The Motley Fool
"Plug Power Stock Has 133% Upside, According to 1 Wall Street Firm"
By Rich Smith
March 9, 2024
KEY POINTS
* Plug Power missed both sales and earnings estimates last week.
* This week, an analyst firm is telling investors the stock could more than double in a year.
* But Plug Power is still burning a lot of cash, and is not a safe stock to own.
HSBC says Plug Power stock is a buy, but they are getting at least two things wrong.
Plug Power reported 2023 earnings last week, and the news was not good.
Missing both sales and earnings estimates, Plug reported a loss of $2.30 per share for the year -- 40% worse than expected.
Investors initially sold off the stock on this news, but then there was good news.
Citing plans to create and sell $1 billion-worth of new stock, and then secure a new $1.6 billion Department of Energy loan, Plug announced its "going concern" warning from last quarter had vanished and it now had all the liquidity it needed to remain in business for the foreseeable future.
This apparently sparked optimism at investment banker HSBC, which tweaked its price target just a little lower on Tuesday, reiterating its buy rating on Plug Power and predicting Plug shares will trade for $8.50 in a year, which would yield 133% profit for investors who bought Plug Power stock on Tuesday.
Is Plug Power stock a buy?
According to HSBC, Plug Power's earnings report was "encouraging."
True, share dilution from the stock offering means Plug stock might be worth a bit less.
On the other hand, while Plug's 2023 losses were gigantic, they were mainly "non-cash charges."
And yet that's not exactly true.
For one thing, raising $1 billion at Plug's current share price of $3.73 would imply Plug needs to issue about 269 million new shares, diluting existing shareholders out of nearly 40% of their ownership stake.
It seems to me, that should lower Plug's value a bit more than the mere 6% by which HSBC lowered its price target!
Moreover, contrary to HSBC's assertion, Plug Power actually did burn a lot of cash last year -- $1.8 billion-worth, according to a tally by S&P Global Market Intelligence.
While it's true that a $1.6 billion government loan, plus $1 billion raised from new stock sales, will allow Plug Power to continue burning cash for another 1.5 years or so, that's not necessarily a great reason to buy the stock.
https://www.fool.com/investing/2024/03/ ... s-analyst/
THE ECONOMY
Re: THE ECONOMY
CNBC
"Laid-off techies face ‘sense of impending doom’ with job cuts at highest since dot-com crash"
Alex Koller @ALEXKOLLER_
PUBLISHED FRI, MAR 15 2024
KEY POINTS
* With tech layoffs at their highest since the 2001 dot-com crash, the job hunt is getting harder and many in the industry are being forced to settle for pay cuts if they can find a new gig at all.
* Since the start of the year, more than 50,000 positions have been slashed at over 200 tech companies, according to tracking website Layoffs.fyi.
* CNBC spoke to a dozen recently laid-off employees about their experiences navigating the job market.
Allison Croisant, a data scientist with about a decade of experience in technology, was laid off by PayPal earlier this year, joining the masses of unemployed across her industry.
Croisant has one word to describe the process of looking for a job right now: “Insane.”
“Everybody else is also getting laid off,” said Croisant, who lives in Omaha, Nebraska, where she worked remotely for PayPal.
Her sentiment is reflected in the numbers.
Since the start of the year, more than 50,000 workers have been laid off from over 200 tech companies, according to tracking website Layoffs.fyi.
It’s a continuation of the predominant theme of 2023, when more than 260,000 workers across nearly 1,200 tech companies lost their jobs.
Alphabet, Amazon, Meta and Microsoft have all taken part in the downsizing this year, along with eBay, Unity Software, SAP and Cisco.
Wall Street has largely cheered on the cost-cutting, sending many tech stocks to record highs on optimism that spending discipline coupled with efficiency gains from artificial intelligence will lead to rising profits.
PayPal announced in January that it was eliminating 9% of its workforce, or about 2,500 jobs.
For the tens of thousands of people in Croisant’s position, the path toward reemployment is daunting.
All told, 2023 was the second-biggest year of cuts on record in the technology sector, behind only the dot-com crash in 2001, according to outplacement firm Challenger, Gray & Christmas.
Not since the spectacular flameouts of Pets.com, eToys and Webvan have so many tech workers lost their jobs in such a short period of time.
Last month’s job cut count was the highest of any February since 2009, when the financial crisis forced companies into cash preservation mode.
CNBC spoke to a dozen people who have been laid off from tech jobs in the past year or so about their experiences navigating the labor market.
Some spoke on the condition that CNBC not use their names or write about the details of their situation.
Taken together, they paint a picture of an increasingly competitive market with job listings that include exacting requirements for qualification and come with lower pay than their prior gigs.
It’s a particularly confounding situation for software developers and data scientists, who just a couple of years ago had some of the most marketable and highly valued skills on the planet, and are now considering whether they need to exit the industry to find employment.
“The market isn’t what it once was,” Roger Lee, creator of Layoffs.fyi, said in an email.
“To secure a new position, many salespeople and recruiters are leaving tech entirely."
"Even engineers are compromising — accepting roles with less stability, a tougher work environment, or lower pay and benefits.”
Lee said tech salaries have “largely stagnated” in the last two years, citing data from Comprehensive.io, a compensation tracker he recently helped launch.
Croisant’s job search involved applying for some positions that had racked up hundreds of applicants.
She could see that data using LinkedIn’s Talent Insights platform, which shows how many people are vying for an open role.
Additionally, some listings required applicants to have advanced degrees or professional experience in machine learning and artificial intelligence, a new development in Croisant’s experience on the job market.
During five weeks of job hunting, Croisant said she applied to 48 openings and landed two interviews.
She finally opted to accept a lower-level data analyst role and a roughly $3,000 reduction in her base pay to take a contract role starting next month at a financial technology company.
“This was an absolutely terrifying experience for me, and I’m not sure if I’ll ever truly feel secure in a job again,” Croisant said.
“But I’m still one of the lucky ones in the end."
"I have friends who’ve been looking for months and still haven’t found anything.”
‘It’s humbling’
Krysten Powers was laid off in January from travel tech startup Flyr after two years in marketing at the company.
She said navigating the current labor market is like a full-time job, “sometimes even harder.”
“You’re putting out resumes and getting almost immediate rejections,” said Powers, who’s worked in marketing for a decade.
“It does take a toll on your confidence and you get this sort of imposter syndrome.”
Powers lives with her husband and two kids in the small town of Natchez, Mississippi.
A month before she lost her job, her family bought a new house.
Powers said moving isn’t an option, and she’s only considering remote roles in marketing.
However, she is willing to accept a pay cut.
“It’s humbling for sure,” she said.
The same dynamics are playing out across the industry, even for former employees of Google, which was long considered the home of Silicon Valley’s elite talent.
Christopher Fong, who worked at Google from 2006 to 2015, is the founder of a group called Xoogler.co, which seeks to provide help for people laid off from the internet company.
The 9-year-old organization, consisting of thousands of Google alumni and current staffers, offers peer support and hundreds of in-person events.
In January, Google eliminated several hundred positions across its hardware, central engineering and Google Assistant teams.
A year earlier, the company cut 12,000 jobs, or roughly 6% of its full-time workforce.
Fong said the “biggest challenge” today for many ex-Google employees is finding a job that maintains their previous level of pay.
Michael Kascsak, who was laid off by Google in March of last year, took a different approach to his job search.
Kascsak said he welcomed a pay cut to start as head of talent acquisition for veterinary business CityVet in January after applying for hundreds of jobs.
He acknowledged that his previous employer had set exceptionally high compensation expectations.
“I went into this knowing I had been fortunate to work at a company that paid at the top percentile and I’m a realist."
"I prepared myself to be flexible,” said Kascsak, who lives in Austin, Texas, and previously worked in talent sourcing for Google.
“I’m fine with the pay now because I’m in the environment I want to be in with great people.”
Tech is a notable outlier in a labor market that’s been largely steady over the past two years.
Nationwide, the unemployment rate ticked up to 3.9% in February from 3.7% each of the prior three months.
