policymakers have said since the start of the year that rate cuts are contingent on gaining "greater confidence" that inflation is moving towards the central bank's 2% goal, but readings over the past few months show price pressures may even be moving in the opposite direction.
"The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence," Powell told a forum in Washington, in what is likely to be his last public appearance before the April 30-May 1 policy meeting.
"Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he said.
U.S. central bankers are universally expected to leave rates unchanged at their upcoming meeting, but until early this month analysts and investors thought rate cuts would likely start with an initial quarter-percentage-point reduction at the Fed's June 11-12 meeting, with two more cuts happening by the end of 2024.
Now the first cut is expected in September and the odds of a second cut are dwindling.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said.
"At the same time, we have significant space to ease should the labor market unexpectedly weaken."
In separate remarks earlier on Tuesday, Fed Vice Chair Philip Jefferson omitted any mention of rate cuts, and said the U.S. central bank was ready to keep its tight monetary policy in place "for longer" if inflation fails to slow as expected.
Jefferson noted the central bank was facing a strong economy and had seen little recent progress in bringing down inflation, excluding what had been a staple reference in Fed speeches to gaining "confidence" in lower inflation and then cutting rates.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said.
In his last public remarks, on Feb. 22, Jefferson included what had been a staple of recent Fed communications - that "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year," a nod to the possibility of reducing the Fed's benchmark overnight interest rate from the current 5.25%-5.50% range to account for a slowing pace of price increases.
'MEASURED HAWKISH RESET'
Analysts and investors have been steadily marking down the likelihood and timing of Fed rate cuts as policymakers struggle to reconcile a gravity-defying economy with their assessment that monetary policy is "restrictive" and inflation likely on its way down.
Both of those ideas have been called into question by job growth, retail spending, inflation and other data that continue to challenge the Fed's sense that the economy was gliding towards lower demand, slower growth, and price increases nearing the 2% target.
Just over five weeks ago, Powell told a U.S. Senate panel that the Fed was "not far" from gaining the confidence in falling inflation needed to cut interest rates.
Powell not only omitted that characterization on Tuesday, but he also did not repeat his prior view, laid out after the Fed's March 19-20 meeting, that data in January and February had not changed the "overall story" of gradually slowing inflation.
Instead, he said the Fed's preferred measure of underlying inflation - the year-over-year change in the core personal consumption expenditures price index - likely rose 2.8% in March, unchanged from February, with three-month and six-month average measures "actually above that level."
"We view this as a measured hawkish reset of policy communication to a more neutral posture with less of an immediate bias to cut rates, though the basic idea of wanting to get more confidence inflation is moving lower before cutting rates remains intact," said Krishna Guha, vice chairman at Evercore ISI.
"But what has not changed is Powell's read of the underlying economics, and this prevents us from reading him too hawkish overall."
When inflation was in fast decline last year, Powell was reluctant to declare the fight against it won even as policymakers laid the groundwork for rate reductions beginning this year.
Officials at the Fed's March 19-20 meeting said they still expected to cut the policy rate by three-quarters of a percentage point by the end of 2024.
Powell at the time said disappointing inflation data in January and February "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%."
Yet the bumps continued through March, enough so that some officials at the last Fed meeting worried monetary policy was not having the sort of impact that would be typically expected from the highest interest rates in a quarter of a century.
Data since then have shown a massive 303,000 jobs were added in March, the pace of consumer price increases accelerated, and even low-income households continued to spend.
The strength of the economy, policymakers suggest, is one reason they could wait to cut rates and be sure inflation will resume its decline.
Reporting by Howard Schneider; Additional reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Dan Burns and Paul Simao
https://www.reuters.com/markets/us/feds ... 024-04-16/
Re: THE ECONOMY
REUTERS
"Bank of America profit hurt by losses on credit cards, office loans"
By Saeed Azhar and Mehnaz Yasmin
April 16, 2024
NEW YORK, April 16 (Reuters) - Bank of America shares on Tuesday fell more than 3% after its first-quarter profits shrank and the bank set aside more money to cover souring loans from consumers whose finances are worsening.
U.S. lenders have cited resilient household finances as evidence that the economy remains on a solid footing, but cracks are starting to show for the lowest-income consumers.
While their spending remains robust despite rising borrowing costs, higher prices and shrinking savings, banks are preparing for more Americans to miss payments.
"The market has used Bank of America as the bellwether for consumer commentary," said David Wagner, a portfolio manager at Aptus Capital Advisors.