It’s been mostly in that range since early 2022.
The U.S. economy added 275,000 jobs in February, topping 200,000 for a third straight month.
Booming market for AI engineers
Sentiment indexes are mixed.
Job review website Glassdoor’s Employee Confidence Index, which gauges how employees feel about their employer’s six-month business outlook, sank to its lowest level in February since its sentiment data first began in 2016.
Among tech workers, discussions about layoffs on Glassdoor have more than quadrupled in the past two years, and were up 12% last month compared with a year earlier.
However, ZipRecruiter’s Job Seeker Confidence Index has been rising since mid-2023, and increased to its highest level in the fourth quarter since the second quarter of 2022.
Even within tech, there’s a vast divide in the current market.
Lee of Layoffs.fyi said AI is driving a “return to rapid hiring and expansion,” even as layoffs continue elsewhere.
Salaries for AI engineers rose 12% from the third to fourth quarter last year, and the average salary for a senior AI engineer nationally is more than $190,000, according to Comprehensive.io.
Amit Mittal was laid off from AI lending company Upstart in November and has since applied for more than 100 jobs.
Amit Mittal has been on both sides of the employment market — previously as a hiring manager and now as a job seeker.
In November, Mittal was laid off from AI lending company Upstart, where he worked as a software engineering manager, often overseeing interviews.
Mittal said he witnessed the hiring process become “a lot more demanding” as layoffs surged.
“There was a lot more pressure on us to basically raise the bar higher and higher,” he said.
“Somebody with a four-year experience in the past would have had a pretty good chance at getting a good job."
"But now they’re competing against people who have six, seven, eight years of experience for the same position.”
Mittal, who’s from India and has lived in the Chicago area since 2007, has lately been subject to a very different kind of pressure.
Under his H-1B visa, Mittal had only 60 days from the official end of his employment to find a new job in the tech industry in order to stay in the country.
“If for four months, I have to pay my bills by driving an Uber or working at McDonald’s flipping burgers, that’s fine,” he said.
“But that mechanism doesn’t exist for me.”
Mittal has now successfully petitioned to obtain a separate B-2 tourist visa, giving him an extra six months to find new employment.
It wasn’t a cheap effort, though.
He estimated he spent around $8,000 on legal and administrative costs tied to his submission.
All the while, Mittal said he’s applied for about 110 jobs to no avail.
He attributed the dearth of success to employers’ reluctance or inability to sponsor visa holders.
“It seems like the possibilities are pretty slim right now, even though I see hundreds of postings every single day,” Mittal said.
Bill Vezey was laid off by eBay in January following a 13-year career as a software engineer at the online retailer.
He said he’s learning the rules of the “new game,” and they’re much different than he remembers.
“Attainability is not just a numbers game,” said Vezey, 64, who lives in Santa Cruz, California.
“It is a combination of how well you brand yourself, about your access through networking to any given position — to the hidden job market.”
Vezey said he hopes to be rehired at his longtime employer and wants to remain in tech.
“I am kind of an incurable optimist, despite what 60-odd years of living have brought,” he said.
Like many of those who spoke to CNBC, Powers said she spends her days tailoring her resume for openings, scanning online job boards and applying for newly posted positions.
She networks by contacting a recruiter or hiring manager connected to each role, though she said some recruiters have ghosted her as quickly as they’ve expressed interest.
She’s had a few interviews, and turned down one job offer.
That position would’ve required her to go to an office while taking a more than 50% pay cut from her previous job.
And she’d have to find child care.
“There’s a sense of impending doom,” Powers said.
“There is a point where the money runs out and the options become really bleak.”
Still, Powers said she’s trying to stay optimistic, “because giving up is not going to get me a job.”
— CNBC’s Jennifer Elias contributed to this report.
https://www.cnbc.com/2024/03/15/laid-of ... -2001.html
"Laid-off techies face ‘sense of impending doom’ with job cuts at highest since dot-com crash"
Alex Koller @ALEXKOLLER_
PUBLISHED FRI, MAR 15 2024
KEY POINTS
* With tech layoffs at their highest since the 2001 dot-com crash, the job hunt is getting harder and many in the industry are being forced to settle for pay cuts if they can find a new gig at all.
* Since the start of the year, more than 50,000 positions have been slashed at over 200 tech companies, according to tracking website Layoffs.fyi.
* CNBC spoke to a dozen recently laid-off employees about their experiences navigating the job market.
Allison Croisant, a data scientist with about a decade of experience in technology, was laid off by PayPal earlier this year, joining the masses of unemployed across her industry.
Croisant has one word to describe the process of looking for a job right now: “Insane.”
“Everybody else is also getting laid off,” said Croisant, who lives in Omaha, Nebraska, where she worked remotely for PayPal.
Her sentiment is reflected in the numbers.
Since the start of the year, more than 50,000 workers have been laid off from over 200 tech companies, according to tracking website Layoffs.fyi.
It’s a continuation of the predominant theme of 2023, when more than 260,000 workers across nearly 1,200 tech companies lost their jobs.
Alphabet, Amazon, Meta and Microsoft have all taken part in the downsizing this year, along with eBay, Unity Software, SAP and Cisco.
Wall Street has largely cheered on the cost-cutting, sending many tech stocks to record highs on optimism that spending discipline coupled with efficiency gains from artificial intelligence will lead to rising profits.
PayPal announced in January that it was eliminating 9% of its workforce, or about 2,500 jobs.
For the tens of thousands of people in Croisant’s position, the path toward reemployment is daunting.
All told, 2023 was the second-biggest year of cuts on record in the technology sector, behind only the dot-com crash in 2001, according to outplacement firm Challenger, Gray & Christmas.
Not since the spectacular flameouts of Pets.com, eToys and Webvan have so many tech workers lost their jobs in such a short period of time.
Last month’s job cut count was the highest of any February since 2009, when the financial crisis forced companies into cash preservation mode.
CNBC spoke to a dozen people who have been laid off from tech jobs in the past year or so about their experiences navigating the labor market.
Some spoke on the condition that CNBC not use their names or write about the details of their situation.
Taken together, they paint a picture of an increasingly competitive market with job listings that include exacting requirements for qualification and come with lower pay than their prior gigs.
It’s a particularly confounding situation for software developers and data scientists, who just a couple of years ago had some of the most marketable and highly valued skills on the planet, and are now considering whether they need to exit the industry to find employment.
“The market isn’t what it once was,” Roger Lee, creator of Layoffs.fyi, said in an email.
“To secure a new position, many salespeople and recruiters are leaving tech entirely."
"Even engineers are compromising — accepting roles with less stability, a tougher work environment, or lower pay and benefits.”
Lee said tech salaries have “largely stagnated” in the last two years, citing data from Comprehensive.io, a compensation tracker he recently helped launch.
Croisant’s job search involved applying for some positions that had racked up hundreds of applicants.
She could see that data using LinkedIn’s Talent Insights platform, which shows how many people are vying for an open role.
Additionally, some listings required applicants to have advanced degrees or professional experience in machine learning and artificial intelligence, a new development in Croisant’s experience on the job market.
During five weeks of job hunting, Croisant said she applied to 48 openings and landed two interviews.
She finally opted to accept a lower-level data analyst role and a roughly $3,000 reduction in her base pay to take a contract role starting next month at a financial technology company.
“This was an absolutely terrifying experience for me, and I’m not sure if I’ll ever truly feel secure in a job again,” Croisant said.
“But I’m still one of the lucky ones in the end."
"I have friends who’ve been looking for months and still haven’t found anything.”
‘It’s humbling’
Krysten Powers was laid off in January from travel tech startup Flyr after two years in marketing at the company.
She said navigating the current labor market is like a full-time job, “sometimes even harder.”
“You’re putting out resumes and getting almost immediate rejections,” said Powers, who’s worked in marketing for a decade.
“It does take a toll on your confidence and you get this sort of imposter syndrome.”
Powers lives with her husband and two kids in the small town of Natchez, Mississippi.
A month before she lost her job, her family bought a new house.
Powers said moving isn’t an option, and she’s only considering remote roles in marketing.
However, she is willing to accept a pay cut.
“It’s humbling for sure,” she said.
The same dynamics are playing out across the industry, even for former employees of Google, which was long considered the home of Silicon Valley’s elite talent.
Christopher Fong, who worked at Google from 2006 to 2015, is the founder of a group called Xoogler.co, which seeks to provide help for people laid off from the internet company.
The 9-year-old organization, consisting of thousands of Google alumni and current staffers, offers peer support and hundreds of in-person events.
In January, Google eliminated several hundred positions across its hardware, central engineering and Google Assistant teams.
A year earlier, the company cut 12,000 jobs, or roughly 6% of its full-time workforce.
Fong said the “biggest challenge” today for many ex-Google employees is finding a job that maintains their previous level of pay.
Michael Kascsak, who was laid off by Google in March of last year, took a different approach to his job search.
Kascsak said he welcomed a pay cut to start as head of talent acquisition for veterinary business CityVet in January after applying for hundreds of jobs.
He acknowledged that his previous employer had set exceptionally high compensation expectations.
“I went into this knowing I had been fortunate to work at a company that paid at the top percentile and I’m a realist."
"I prepared myself to be flexible,” said Kascsak, who lives in Austin, Texas, and previously worked in talent sourcing for Google.
“I’m fine with the pay now because I’m in the environment I want to be in with great people.”
Tech is a notable outlier in a labor market that’s been largely steady over the past two years.
Nationwide, the unemployment rate ticked up to 3.9% in February from 3.7% each of the prior three months.
It’s been mostly in that range since early 2022.
The U.S. economy added 275,000 jobs in February, topping 200,000 for a third straight month.
Booming market for AI engineers
Sentiment indexes are mixed.
Job review website Glassdoor’s Employee Confidence Index, which gauges how employees feel about their employer’s six-month business outlook, sank to its lowest level in February since its sentiment data first began in 2016.
Among tech workers, discussions about layoffs on Glassdoor have more than quadrupled in the past two years, and were up 12% last month compared with a year earlier.
However, ZipRecruiter’s Job Seeker Confidence Index has been rising since mid-2023, and increased to its highest level in the fourth quarter since the second quarter of 2022.
Even within tech, there’s a vast divide in the current market.
Lee of Layoffs.fyi said AI is driving a “return to rapid hiring and expansion,” even as layoffs continue elsewhere.
Salaries for AI engineers rose 12% from the third to fourth quarter last year, and the average salary for a senior AI engineer nationally is more than $190,000, according to Comprehensive.io.
Amit Mittal was laid off from AI lending company Upstart in November and has since applied for more than 100 jobs.
Amit Mittal has been on both sides of the employment market — previously as a hiring manager and now as a job seeker.
In November, Mittal was laid off from AI lending company Upstart, where he worked as a software engineering manager, often overseeing interviews.
Mittal said he witnessed the hiring process become “a lot more demanding” as layoffs surged.
“There was a lot more pressure on us to basically raise the bar higher and higher,” he said.
“Somebody with a four-year experience in the past would have had a pretty good chance at getting a good job."
"But now they’re competing against people who have six, seven, eight years of experience for the same position.”
Mittal, who’s from India and has lived in the Chicago area since 2007, has lately been subject to a very different kind of pressure.
Under his H-1B visa, Mittal had only 60 days from the official end of his employment to find a new job in the tech industry in order to stay in the country.
“If for four months, I have to pay my bills by driving an Uber or working at McDonald’s flipping burgers, that’s fine,” he said.
“But that mechanism doesn’t exist for me.”
Mittal has now successfully petitioned to obtain a separate B-2 tourist visa, giving him an extra six months to find new employment.
It wasn’t a cheap effort, though.
He estimated he spent around $8,000 on legal and administrative costs tied to his submission.
All the while, Mittal said he’s applied for about 110 jobs to no avail.
He attributed the dearth of success to employers’ reluctance or inability to sponsor visa holders.
“It seems like the possibilities are pretty slim right now, even though I see hundreds of postings every single day,” Mittal said.
Bill Vezey was laid off by eBay in January following a 13-year career as a software engineer at the online retailer.
He said he’s learning the rules of the “new game,” and they’re much different than he remembers.
“Attainability is not just a numbers game,” said Vezey, 64, who lives in Santa Cruz, California.
“It is a combination of how well you brand yourself, about your access through networking to any given position — to the hidden job market.”
Vezey said he hopes to be rehired at his longtime employer and wants to remain in tech.
“I am kind of an incurable optimist, despite what 60-odd years of living have brought,” he said.
Like many of those who spoke to CNBC, Powers said she spends her days tailoring her resume for openings, scanning online job boards and applying for newly posted positions.
She networks by contacting a recruiter or hiring manager connected to each role, though she said some recruiters have ghosted her as quickly as they’ve expressed interest.
She’s had a few interviews, and turned down one job offer.
That position would’ve required her to go to an office while taking a more than 50% pay cut from her previous job.
And she’d have to find child care.
“There’s a sense of impending doom,” Powers said.
“There is a point where the money runs out and the options become really bleak.”
Still, Powers said she’s trying to stay optimistic, “because giving up is not going to get me a job.”
— CNBC’s Jennifer Elias contributed to this report.
https://www.cnbc.com/2024/03/15/laid-of ... -2001.html
Re: THE ECONOMY
REUTERS
"US factory production rebounds from weather-induced slump"
By Lucia Mutikani
March 15, 2024
Summary
* Import prices increase 0.3% in February
* Manufacturing production rebounds 0.8%
* Consumer sentiment, inflation expectations stable in March
WASHINGTON, March 15 (Reuters) - Production at U.S. factories increased more than expected in February amid a rise in temperatures, but data for the prior month was revised sharply down as manufacturing remains hamstrung by high interest rates.
Manufacturing, which accounts for 10.3% of the economy, has been squeezed by 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022.
The U.S. central bank is expected to leave rates unchanged at the end of a two-day policy meeting next Wednesday.
Financial markets anticipate rate cuts will start in June.
"The manufacturing sector continues to face headwinds from higher borrowing costs and tighter credit conditions," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
"However, lower interest rates as the Fed starts cutting the target range this year, as well as an onshoring of supply networks may provide support to factory activity in 2024."
Manufacturing output rebounded 0.8% last month after a downwardly revised 1.1% drop in the prior month, the Fed said.
Factory output was previously reported to have dropped 0.5% in January, weighed down by frigid temperatures.
Economists polled by Reuters had forecast factory output would rise 0.3%.
Production at factories fell 0.7% on a year-on-year basis in February.
Despite the overall weakness, there remain pockets of manufacturing strength.
Motor vehicle and parts output accelerated 1.8% last month, the U.S. central bank's report showed.
That followed a 3.8% weather-induced decline in January.
Durable goods manufacturing production increased 1.0%.
Machinery output rose 1.7%.
There were also big increases in the production of wood products as well as miscellaneous goods.
Output of computer and electronic products rose as did that of electrical equipment, appliances and components.
This bodes well for business investment.
Production of nondurable goods rose 0.7%, lifted by the chemicals, printing and support, and paper output categories.
Mild temperatures also boosted mining output, which rebounded 2.2% after plunging 2.9% in January.
But oil and gas well drilling fell for the fourth straight month.
It was down 10.1% on a year-on-year basis.
Utilities production fell 7.5% as demand for heating ebbed.
That followed a 7.4% surge in January.
Overall industrial production gained 0.1% in February after falling 0.5% in January.
Industrial production fell 0.2% on a year-on-year basis in February.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.3%.
It is 1.3 percentage points below its 1972-2023 average.
The operating rate for the manufacturing sector rose six-tenths of a percentage point to 77.0%.
It is 1.2 percentage points below its long-run average.
Stocks on Wall Street were trading lower.
The dollar was little changed against a basket of currencies.
U.S. Treasury yields were mixed.
IMPORT PRICES RISE
News on the inflation front was mixed.
Import prices rose moderately in February after surging in January, but the overall disinflationary trend is slowing.