"The weakness in credit card delinquencies caught them offside."
BofA's net charge-offs, or debts that are unlikely to be recovered, rose to $1.5 billion in the first quarter from $807 million a year earlier, mainly from credit card losses.
The charge-offs are from delinquencies in the fourth quarter, but are beginning to stabilize, said Alastair Borthwick, chief financial officer.
"The main economic hangover for Bank of America as well as most other banks is that Federal Reserve interest rates may not decline as quickly as previously expected," said Michael Ashley Schulman, chief investment officer of California-based investment firm Running Point, which advises wealthy families.
"Therefore they may see an uptick in consumer and business delinquencies and defaults, especially from real estate."
"One good quarter from the bank is not going to allay these macro concerns."
Despite Tuesday's decline, BofA shares were up about 3% this year, lagging the S&P 500 bank index's 4.7% increase and a 6% gain for rival JPMorgan.
BofA's net interest income (NII) — the difference between what it earns on loans and pays for deposits — slid 3% to $14 billion as it paid more to customers to park their money while demand from borrowers stayed modest.
But it was turning more optimistic.
"We continue to expect that Q2 will be the low point for NII and we expect the back half of 2024 to grow," Borthwick told analysts on a conference call on Tuesday.
JPMorgan, the largest U.S. lender, slightly increased its estimate for NII, disappointing investors who hoped that the bank would reap even greater benefits from a prolonged period of higher interest rates.
BofA's CEO Brian Moynihan told analysts the bank had cut the workforce by more than 4,700 employees from the first quarter of 2023.
SHIFTING EXPECTATIONS
Excluding one-off items, Bank of America earned 83 cents a share in the first quarter, ahead of analysts' average estimate of 76 cents a share, according to LSEG data.
Still, shifting expectations for U.S. interest rate cuts and an uncertain economic outlook have made it more difficult to predict future profits, banking executives said last week.
If the Federal Reserve keeps rates higher for longer in the coming months, lenders that made bumper profits from rising interest rates in the last two years could build on their gains.
But their earnings could diminish if a potential economic slowdown deters borrowers from taking out loans.
"Generally speaking, higher for longer is probably better for banks," said Borthwick.
"Inflation is under control ... that appears to be the case."
"So that's obviously a good place."
A resilient U.S. economy, buoyant equities and a flurry of large deals have reignited hopes of a nascent recovery in dealmaking, although industry executives have expressed guarded optimism.
Investment banking fees jumped 35% to $1.6 billion from a year earlier, partially offsetting a decline in interest payments due to slow demand from borrowers.
Last month, Borthwick said he expected investment banking revenue to jump 10% to 15% in the first quarter.
Revenue from the segment also rose at rival JPMorgan and Citigroup in the first quarter, fueled by gains in debt and equity capital markets.
BofA's sales and trading revenue rose 2% to $5.2 billion with equities contributing a 15% jump and fixed income currencies and commodities posting a 4% decline.
COMMERCIAL REAL ESTATE
Bank of America set aside $1.3 billion in provisions for credit losses in the first quarter, up from $931 million a year earlier.
It also took more writedowns on office loans, which partly increased loan losses for its commercial division.
Still, its CFO said the lender had limited commercial real estate exposure and was reviewing ratings, property appraisals and sales.
Revenue from Bank of America's consumer unit sank 5% to $10 billion in the quarter, primarily due to lower deposit balances.
Bank of America also took a $700 million charge in the reported quarter to replenish a government deposit insurance fund, drained by $16 billion to cover depositors of two banks that collapsed in 2023.
Profit from BofA's Merrill wealth management division rose about 10% to $1 billion as rising equity values generated higher fees with record revenue and client balances.
The division grew assets under management to $1.4 trillion from $1.3 trillion in the fourth quarter.
Reporting by Saeed Azhar in New York and Mehnaz Yasmin in Bengaluru;additional reporting by Sinead Carew; Editing by Lananh Nguyen, Shinjini Ganguli and Nick Zieminski
https://www.reuters.com/business/financ ... 024-04-16/
"Bank of America profit hurt by losses on credit cards, office loans"
By Saeed Azhar and Mehnaz Yasmin
April 16, 2024
NEW YORK, April 16 (Reuters) - Bank of America shares on Tuesday fell more than 3% after its first-quarter profits shrank and the bank set aside more money to cover souring loans from consumers whose finances are worsening.