Declining goods prices accounted for much of the cooling in inflation last year.
Import prices were up 0.3% last month after a 0.8% jump in January, the Labor Department's Bureau of Labor Statistics reported.
The increase in import prices, which exclude tariffs, was in line with economists' expectations.
In the 12 months through February, import prices dropped 0.8% after declining 1.3% in January.
Though annual import prices decreased for the 13th straight month, the pace has slowed since prices slumped 2.4% in December.
Government data this week showed both consumer and producer prices increased strongly for a second consecutive month in February.
"While import prices continue to exert modest disinflationary pressure on U.S. consumer inflation, that pressure is waning," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Imported fuel prices shot up 1.8% in February after rebounding 1.2% in the prior month.
The cost of imported food increased 1.1% after advancing 1.7% in January.
Excluding fuels and food, import prices gained 0.1%.
These so-called core import prices increased 0.7% in January.
They fell 0.7% on a year-on-year basis in February.
The import price data did not change economists' expectations that the personal consumption expenditures (PCE) price index, excluding food and energy, increased 0.3% in February after a gain of 0.4% in January.
The core PCE price index is one of the inflation measures tracked by the Fed for its 2% target.
Core inflation is forecast to rise 2.8% in February, which would match January's gain.
Consumers expected inflation to remain steady at higher levels over the next 12 months and beyond, a report from the University of Michigan showed.
The University of Michigan survey's reading of one-year inflation expectations was unchanged at 3.0% in March.
Its five-year inflation outlook held steady at 2.9% for a fourth straight month.
Consumer sentiment was also stable this month.
"Consumers may instead be taking their cue from recent political developments, with the low approval ratings of both candidates suggesting little enthusiasm about the rematch between President Joe Biden and Republican nominee Donald Trump later this year," said Stephen Brown, deputy chief North America economist at Capital Economics.
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-i ... 024-03-15/
"US factory production rebounds from weather-induced slump"
By Lucia Mutikani
March 15, 2024
Summary
* Import prices increase 0.3% in February
* Manufacturing production rebounds 0.8%
* Consumer sentiment, inflation expectations stable in March
WASHINGTON, March 15 (Reuters) - Production at U.S. factories increased more than expected in February amid a rise in temperatures, but data for the prior month was revised sharply down as manufacturing remains hamstrung by high interest rates.
Manufacturing, which accounts for 10.3% of the economy, has been squeezed by 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022.
The U.S. central bank is expected to leave rates unchanged at the end of a two-day policy meeting next Wednesday.
Financial markets anticipate rate cuts will start in June.
"The manufacturing sector continues to face headwinds from higher borrowing costs and tighter credit conditions," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
"However, lower interest rates as the Fed starts cutting the target range this year, as well as an onshoring of supply networks may provide support to factory activity in 2024."
Manufacturing output rebounded 0.8% last month after a downwardly revised 1.1% drop in the prior month, the Fed said.
Factory output was previously reported to have dropped 0.5% in January, weighed down by frigid temperatures.
Economists polled by Reuters had forecast factory output would rise 0.3%.
Production at factories fell 0.7% on a year-on-year basis in February.
Despite the overall weakness, there remain pockets of manufacturing strength.
Motor vehicle and parts output accelerated 1.8% last month, the U.S. central bank's report showed.
That followed a 3.8% weather-induced decline in January.
Durable goods manufacturing production increased 1.0%.
Machinery output rose 1.7%.
There were also big increases in the production of wood products as well as miscellaneous goods.
Output of computer and electronic products rose as did that of electrical equipment, appliances and components.
This bodes well for business investment.
Production of nondurable goods rose 0.7%, lifted by the chemicals, printing and support, and paper output categories.
Mild temperatures also boosted mining output, which rebounded 2.2% after plunging 2.9% in January.
But oil and gas well drilling fell for the fourth straight month.
It was down 10.1% on a year-on-year basis.
Utilities production fell 7.5% as demand for heating ebbed.
That followed a 7.4% surge in January.
Overall industrial production gained 0.1% in February after falling 0.5% in January.
Industrial production fell 0.2% on a year-on-year basis in February.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.3%.
It is 1.3 percentage points below its 1972-2023 average.
The operating rate for the manufacturing sector rose six-tenths of a percentage point to 77.0%.
It is 1.2 percentage points below its long-run average.
Stocks on Wall Street were trading lower.
The dollar was little changed against a basket of currencies.
U.S. Treasury yields were mixed.
IMPORT PRICES RISE
News on the inflation front was mixed.
Import prices rose moderately in February after surging in January, but the overall disinflationary trend is slowing.
Declining goods prices accounted for much of the cooling in inflation last year.
Import prices were up 0.3% last month after a 0.8% jump in January, the Labor Department's Bureau of Labor Statistics reported.
The increase in import prices, which exclude tariffs, was in line with economists' expectations.
In the 12 months through February, import prices dropped 0.8% after declining 1.3% in January.
Though annual import prices decreased for the 13th straight month, the pace has slowed since prices slumped 2.4% in December.
Government data this week showed both consumer and producer prices increased strongly for a second consecutive month in February.
"While import prices continue to exert modest disinflationary pressure on U.S. consumer inflation, that pressure is waning," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Imported fuel prices shot up 1.8% in February after rebounding 1.2% in the prior month.
The cost of imported food increased 1.1% after advancing 1.7% in January.
Excluding fuels and food, import prices gained 0.1%.
These so-called core import prices increased 0.7% in January.
They fell 0.7% on a year-on-year basis in February.
The import price data did not change economists' expectations that the personal consumption expenditures (PCE) price index, excluding food and energy, increased 0.3% in February after a gain of 0.4% in January.
The core PCE price index is one of the inflation measures tracked by the Fed for its 2% target.
Core inflation is forecast to rise 2.8% in February, which would match January's gain.
Consumers expected inflation to remain steady at higher levels over the next 12 months and beyond, a report from the University of Michigan showed.
The University of Michigan survey's reading of one-year inflation expectations was unchanged at 3.0% in March.
Its five-year inflation outlook held steady at 2.9% for a fourth straight month.
Consumer sentiment was also stable this month.
"Consumers may instead be taking their cue from recent political developments, with the low approval ratings of both candidates suggesting little enthusiasm about the rematch between President Joe Biden and Republican nominee Donald Trump later this year," said Stephen Brown, deputy chief North America economist at Capital Economics.
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-i ... 024-03-15/
Re: THE ECONOMY
The Wall Street Journal
"Suspense Builds for Fed as Growth Downshifts and Inflation Lingers"
Story by Aaron Back
17 MARCH 2024
A mixed set of economic data over the past week delivered a whiff of the dreaded S-word: Stagflation.
But only a whiff.
First, consumer price inflation in February came in slightly higher than expected.
Then retail sales for the month disappointed, with a downward revision to January as well, and February producer prices also came in on the warm side.
On Friday, a preliminary reading from the University of Michigan’s consumer sentiment survey showed a decline to 76.5 in March from 76.9 previously, against expectations for a slight rise.
Taken together, the data hinted at a possibility that would spook investors: that growth could keep slowing even while inflation plateaus, making it difficult for the Federal Reserve to cut rates this summer.
The likelihood of a quarter-point cut by June, as implied by markets, has fallen to 50.4% from 57.4% a week ago, according to the CME FedWatch tool.
The implied chance that the Fed could stand pat through its July meeting has risen to 24.1% from just 8.1% a week ago.
In a note on Thursday, Bank of America strategists argued that the macroeconomic picture is “flipping from goldilocks to stagflation,” which they defined as growth below 2% and inflation of between 3% and 4%.
They highlighted trades that could benefit from stagflation such as gold, crypto and cash.
But investors should keep the bigger picture in mind.
Growth, while coming off the boil, is still solid.
And inflation is well below where it was just a few months ago.
Taking into account the latest consumer and producer inflation readings, economists at Goldman Sachs inched up their estimate for the February core personal-consumption expenditures price index, the inflation measure favored by the Fed, by 0.02 percentage point.
They now expect it rose 2.8% in February from a year earlier.
That would be unchanged from January, but down from 3.2% as recently as November.
Meanwhile they expect first-quarter gross domestic product growth of 1.7% on an annualized basis, down from an earlier estimate of 2.1%.
Furthermore, there continued to be encouraging signs on the supply side of the U.S. economy.
Industrial production ticked up by 0.1% in February, compared with a 0.5% decline in January, data from the Fed showed on Friday.
The February headline figure was pulled down by a 7.5% drop in utility output because of warmer-than-typical temperatures.
Manufacturing output rose 0.8% and business equipment production jumped 1.7%, with broad-based gains across transport, industrials and information processing, which analysts at Capital Economics wrote “bodes well for equipment investment in the first quarter.”
In short, the U.S. economy appears to be entering a new phase, with rapid disinflation being replaced by a slower slog downward.
Meanwhile, business investment is at least partly taking the baton from consumer spending as a growth driver.
Investors will get a better idea what this means for the Fed’s plans when it releases a new set of economic and rate projections at its policy-setting meeting next week.
But it is a far cry from stagflation.
Write to Aaron Back at aaron.back@wsj.com
https://www.msn.com/en-us/money/markets ... 8920&ei=68
"Suspense Builds for Fed as Growth Downshifts and Inflation Lingers"
Story by Aaron Back
17 MARCH 2024
A mixed set of economic data over the past week delivered a whiff of the dreaded S-word: Stagflation.
But only a whiff.
First, consumer price inflation in February came in slightly higher than expected.
Then retail sales for the month disappointed, with a downward revision to January as well, and February producer prices also came in on the warm side.
On Friday, a preliminary reading from the University of Michigan’s consumer sentiment survey showed a decline to 76.5 in March from 76.9 previously, against expectations for a slight rise.
Taken together, the data hinted at a possibility that would spook investors: that growth could keep slowing even while inflation plateaus, making it difficult for the Federal Reserve to cut rates this summer.
The likelihood of a quarter-point cut by June, as implied by markets, has fallen to 50.4% from 57.4% a week ago, according to the CME FedWatch tool.
The implied chance that the Fed could stand pat through its July meeting has risen to 24.1% from just 8.1% a week ago.
In a note on Thursday, Bank of America strategists argued that the macroeconomic picture is “flipping from goldilocks to stagflation,” which they defined as growth below 2% and inflation of between 3% and 4%.
They highlighted trades that could benefit from stagflation such as gold, crypto and cash.
But investors should keep the bigger picture in mind.
Growth, while coming off the boil, is still solid.
And inflation is well below where it was just a few months ago.
Taking into account the latest consumer and producer inflation readings, economists at Goldman Sachs inched up their estimate for the February core personal-consumption expenditures price index, the inflation measure favored by the Fed, by 0.02 percentage point.
They now expect it rose 2.8% in February from a year earlier.
That would be unchanged from January, but down from 3.2% as recently as November.
Meanwhile they expect first-quarter gross domestic product growth of 1.7% on an annualized basis, down from an earlier estimate of 2.1%.
Furthermore, there continued to be encouraging signs on the supply side of the U.S. economy.
Industrial production ticked up by 0.1% in February, compared with a 0.5% decline in January, data from the Fed showed on Friday.
The February headline figure was pulled down by a 7.5% drop in utility output because of warmer-than-typical temperatures.
Manufacturing output rose 0.8% and business equipment production jumped 1.7%, with broad-based gains across transport, industrials and information processing, which analysts at Capital Economics wrote “bodes well for equipment investment in the first quarter.”
In short, the U.S. economy appears to be entering a new phase, with rapid disinflation being replaced by a slower slog downward.
Meanwhile, business investment is at least partly taking the baton from consumer spending as a growth driver.
Investors will get a better idea what this means for the Fed’s plans when it releases a new set of economic and rate projections at its policy-setting meeting next week.
But it is a far cry from stagflation.
Write to Aaron Back at aaron.back@wsj.com
https://www.msn.com/en-us/money/markets ... 8920&ei=68
Re: THE ECONOMY
essanews.com
"Pentagon ends XM1299 super howitzer program amid technical challenges"
Story by BAK
18 MARCH 2024
On March 8, the Pentagon announced the discontinuation of the XM1299 super howitzer program, created to augment the older M109s.
This marks another in a series of recent program cancellations.
The XM1299, a 155 mm self-propelled howitzer program, faced insufficient funding in the fiscal year 2025.
Doug Bush, Assistant Secretary of the Army for Acquisition, Logistics, and Technology, disclosed that despite completing prototypes in the previous fall, they didn't meet the criteria for production.
A total of 20 prototypes were constructed: two designated for destruction during mine and ballistic tests, and the remaining 18 for further testing by an artillery battalion.
The primary reason for halting the funding was technical issues encountered during trials.
Notably, the exceptionally long 58 calibers barrel (almost 29.5 feet) showcased excessive wear.
Abandoning an Expensive Endeavor
For context, most modern 155 mm caliber self-propelled guns feature barrels of 52 calibers, like the Krab, whereas American counterparts, including the M109 family and the M777, possess only 39 calibers.
Nonetheless, the Army Futures Command is exploring various "existing solutions" to assess their technological maturity.
Among the possible alternatives is the M109-52, essentially an enhanced M109A7 outfitted with the same German artillery found in the Panzerhaubitze 2000.
The XM1299 was developed as part of the ERCA (Extended Range Cannon Artillery) program, aimed at securing a substantial range advantage for the US Army over potential adversaries.
The long barrel and enlarged ammunition chamber were expected to enable ranges between 43-93 miles using standard ammunition and 81-93 miles with rocket-assisted projectiles.
Moreover, it boasted a high rate of fire — up to 10 rounds per minute — while maintaining a relatively light mass of about 44 tons.
Additionally, its new fire control system promised enhanced firing accuracy.
Unfortunately, American artillery units will continue to look enviously at their Polish, French, or German counterparts, a sentiment not unfamiliar in the history of the US Army.
Maintaining Traditions Beyond the XM1299
Just a month prior, the Future Attack Reconnaissance Aircraft (FARA) program was another casualty of budget restraints and strategic shifts, originally intended to supply the US Army with new reconnaissance and attack helicopters to replace the retired Bell OH-58D Kiowa.
Competitors for the program included the Bell 360 Invictus and the LM S-97 Raider.
Aside from financial reasons, a strategic reassessment on the battlefield influenced the decision, favoring drones for reconnaissance duties over manned helicopters.
Consequently, the AH-64D/E Apache attack helicopters will lack manned support.
The extent to which drones can bridge this gap is still to be determined.
In September 2023, the US Army also recommended discontinuing the M1A2 SEPv4 Abrams program, aimed at replacing the SEPv3 variant, among other upgrades.
The new Abrams variant was to feature an updated fire control system, competitive communication systems, self-diagnostic capabilities, and a data link for utilizing programmable ammunition XM1147.
The decision was influenced by the current development path of the Abrams, considered unsustainable due to its substantial weight (approximately 74 tons, over 79 tons when fully equipped) and high fuel consumption.
Focus has shifted towards developing a new version that aims to be lighter, more mobile, and more cost-effective while maintaining the safety and firepower required by the crew.
In May 2021, the Strategic Long-Range Cannon (SLRC) program, which aimed to achieve a firing range of up to 1000 miles, was presumably canceled following the US withdrawal from the INF disarmament treaty.
Throughout history, several similar programs have been terminated, such as the Boeing-Sikorsky RAH-66 Comanche helicopter project in 2004 after $7 billion in spending, and the XM2001 Crusader in 2002 after an investment of $11 billion.
The most costly was the Future Combat Systems program, which, costing American taxpayers $32 billion, was closed in 2009 after attempting to replace nearly all of the US Army’s heavy weaponry with a new family of light tracked vehicles.
Was It Wasteful?
These cancellations don't necessarily equate to squandered resources.
On the contrary, they represent continuous development efforts by the US Army and parallel advancements in the national defense industry.
These seemingly unsuccessful programs often lay the groundwork for future successful initiatives by contributing valuable technological advancements.