U.S. lenders have cited resilient household finances as evidence that the economy remains on a solid footing, but cracks are starting to show for the lowest-income consumers.
While their spending remains robust despite rising borrowing costs, higher prices and shrinking savings, banks are preparing for more Americans to miss payments.
"The market has used Bank of America as the bellwether for consumer commentary," said David Wagner, a portfolio manager at Aptus Capital Advisors.
"The weakness in credit card delinquencies caught them offside."
BofA's net charge-offs, or debts that are unlikely to be recovered, rose to $1.5 billion in the first quarter from $807 million a year earlier, mainly from credit card losses.
The charge-offs are from delinquencies in the fourth quarter, but are beginning to stabilize, said Alastair Borthwick, chief financial officer.
"The main economic hangover for Bank of America as well as most other banks is that Federal Reserve interest rates may not decline as quickly as previously expected," said Michael Ashley Schulman, chief investment officer of California-based investment firm Running Point, which advises wealthy families.
"Therefore they may see an uptick in consumer and business delinquencies and defaults, especially from real estate."
"One good quarter from the bank is not going to allay these macro concerns."
Despite Tuesday's decline, BofA shares were up about 3% this year, lagging the S&P 500 bank index's 4.7% increase and a 6% gain for rival JPMorgan.
BofA's net interest income (NII) — the difference between what it earns on loans and pays for deposits — slid 3% to $14 billion as it paid more to customers to park their money while demand from borrowers stayed modest.
But it was turning more optimistic.
"We continue to expect that Q2 will be the low point for NII and we expect the back half of 2024 to grow," Borthwick told analysts on a conference call on Tuesday.
JPMorgan, the largest U.S. lender, slightly increased its estimate for NII, disappointing investors who hoped that the bank would reap even greater benefits from a prolonged period of higher interest rates.
BofA's CEO Brian Moynihan told analysts the bank had cut the workforce by more than 4,700 employees from the first quarter of 2023.
SHIFTING EXPECTATIONS
Excluding one-off items, Bank of America earned 83 cents a share in the first quarter, ahead of analysts' average estimate of 76 cents a share, according to LSEG data.
Still, shifting expectations for U.S. interest rate cuts and an uncertain economic outlook have made it more difficult to predict future profits, banking executives said last week.
If the Federal Reserve keeps rates higher for longer in the coming months, lenders that made bumper profits from rising interest rates in the last two years could build on their gains.
But their earnings could diminish if a potential economic slowdown deters borrowers from taking out loans.
"Generally speaking, higher for longer is probably better for banks," said Borthwick.
"Inflation is under control ... that appears to be the case."
"So that's obviously a good place."
A resilient U.S. economy, buoyant equities and a flurry of large deals have reignited hopes of a nascent recovery in dealmaking, although industry executives have expressed guarded optimism.
Investment banking fees jumped 35% to $1.6 billion from a year earlier, partially offsetting a decline in interest payments due to slow demand from borrowers.
Last month, Borthwick said he expected investment banking revenue to jump 10% to 15% in the first quarter.
Revenue from the segment also rose at rival JPMorgan and Citigroup in the first quarter, fueled by gains in debt and equity capital markets.
BofA's sales and trading revenue rose 2% to $5.2 billion with equities contributing a 15% jump and fixed income currencies and commodities posting a 4% decline.
COMMERCIAL REAL ESTATE
Bank of America set aside $1.3 billion in provisions for credit losses in the first quarter, up from $931 million a year earlier.
It also took more writedowns on office loans, which partly increased loan losses for its commercial division.
Still, its CFO said the lender had limited commercial real estate exposure and was reviewing ratings, property appraisals and sales.
Revenue from Bank of America's consumer unit sank 5% to $10 billion in the quarter, primarily due to lower deposit balances.
Bank of America also took a $700 million charge in the reported quarter to replenish a government deposit insurance fund, drained by $16 billion to cover depositors of two banks that collapsed in 2023.
Profit from BofA's Merrill wealth management division rose about 10% to $1 billion as rising equity values generated higher fees with record revenue and client balances.
The division grew assets under management to $1.4 trillion from $1.3 trillion in the fourth quarter.
Reporting by Saeed Azhar in New York and Mehnaz Yasmin in Bengaluru;additional reporting by Sinead Carew; Editing by Lananh Nguyen, Shinjini Ganguli and Nick Zieminski
https://www.reuters.com/business/financ ... 024-04-16/
Re: THE ECONOMY
REUTERS
"US manufacturing output increases in March; February data revised higher"
By Reuters
April 16, 2024
WASHINGTON, April 16 (Reuters) - Production at U.S. factories increased solidly in March as output at motor vehicle assembly plants and elsewhere rose, suggesting that manufacturing was turning the corner after being constrained by higher borrowing costs.