Moreover, by engaging in projects like the FCS, XM907, or FARA, American engineers accumulate significant experience crucial for designing future weapons systems.
The history of these projects illustrates the importance of investing in research and development: without the Crusader, there would be no XM1299, and the XM1299 paves the way for the future of American artillery technology.
https://www.msn.com/en-us/news/world/pe ... 530&ei=125
"Pentagon ends XM1299 super howitzer program amid technical challenges"
Story by BAK
18 MARCH 2024
On March 8, the Pentagon announced the discontinuation of the XM1299 super howitzer program, created to augment the older M109s.
This marks another in a series of recent program cancellations.
The XM1299, a 155 mm self-propelled howitzer program, faced insufficient funding in the fiscal year 2025.
Doug Bush, Assistant Secretary of the Army for Acquisition, Logistics, and Technology, disclosed that despite completing prototypes in the previous fall, they didn't meet the criteria for production.
A total of 20 prototypes were constructed: two designated for destruction during mine and ballistic tests, and the remaining 18 for further testing by an artillery battalion.
The primary reason for halting the funding was technical issues encountered during trials.
Notably, the exceptionally long 58 calibers barrel (almost 29.5 feet) showcased excessive wear.
Abandoning an Expensive Endeavor
For context, most modern 155 mm caliber self-propelled guns feature barrels of 52 calibers, like the Krab, whereas American counterparts, including the M109 family and the M777, possess only 39 calibers.
Nonetheless, the Army Futures Command is exploring various "existing solutions" to assess their technological maturity.
Among the possible alternatives is the M109-52, essentially an enhanced M109A7 outfitted with the same German artillery found in the Panzerhaubitze 2000.
The XM1299 was developed as part of the ERCA (Extended Range Cannon Artillery) program, aimed at securing a substantial range advantage for the US Army over potential adversaries.
The long barrel and enlarged ammunition chamber were expected to enable ranges between 43-93 miles using standard ammunition and 81-93 miles with rocket-assisted projectiles.
Moreover, it boasted a high rate of fire — up to 10 rounds per minute — while maintaining a relatively light mass of about 44 tons.
Additionally, its new fire control system promised enhanced firing accuracy.
Unfortunately, American artillery units will continue to look enviously at their Polish, French, or German counterparts, a sentiment not unfamiliar in the history of the US Army.
Maintaining Traditions Beyond the XM1299
Just a month prior, the Future Attack Reconnaissance Aircraft (FARA) program was another casualty of budget restraints and strategic shifts, originally intended to supply the US Army with new reconnaissance and attack helicopters to replace the retired Bell OH-58D Kiowa.
Competitors for the program included the Bell 360 Invictus and the LM S-97 Raider.
Aside from financial reasons, a strategic reassessment on the battlefield influenced the decision, favoring drones for reconnaissance duties over manned helicopters.
Consequently, the AH-64D/E Apache attack helicopters will lack manned support.
The extent to which drones can bridge this gap is still to be determined.
In September 2023, the US Army also recommended discontinuing the M1A2 SEPv4 Abrams program, aimed at replacing the SEPv3 variant, among other upgrades.
The new Abrams variant was to feature an updated fire control system, competitive communication systems, self-diagnostic capabilities, and a data link for utilizing programmable ammunition XM1147.
The decision was influenced by the current development path of the Abrams, considered unsustainable due to its substantial weight (approximately 74 tons, over 79 tons when fully equipped) and high fuel consumption.
Focus has shifted towards developing a new version that aims to be lighter, more mobile, and more cost-effective while maintaining the safety and firepower required by the crew.
In May 2021, the Strategic Long-Range Cannon (SLRC) program, which aimed to achieve a firing range of up to 1000 miles, was presumably canceled following the US withdrawal from the INF disarmament treaty.
Throughout history, several similar programs have been terminated, such as the Boeing-Sikorsky RAH-66 Comanche helicopter project in 2004 after $7 billion in spending, and the XM2001 Crusader in 2002 after an investment of $11 billion.
The most costly was the Future Combat Systems program, which, costing American taxpayers $32 billion, was closed in 2009 after attempting to replace nearly all of the US Army’s heavy weaponry with a new family of light tracked vehicles.
Was It Wasteful?
These cancellations don't necessarily equate to squandered resources.
On the contrary, they represent continuous development efforts by the US Army and parallel advancements in the national defense industry.
These seemingly unsuccessful programs often lay the groundwork for future successful initiatives by contributing valuable technological advancements.
Moreover, by engaging in projects like the FCS, XM907, or FARA, American engineers accumulate significant experience crucial for designing future weapons systems.
The history of these projects illustrates the importance of investing in research and development: without the Crusader, there would be no XM1299, and the XM1299 paves the way for the future of American artillery technology.
https://www.msn.com/en-us/news/world/pe ... 530&ei=125
Re: THE ECONOMY
REUTERS
"Hydrogen adoption will cost Europe, US more than $1 trillion"
Reuters
March 18, 2024
HOUSTON, March 18 (Reuters) - Europe and the U.S. will have to spend in excess of $1 trillion for building infrastructure to enable widespread use of hydrogen fuel, an executive at Mitsubishi Heavy Industries said on Monday.
A wholesale move to hydrogen will need significant new demand, which could only come with investments in infrastructure to reduce the cost.
European and U.S. governments will have to make that investment, Emmanouil Kakaras, an executive vice president at Mitsubishi said in an interview on the sidelines of CERAWeek by S&P Global energy conference.
"If you count the funding to bridge the gap, you will easily get to $1 trillion," said Kakaras.
European governments have committed $750 billion and with the U.S. Inflation Reduction Act funding for hydrogen projects, it could be enough to make the transition to clean fuels from fossil fuels happen, he said.
New infrastructure for the use of hydrogen in Europe will spur wider adoption by 2035, and if combined with carbon capture and storage in the U.S. to offset greenhouse gas emissions, the energy transition could be realized, he said.
In contrast, Saudi Aramco CEO Amin Nasser at the same conference said the world would be better off it were to focus on reducing carbon emissions from oil and gas rather than shift to other energy sources and technologies.
"The current transition strategy is visibly failing on most fronts," said Nasser.
"Despite its significant long term potential, hydrogen still costs in the range of $200 to $400 per barrel of oil equivalent, while oil and gas remain much cheaper."
Reporting by Curtis Williams in Houston; Editing by Marguerita Choy
https://www.reuters.com/business/energy ... 024-03-18/
"Hydrogen adoption will cost Europe, US more than $1 trillion"
Reuters
March 18, 2024
HOUSTON, March 18 (Reuters) - Europe and the U.S. will have to spend in excess of $1 trillion for building infrastructure to enable widespread use of hydrogen fuel, an executive at Mitsubishi Heavy Industries said on Monday.
A wholesale move to hydrogen will need significant new demand, which could only come with investments in infrastructure to reduce the cost.
European and U.S. governments will have to make that investment, Emmanouil Kakaras, an executive vice president at Mitsubishi said in an interview on the sidelines of CERAWeek by S&P Global energy conference.
"If you count the funding to bridge the gap, you will easily get to $1 trillion," said Kakaras.
European governments have committed $750 billion and with the U.S. Inflation Reduction Act funding for hydrogen projects, it could be enough to make the transition to clean fuels from fossil fuels happen, he said.
New infrastructure for the use of hydrogen in Europe will spur wider adoption by 2035, and if combined with carbon capture and storage in the U.S. to offset greenhouse gas emissions, the energy transition could be realized, he said.
In contrast, Saudi Aramco CEO Amin Nasser at the same conference said the world would be better off it were to focus on reducing carbon emissions from oil and gas rather than shift to other energy sources and technologies.
"The current transition strategy is visibly failing on most fronts," said Nasser.
"Despite its significant long term potential, hydrogen still costs in the range of $200 to $400 per barrel of oil equivalent, while oil and gas remain much cheaper."