Manufacturing output rose 0.5% last month after an upwardly revised 1.2% rebound in the prior month, the Federal Reserve said on Tuesday.
Factory output was previously reported to have rebounded 0.8% in February.
Economists polled by Reuters had forecast factory output rising 0.3%.
Production at factories increased 0.8% year-on-year in March.
It edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December quarter.
Manufacturing accounts for 10.4% of the economy.
A survey from the Institute for Supply Management early this month showed manufacturing grew for the first time in 1-1/2 years in March.
But with the Federal Reserve expected to delay an anticipated rate cut this year amid stubbornly high inflation, manufacturing is not out of the woods yet.
Motor vehicle and parts output increased 3.1% last month after advancing 3.4% in February.
Durable goods manufacturing production rose 0.3%.
There were significant increases in the output of aerospace and miscellaneous transportation equipment, and wood products.
But output of nonmetallic mineral products, furniture as well as primary metals declined.
Production of nondurable goods rose 0.7% as gains in the output of petroleum and coal products and chemicals offset declines food, beverage and tobacco products.
Mining output dropped 1.4% after rebounding 3.0% in February.
Utilities production rose 2.0% after decreasing 7.6% in February.
Overall industrial production rose 0.4% in March after rising by the same margin in February.
Industrial production was unchanged year-on-year in March.
It contracted at a 1.8% pace in the January-March quarter after shrinking at a 1.9% rate in the fourth quarter.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, rose to 78.4% from 78.2% in February.
It is 1.2 percentage points below its 1972-2023 average.
The operating rate for the manufacturing sector increased 0.3 percentage point in March to 77.4%.
It is 0.8 percentage points below its long-run average.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-m ... 024-04-16/
"US manufacturing output increases in March; February data revised higher"
By Reuters
April 16, 2024
WASHINGTON, April 16 (Reuters) - Production at U.S. factories increased solidly in March as output at motor vehicle assembly plants and elsewhere rose, suggesting that manufacturing was turning the corner after being constrained by higher borrowing costs.
Manufacturing output rose 0.5% last month after an upwardly revised 1.2% rebound in the prior month, the Federal Reserve said on Tuesday.
Factory output was previously reported to have rebounded 0.8% in February.
Economists polled by Reuters had forecast factory output rising 0.3%.
Production at factories increased 0.8% year-on-year in March.
It edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December quarter.
Manufacturing accounts for 10.4% of the economy.
A survey from the Institute for Supply Management early this month showed manufacturing grew for the first time in 1-1/2 years in March.
But with the Federal Reserve expected to delay an anticipated rate cut this year amid stubbornly high inflation, manufacturing is not out of the woods yet.
Motor vehicle and parts output increased 3.1% last month after advancing 3.4% in February.
Durable goods manufacturing production rose 0.3%.
There were significant increases in the output of aerospace and miscellaneous transportation equipment, and wood products.
But output of nonmetallic mineral products, furniture as well as primary metals declined.
Production of nondurable goods rose 0.7% as gains in the output of petroleum and coal products and chemicals offset declines food, beverage and tobacco products.
Mining output dropped 1.4% after rebounding 3.0% in February.
Utilities production rose 2.0% after decreasing 7.6% in February.
Overall industrial production rose 0.4% in March after rising by the same margin in February.
Industrial production was unchanged year-on-year in March.
It contracted at a 1.8% pace in the January-March quarter after shrinking at a 1.9% rate in the fourth quarter.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, rose to 78.4% from 78.2% in February.
It is 1.2 percentage points below its 1972-2023 average.
The operating rate for the manufacturing sector increased 0.3 percentage point in March to 77.4%.
It is 0.8 percentage points below its long-run average.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-m ... 024-04-16/
Re: THE ECONOMY
REUTERS
"Fed could keep monetary policy tight for longer if needed, Jefferson says"
By Howard Schneider
April 16, 2024
WASHINGTON, April 16 (Reuters) - Federal Reserve Vice Chair Philip Jefferson, in remarks devoid of any mention of interest rate cuts, said on Tuesday "it will be appropriate to hold in place the current restrictive stance of policy for longer" if inflation fails to slow as expected.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said in remarks prepared for a speech to a Fed research conference in Washington.