Reporting by Curtis Williams in Houston; Editing by Marguerita Choy
https://www.reuters.com/business/energy ... 024-03-18/
Re: THE ECONOMY
The Telegraph
"It’s not the economy, it’s inflation, stupid"
Story by Ben Wright
19 MARCH 2024
If the US election was a referendum of economists, Joe Biden would be a shoo-in for a second term.
The consensus was that the world’s largest economy would slip into recession last year.
Instead it grew by 3pc.
Unemployment hasn’t been this low for this long in 50 years.
Wages are climbing.
The stock market is going gangbusters.
The trouble is, voters aren’t buying it.
Almost six in every 10 voters polled by CBS News described the US economy under Biden as “bad”.
Stranger still, the main reason for faster-than-expected growth appears to be the gusto with which Americans are hitting the malls.
One economist says, the average American appears to be “miserable, but still spending”.
Either we’re witnessing a case of mass retail therapy or there’s a huge disconnect between how the US economy is faring and the general mood among soon-to-be voters.
Some commentators, apparently stumped by this mystery, have come up with the condescending neologism “vibecession”.
But the missing link between the bloodless, top-down numbers and how well-off voters feel is blindingly obvious: inflation may well be coming down but it remains stubbornly high.
Ordinary Americans are reminded of this fact every time they buy groceries, fill their tanks with gas, and (because interest rates are still high) pay their monthly mortgage, car finance or credit card bills.
You only have to look at the 10 national USA TODAY/Suffolk polls that have come out since Biden moved into the White House to see what’s going on.
In the first one, which came out in January 2021, the percentage of voters positive about the direction of the economy was 32pc.
That figure then proceeded to fall steadily, reaching its nadir of just 9pc in July 2022.
It is absolutely no coincidence that this was just a month after price increases peaked, hitting levels US consumers had not experienced for more than four decades.
It doesn’t matter how often Biden repeats his mantra that inflation has fallen two-thirds from its peak; prices are still rising.
To take just one extreme example, the cost of auto insurance rose by nearly 21pc last year, the sharpest spike since 1976.
With the starting gun sounding on the election campaign last week, a broad swathe of surveys suggests the two candidates are effectively neck-and-neck.
But recent polls show Trump with an 11 to 20-point edge over Biden on which candidate would better handle the economy.
Trump also enjoys a landslide advantage over his rival on inflation despite loudly proclaiming a whole host of policies – including slapping 100pc tariffs on foreign cars – that would clearly exacerbate the problem.
Some of the key factors in November’s election will therefore be how fast inflation continues to fall, whether the Fed feels it can cut interest rates and, crucially, when perceptions about high prices start to recalibrate.
On all three, the outlook is ominous for Biden.
Clearly, the US economy did do better under the 45th President than it did under the 46th.
But most of that was to do with the fact that Trump was riding on the coat-tails of 10-year economic recovery and Biden had to jump-start the country after the pandemic.
Many Americans pocketed the stimulus cheques handed out by the government and then moaned about the spike in inflation caused by such federal largesse.
It’s also true that the US has managed to curb inflation faster than most other rich nations.
Trouble is, Americans tend not to compare prices with German supermarkets and Japanese petrol stations.
What’s more, there are some pretty Panglossian takes about the US economy doing the rounds.
Americans are saving less than they were before the pandemic and racking up record credit card debt (balances on consumer credit cards and other revolving facilities recently topped $1 trillion for the first time ever).
Something similar is obviously happening at a national level with the underlying deficits over the past year approaching 8pc of GDP.
Wages are now growing faster than inflation but they have some way to go to make up for the real terms cuts of recent years.
And the phenomenon is not being experienced evenly across the workforces: wages are growing fastest for the young and the lowest-paid – two constituencies that are already predisposed to vote for Biden.
One economist says his hunch is that, six months from now, households will be feeling better off.
Real wages will have risen further, interest rates will be lower and house prices will have started to climb.
“So, even if consumers are still aghast at the price of milk, they may feel better able to afford it,” he reasons.
But, it’s just a hunch.
And a slight untick in sentiment six months from now doesn’t leave much time for any attendant feel-good factor to percolate through the electorate before they head to the voting booths two months later.
Core inflation is forecast to have fallen back to the US Federal Reserve’s target by the end of the year.
But data out in the past few days suggest the “last mile” of the Fed’s battle to get prices under control could be a hard slog.
The markets have priced in three interest rate cuts this year.
However, that’s starting to look a tad optimistic.
Short of crossing all his digits, what’s Biden’s Plan B?
He has already made the case that his stimulus package helped pull the US economy out of its post-pandemic slump.
He should now promise it was a one-off and make shoring up the nation’s finances the number one priority of his second term.
Instead Biden looks set to try and shift blame on to businesses.
“Snack companies think you won’t notice when they charge you just as much for the same size bag but with fewer chips in it,” the President said in his actual State of the Union address.
“Too many corporations raise their prices to pad their profits, charging you more and more for less and less.”
It’s what Trump would do.
But will it be enough to beat him?
https://www.msn.com/en-us/money/markets ... 591&ei=225
"It’s not the economy, it’s inflation, stupid"
Story by Ben Wright
19 MARCH 2024
If the US election was a referendum of economists, Joe Biden would be a shoo-in for a second term.
The consensus was that the world’s largest economy would slip into recession last year.
Instead it grew by 3pc.
Unemployment hasn’t been this low for this long in 50 years.
Wages are climbing.
The stock market is going gangbusters.
The trouble is, voters aren’t buying it.
Almost six in every 10 voters polled by CBS News described the US economy under Biden as “bad”.
Stranger still, the main reason for faster-than-expected growth appears to be the gusto with which Americans are hitting the malls.
One economist says, the average American appears to be “miserable, but still spending”.
Either we’re witnessing a case of mass retail therapy or there’s a huge disconnect between how the US economy is faring and the general mood among soon-to-be voters.
Some commentators, apparently stumped by this mystery, have come up with the condescending neologism “vibecession”.
But the missing link between the bloodless, top-down numbers and how well-off voters feel is blindingly obvious: inflation may well be coming down but it remains stubbornly high.
Ordinary Americans are reminded of this fact every time they buy groceries, fill their tanks with gas, and (because interest rates are still high) pay their monthly mortgage, car finance or credit card bills.
You only have to look at the 10 national USA TODAY/Suffolk polls that have come out since Biden moved into the White House to see what’s going on.
In the first one, which came out in January 2021, the percentage of voters positive about the direction of the economy was 32pc.
That figure then proceeded to fall steadily, reaching its nadir of just 9pc in July 2022.
It is absolutely no coincidence that this was just a month after price increases peaked, hitting levels US consumers had not experienced for more than four decades.
It doesn’t matter how often Biden repeats his mantra that inflation has fallen two-thirds from its peak; prices are still rising.
To take just one extreme example, the cost of auto insurance rose by nearly 21pc last year, the sharpest spike since 1976.
With the starting gun sounding on the election campaign last week, a broad swathe of surveys suggests the two candidates are effectively neck-and-neck.
But recent polls show Trump with an 11 to 20-point edge over Biden on which candidate would better handle the economy.
Trump also enjoys a landslide advantage over his rival on inflation despite loudly proclaiming a whole host of policies – including slapping 100pc tariffs on foreign cars – that would clearly exacerbate the problem.
Some of the key factors in November’s election will therefore be how fast inflation continues to fall, whether the Fed feels it can cut interest rates and, crucially, when perceptions about high prices start to recalibrate.
On all three, the outlook is ominous for Biden.
Clearly, the US economy did do better under the 45th President than it did under the 46th.
But most of that was to do with the fact that Trump was riding on the coat-tails of 10-year economic recovery and Biden had to jump-start the country after the pandemic.
Many Americans pocketed the stimulus cheques handed out by the government and then moaned about the spike in inflation caused by such federal largesse.
It’s also true that the US has managed to curb inflation faster than most other rich nations.
Trouble is, Americans tend not to compare prices with German supermarkets and Japanese petrol stations.
What’s more, there are some pretty Panglossian takes about the US economy doing the rounds.
Americans are saving less than they were before the pandemic and racking up record credit card debt (balances on consumer credit cards and other revolving facilities recently topped $1 trillion for the first time ever).