"Of course, the outlook is still quite uncertain, and if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer."
"I am fully committed to getting inflation back to 2%."
His comments did not include what has been a standard messaging point for Fed officials in recent months that rate cuts could begin once policymakers gained more confidence that inflation is still falling - a hurdle that's become steeper after inflation through the first quarter proved unexpectedly strong.
On Feb. 22, for example, Jefferson said "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year."
His remarks on Tuesday noted that while the baseline remained for inflation to slow, "inflation data over the past three months were above the low readings in the second half of last year," while job growth and retail spending remained stronger than expected.
"While we have seen considerable progress in lowering inflation, the job of sustainably restoring 2% inflation is not yet done," Jefferson said in his prepared remarks.
March, in fact, may prove another lost month for the Fed.
Jefferson said that staff estimates indicate the personal consumption expenditures price index, which the Fed uses to set its 2% inflation target, increased at a 2.7% annual rate in March, faster than in February.
The "core" rate excluding food and energy prices is estimated to have increased at a 2.8% rate, unchanged from the prior month.
The bulk of Jefferson's prepared remarks were devoted to a historical review of how policymakers deal with uncertainty, with just three paragraphs on the "current situation."
Fed Chair Jerome Powell is scheduled to field questions during an event in Washington at 1:15 p.m. EDT (1715 GMT) on Tuesday.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/markets/us/fed- ... 024-04-16/
"Fed could keep monetary policy tight for longer if needed, Jefferson says"
By Howard Schneider
April 16, 2024
WASHINGTON, April 16 (Reuters) - Federal Reserve Vice Chair Philip Jefferson, in remarks devoid of any mention of interest rate cuts, said on Tuesday "it will be appropriate to hold in place the current restrictive stance of policy for longer" if inflation fails to slow as expected.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said in remarks prepared for a speech to a Fed research conference in Washington.
"Of course, the outlook is still quite uncertain, and if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer."
"I am fully committed to getting inflation back to 2%."
His comments did not include what has been a standard messaging point for Fed officials in recent months that rate cuts could begin once policymakers gained more confidence that inflation is still falling - a hurdle that's become steeper after inflation through the first quarter proved unexpectedly strong.
On Feb. 22, for example, Jefferson said "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year."
His remarks on Tuesday noted that while the baseline remained for inflation to slow, "inflation data over the past three months were above the low readings in the second half of last year," while job growth and retail spending remained stronger than expected.
"While we have seen considerable progress in lowering inflation, the job of sustainably restoring 2% inflation is not yet done," Jefferson said in his prepared remarks.
March, in fact, may prove another lost month for the Fed.
Jefferson said that staff estimates indicate the personal consumption expenditures price index, which the Fed uses to set its 2% inflation target, increased at a 2.7% annual rate in March, faster than in February.
The "core" rate excluding food and energy prices is estimated to have increased at a 2.8% rate, unchanged from the prior month.
The bulk of Jefferson's prepared remarks were devoted to a historical review of how policymakers deal with uncertainty, with just three paragraphs on the "current situation."
Fed Chair Jerome Powell is scheduled to field questions during an event in Washington at 1:15 p.m. EDT (1715 GMT) on Tuesday.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/markets/us/fed- ... 024-04-16/
Re: THE ECONOMY
REUTERS
"Yellen says US working to mitigate risks to global economy"
By Andrea Shalal
April 16, 2024
WASHINGTON, April 16 (Reuters) - U.S. Treasury Secretary Janet Yellen on Tuesday said a stronger-than-expected U.S. economic growth had helped power the global economy, and Washington was working to mitigate remaining risks to the global outlook and ensure sustainable long-term growth.
In remarks prepared for a news conference, Yellen said the U.S. labor market was remarkably healthy and inflation was down significantly from its peak, although there was more work to do.
She said she expected the U.S. economy to continue to underpin the global economy, but acknowledged that the global recovery had been uneven and risks remained.
"From the start of the administration, President (Joe) Biden has made clear that American isolationism was over," Yellen said.
"So while we expect that America’s economic strength will continue to underpin global growth, we’ve also been engaging with the world to mitigate short-term risks and support sustainable long-term growth."
That work will continue at this week's spring meetings of the International Monetary Fund and World Bank, where Yellen will meet with officials from China, South Korea, Japan, Britain and many other countries.
Yellen said she raised concerns with Chinese officials during her visit to Guangzhou and Beijing earlier this month about the risks that its manufacturing overcapacity posed to the United States and the global economy.
This week, she said U.S. and Chinese officials will hold the fourth meetings of the Economic and Financial Working Groups, which will focus on anti-money laundering and balanced growth.
Yellen said she also planned to work with Brazil, current president of the Group of Twenty (G20) major economies, including on a review of the global climate finance architecture.
The United States would also keep pushing for reforms at the World Bank and other multilateral development banks (MDBs) to expand their lending capacity to help developing countries deal with climate change, pandemics and other challenges that posed risks to global growth.
"No one country can tackle these issue alone, nor is bilateral action sufficient, so we've pushed for decisive and coordinated action," she said.
Yellen said the World Bank and other MDBs had made significant progress, boosting lending capacity over the next decade by $200 billion from responsibly stretching balance sheets and another $50 billion from capital increases at the European Bank for Reconstruction and Development and the Inter-American Development Bank.
At the IMF, she said, the United States was focused on strengthening the global lender's ability to respond to crises and was pushing the IMF to structure loans with "robust policy conditionality" to enable countries to restore stability.
Reporting by Andrea Shalal; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/yell ... 024-04-16/
"Yellen says US working to mitigate risks to global economy"
By Andrea Shalal
April 16, 2024
WASHINGTON, April 16 (Reuters) - U.S. Treasury Secretary Janet Yellen on Tuesday said a stronger-than-expected U.S. economic growth had helped power the global economy, and Washington was working to mitigate remaining risks to the global outlook and ensure sustainable long-term growth.
In remarks prepared for a news conference, Yellen said the U.S. labor market was remarkably healthy and inflation was down significantly from its peak, although there was more work to do.
She said she expected the U.S. economy to continue to underpin the global economy, but acknowledged that the global recovery had been uneven and risks remained.
"From the start of the administration, President (Joe) Biden has made clear that American isolationism was over," Yellen said.
"So while we expect that America’s economic strength will continue to underpin global growth, we’ve also been engaging with the world to mitigate short-term risks and support sustainable long-term growth."
That work will continue at this week's spring meetings of the International Monetary Fund and World Bank, where Yellen will meet with officials from China, South Korea, Japan, Britain and many other countries.
Yellen said she raised concerns with Chinese officials during her visit to Guangzhou and Beijing earlier this month about the risks that its manufacturing overcapacity posed to the United States and the global economy.
This week, she said U.S. and Chinese officials will hold the fourth meetings of the Economic and Financial Working Groups, which will focus on anti-money laundering and balanced growth.
Yellen said she also planned to work with Brazil, current president of the Group of Twenty (G20) major economies, including on a review of the global climate finance architecture.
The United States would also keep pushing for reforms at the World Bank and other multilateral development banks (MDBs) to expand their lending capacity to help developing countries deal with climate change, pandemics and other challenges that posed risks to global growth.
"No one country can tackle these issue alone, nor is bilateral action sufficient, so we've pushed for decisive and coordinated action," she said.
Yellen said the World Bank and other MDBs had made significant progress, boosting lending capacity over the next decade by $200 billion from responsibly stretching balance sheets and another $50 billion from capital increases at the European Bank for Reconstruction and Development and the Inter-American Development Bank.
At the IMF, she said, the United States was focused on strengthening the global lender's ability to respond to crises and was pushing the IMF to structure loans with "robust policy conditionality" to enable countries to restore stability.
Reporting by Andrea Shalal; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/yell ... 024-04-16/
Re: THE ECONOMY
REUTERS
"Smaller US manufacturers warm to Biden's big industrial plan, survey shows"
By Timothy Aeppel
April 16, 2024
April 16 (Reuters) - America’s small and mid-sized manufacturers may be warming up to the Biden administration’s push for an aggressive industrial policy.
In a survey of 150 producers, nearly 49% said they thought President Joe Biden "is more likely to bring about an American manufacturing renaissance," while just over 31% gave that accolade to Republican candidate Donald Trump.
About 15% favor an unnamed third-party candidate to revitalize the sector, according to the survey conducted by polling company John Zogby Strategies on behalf of Xometry, a Maryland-based company that provides digital sourcing services for industrial producers.
Biden’s industrial policy, headlined by legislation passed in 2022 that sparked a surge of factory construction, is aimed at boosting semiconductors, electric vehicles and green technologies, as well as other sectors.
The efforts so far have not produced many manufacturing jobs.
And so, as the presidential campaign shifts into higher gear ahead of November’s election, Biden is touring factories to tout his accomplishments, especially to voters in battleground states.
"This is the first time in a long time that we’ve had a deliberate industrial strategy being pushed by the executive branch - that’s unique," said Randy Altschuler, chief executive of Xometry.
Altschuler said federal investments have yet to filter down to smaller producers, with many of the most high-profile projects favoring giants like Intel and Samsung, which are both planning new semiconductor plants.
"You’re going to see a bigger benefit (for smaller companies) further down the road," said Altschuler, as those projects create demand for the underlying pipeline of goods and services needed to complete and supply those factories.
Altschuler, who ran for Congress in New York in 2010 and lost and remains a registered Republican, said the political divide over industrial policy - which was once opposed by many Republicans as picking winners and losers - has narrowed sharply in recent years.
Republican Senator Marco Rubio of Florida, for instance, recently penned an essay for the conservative policy journal National Affairs that argued the U.S. needs a strong industrial policy while faulting the Biden initiatives.
Still, manufacturers favor Republicans by one key measure.
The National Association of Manufacturers Political Action Committee has so far directed nearly three-quarters of its contributions to Republican candidates in this election cycle, according to the nonprofit research group OpenSecrets.
Reporting by Timothy Aeppel; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/smal ... 024-04-16/
"Smaller US manufacturers warm to Biden's big industrial plan, survey shows"
By Timothy Aeppel
April 16, 2024
April 16 (Reuters) - America’s small and mid-sized manufacturers may be warming up to the Biden administration’s push for an aggressive industrial policy.
In a survey of 150 producers, nearly 49% said they thought President Joe Biden "is more likely to bring about an American manufacturing renaissance," while just over 31% gave that accolade to Republican candidate Donald Trump.
About 15% favor an unnamed third-party candidate to revitalize the sector, according to the survey conducted by polling company John Zogby Strategies on behalf of Xometry, a Maryland-based company that provides digital sourcing services for industrial producers.
Biden’s industrial policy, headlined by legislation passed in 2022 that sparked a surge of factory construction, is aimed at boosting semiconductors, electric vehicles and green technologies, as well as other sectors.
The efforts so far have not produced many manufacturing jobs.
And so, as the presidential campaign shifts into higher gear ahead of November’s election, Biden is touring factories to tout his accomplishments, especially to voters in battleground states.
"This is the first time in a long time that we’ve had a deliberate industrial strategy being pushed by the executive branch - that’s unique," said Randy Altschuler, chief executive of Xometry.
Altschuler said federal investments have yet to filter down to smaller producers, with many of the most high-profile projects favoring giants like Intel and Samsung, which are both planning new semiconductor plants.
"You’re going to see a bigger benefit (for smaller companies) further down the road," said Altschuler, as those projects create demand for the underlying pipeline of goods and services needed to complete and supply those factories.
Altschuler, who ran for Congress in New York in 2010 and lost and remains a registered Republican, said the political divide over industrial policy - which was once opposed by many Republicans as picking winners and losers - has narrowed sharply in recent years.
Republican Senator Marco Rubio of Florida, for instance, recently penned an essay for the conservative policy journal National Affairs that argued the U.S. needs a strong industrial policy while faulting the Biden initiatives.
Still, manufacturers favor Republicans by one key measure.
The National Association of Manufacturers Political Action Committee has so far directed nearly three-quarters of its contributions to Republican candidates in this election cycle, according to the nonprofit research group OpenSecrets.
Reporting by Timothy Aeppel; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/smal ... 024-04-16/
Re: THE ECONOMY
REUTERS
"US trade chief Tai says taking 'serious look' at tools to deal with China"
By David Lawder
April 16, 2024
WASHINGTON, April 16 (Reuters) - U.S. Trade Representative Katherine Tai will tell lawmakers on Tuesday that the Biden administration is "taking a serious look" at U.S. trade defense tools to deal with threats posed by China's trade and economic policies, including a review of Trump-era tariffs on Chinese imports.
In excerpts of testimony to the U.S. House of Representatives Ways and Means Committee released ahead of a hearing on Tuesday, Tai said that China's policies were causing "dependencies and vulnerabilities in multiple sectors, harming American workers and businesses and creating real risks for our supply chains."
"This is why we are taking a serious look at how our existing tools are addressing this problem, including through our four-year review of the China Section 301 tariffs," Tai said.
Tai's testimony on the Biden administration's 2024 trade agenda comes just a week after U.S. Treasury Secretary Janet Yellen issued a warning to Chinese leaders that their overinvestment in production capacity for electric vehicles, solar panels and other clean energy goods was threatening an unacceptable wave of exports that would hurt producers and workers in the United States and elsewhere.
Yellen on Tuesday will commence a new dialogue with Chinese officials on "balanced growth" at the Treasury, but China trade experts say her message to Beijing on excess capacity may be an initial step toward a new "Section 301" unfair trade practices investigation that could impose new tariffs on EVs, solar panels and other imports.
Former President Donald Trump used Section 301 of the Trade Act of 1974, to impose tariffs on hundreds of billions of dollars worth of Chinese imports in 2018.
The Biden administration is now nearing completion of a lengthy review of whether to renew those duties.
Tai also will tell lawmakers that she is closely reviewing a petition from five U.S. unions to open a new Section 301 investigation into China's allegedly unfair acts, policies and practices in the maritime logistics and shipbuilding sector.
"Our economic relationship with the PRC is complex, and as the President said, we want competition with China, not conflict," Tai said in her excerpts.
A major goal of the Biden administration's work on supply chains has been aimed at reducing dependence on China and diversifying sources of supply to avoid bottlenecks like those that occurred at the end of the COVID-19 pandemic, Tai said
"Reducing dependencies and vulnerabilities and strengthening supply chains is a major priority for USTR this year, which informs our work as part of the President’s Council on Supply Chain Resilience," Tai said.
The U.S. trade chief has put workers at the center of U.S. trade policy, seeking to build higher labor standards in trade negotiations with other countries.
She said this includes prioritizing strong labor commitments in negotiations with Kenya and Taiwan.
Reporting by David Lawder; Editing by Michael Perry
https://www.reuters.com/world/us-trade- ... 024-04-16/
"US trade chief Tai says taking 'serious look' at tools to deal with China"
By David Lawder
April 16, 2024
WASHINGTON, April 16 (Reuters) - U.S. Trade Representative Katherine Tai will tell lawmakers on Tuesday that the Biden administration is "taking a serious look" at U.S. trade defense tools to deal with threats posed by China's trade and economic policies, including a review of Trump-era tariffs on Chinese imports.
In excerpts of testimony to the U.S. House of Representatives Ways and Means Committee released ahead of a hearing on Tuesday, Tai said that China's policies were causing "dependencies and vulnerabilities in multiple sectors, harming American workers and businesses and creating real risks for our supply chains."
"This is why we are taking a serious look at how our existing tools are addressing this problem, including through our four-year review of the China Section 301 tariffs," Tai said.
Tai's testimony on the Biden administration's 2024 trade agenda comes just a week after U.S. Treasury Secretary Janet Yellen issued a warning to Chinese leaders that their overinvestment in production capacity for electric vehicles, solar panels and other clean energy goods was threatening an unacceptable wave of exports that would hurt producers and workers in the United States and elsewhere.
Yellen on Tuesday will commence a new dialogue with Chinese officials on "balanced growth" at the Treasury, but China trade experts say her message to Beijing on excess capacity may be an initial step toward a new "Section 301" unfair trade practices investigation that could impose new tariffs on EVs, solar panels and other imports.
Former President Donald Trump used Section 301 of the Trade Act of 1974, to impose tariffs on hundreds of billions of dollars worth of Chinese imports in 2018.
The Biden administration is now nearing completion of a lengthy review of whether to renew those duties.
Tai also will tell lawmakers that she is closely reviewing a petition from five U.S. unions to open a new Section 301 investigation into China's allegedly unfair acts, policies and practices in the maritime logistics and shipbuilding sector.
"Our economic relationship with the PRC is complex, and as the President said, we want competition with China, not conflict," Tai said in her excerpts.
A major goal of the Biden administration's work on supply chains has been aimed at reducing dependence on China and diversifying sources of supply to avoid bottlenecks like those that occurred at the end of the COVID-19 pandemic, Tai said
"Reducing dependencies and vulnerabilities and strengthening supply chains is a major priority for USTR this year, which informs our work as part of the President’s Council on Supply Chain Resilience," Tai said.
The U.S. trade chief has put workers at the center of U.S. trade policy, seeking to build higher labor standards in trade negotiations with other countries.
She said this includes prioritizing strong labor commitments in negotiations with Kenya and Taiwan.
Reporting by David Lawder; Editing by Michael Perry
https://www.reuters.com/world/us-trade- ... 024-04-16/