Something similar is obviously happening at a national level with the underlying deficits over the past year approaching 8pc of GDP.
Wages are now growing faster than inflation but they have some way to go to make up for the real terms cuts of recent years.
And the phenomenon is not being experienced evenly across the workforces: wages are growing fastest for the young and the lowest-paid – two constituencies that are already predisposed to vote for Biden.
One economist says his hunch is that, six months from now, households will be feeling better off.
Real wages will have risen further, interest rates will be lower and house prices will have started to climb.
“So, even if consumers are still aghast at the price of milk, they may feel better able to afford it,” he reasons.
But, it’s just a hunch.
And a slight untick in sentiment six months from now doesn’t leave much time for any attendant feel-good factor to percolate through the electorate before they head to the voting booths two months later.
Core inflation is forecast to have fallen back to the US Federal Reserve’s target by the end of the year.
But data out in the past few days suggest the “last mile” of the Fed’s battle to get prices under control could be a hard slog.
The markets have priced in three interest rate cuts this year.
However, that’s starting to look a tad optimistic.
Short of crossing all his digits, what’s Biden’s Plan B?
He has already made the case that his stimulus package helped pull the US economy out of its post-pandemic slump.
He should now promise it was a one-off and make shoring up the nation’s finances the number one priority of his second term.
Instead Biden looks set to try and shift blame on to businesses.
“Snack companies think you won’t notice when they charge you just as much for the same size bag but with fewer chips in it,” the President said in his actual State of the Union address.
“Too many corporations raise their prices to pad their profits, charging you more and more for less and less.”
It’s what Trump would do.
But will it be enough to beat him?
https://www.msn.com/en-us/money/markets ... 591&ei=225
Re: THE ECONOMY
CNBC
"Fed holds rates steady and maintains three cuts coming sometime this year"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAR 20 2024
KEY POINTS
* Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%.
* Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020.
The Federal Reserve on Wednesday held interest rates steady as expected and signaled it still plans multiple cuts before the end of the year.
Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%, where it has held since July 2023.
Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020.
The current federal funds rate level is the highest in more than 23 years.
The rate sets what banks charge each other for overnight lending but feeds through to many forms of consumer debt.
The outlook for three cuts came from the Fed’s “dot plot,” a closely watched matrix of anonymous projections from the 19 officials who comprise the FOMC.
The chart provides no indication for the timing of the moves.
Chair Jerome Powell said the Fed also did not elaborate on timing but said he still expects the cuts to come, as long as the data cooperate.
Futures markets following the meeting were pricing in a nearly 75% probability that the first cut comes at the June 11-12 meeting, according to the CME Group’s FedWatch gauge.
“We believe that our policy rate is likely at its peak for this type of cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said at his post-meeting news conference.
“We are prepared to maintain the current target range for the federal funds rate for longer if appropriate.”
The plot indicated three cuts in 2025 – one fewer than the last time the grid was updated in December.
The committee sees three more reductions in 2026 and then two more in the future until the fed funds rate settles in around 2.6%, near what policymakers estimate to be the “neutral rate” that is neither stimulative nor restrictive.
The grid is part of the Fed’s Summary of Economic Projections, which also provides estimates for gross domestic product, inflation and unemployment.
The dot assortment skewed somewhat hawkish from December in terms of deviations from the median, but not enough to change this year’s projections.
Markets rallied following the release of the FOMC decision.
The Dow Jones Industrial Average finished the session up 401 points, or just over 1%.
Treasury yields headed mostly lower, with the benchmark 10-year note most recently at 4.28%, off 0.01 percentage point.
“The sum total of this ‘no news is good news’ press conference is that markets continue to have a green light to run higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“We aren’t surprised to see the initial reaction from investors to be to push stock prices up and expect that to continue until some new shock hits the system because this Fed isn’t going to stand in the way of the bull market.”
Raises GDP forecast
Officials sharply accelerated their projections for GDP growth this year and now see the economy running at a 2.1% annualized rate, up from the 1.4% estimate in December.
The unemployment rate forecast moved slightly lower from the previous estimate to 4%, while the projection for core inflation as measured by personal consumption expenditures rose to 2.6%, up 0.2 percentage point from before but slightly below the most recent level of 2.8%.
The unemployment rate for February was 3.9%.
The outlook for GDP also rose incrementally for the next two years.
Core PCE inflation is expected to get back to target by 2026, same as in December.
The FOMC’s post-meeting statement was almost identical to the one delivered at its last meeting in January save for an upgrade on its job growth assessment to “strong” from the January characterization that gains had “moderated.”
The decision to stand pat on rates was approved unanimously.
Markets had been watching closely for clues about where the Fed would go from here with monetary policy.
Earlier this year, traders in the fed funds futures market had strongly priced in a likelihood that the central bank would start cutting at this week’s meeting and continue doing so until it had totaled as many as seven decreases by the end of the year.
However, recent developments have changed that outlook dramatically.
Higher-than-expected inflation data to start 2024 triggered caution from top Fed officials, and the January FOMC meeting concluded with the central bank saying it needed more evidence that prices were decelerating before it would gain “greater confidence” on inflation and start cutting.
Statements from Powell and other policymakers since then added to the sentiment of a patient, data-driven approach, and markets have had to reprice.
Powell and his cohorts have indicated that with the economy still growing at a healthy pace and unemployment below 4%, they can take a more measured approach when loosening monetary policy.
“The economy is strong, inflation has come way down,” Powell said, “and that gives us the ability to approach this question carefully and feel more confident that inflation is moving down sustainably at 2% when we take that step to begin dialing back our restrictive policy.”
The expectation heading into this week’s meeting is for the first cut to happen in June and two more to follow, bringing markets and Fed officials back into alignment.
Beyond that, markets also were looking for some direction on the Fed’s balance sheet reduction program.
In a process that began in June 2022, the central bank is allowing up to $60 billion a month in maturing proceeds from Treasurys plus up to $35 billion in mortgage-backed securities to roll off each month rather than be reinvested.
The process is often referred to as “quantitative tightening” and has resulted in about a $1.4 trillion drawdown in the Fed’s holdings.
Powell confirmed the issue was discussed at the meeting but noted that no decisions were made on the extent and timing of the potential balance sheet reduction.
“While we did not make any decisions today, the general sense of the committee is that it will be appropriate to slow the pace of runoff fairly soon, consistent with the plans we previously issued,” he said.
https://www.cnbc.com/2024/03/20/fed-mee ... 2024-.html
"Fed holds rates steady and maintains three cuts coming sometime this year"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAR 20 2024
KEY POINTS
* Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%.
* Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020.
The Federal Reserve on Wednesday held interest rates steady as expected and signaled it still plans multiple cuts before the end of the year.
Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%, where it has held since July 2023.
Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020.
The current federal funds rate level is the highest in more than 23 years.
The rate sets what banks charge each other for overnight lending but feeds through to many forms of consumer debt.
The outlook for three cuts came from the Fed’s “dot plot,” a closely watched matrix of anonymous projections from the 19 officials who comprise the FOMC.
The chart provides no indication for the timing of the moves.
Chair Jerome Powell said the Fed also did not elaborate on timing but said he still expects the cuts to come, as long as the data cooperate.
Futures markets following the meeting were pricing in a nearly 75% probability that the first cut comes at the June 11-12 meeting, according to the CME Group’s FedWatch gauge.
“We believe that our policy rate is likely at its peak for this type of cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said at his post-meeting news conference.
“We are prepared to maintain the current target range for the federal funds rate for longer if appropriate.”
The plot indicated three cuts in 2025 – one fewer than the last time the grid was updated in December.
The committee sees three more reductions in 2026 and then two more in the future until the fed funds rate settles in around 2.6%, near what policymakers estimate to be the “neutral rate” that is neither stimulative nor restrictive.
The grid is part of the Fed’s Summary of Economic Projections, which also provides estimates for gross domestic product, inflation and unemployment.
The dot assortment skewed somewhat hawkish from December in terms of deviations from the median, but not enough to change this year’s projections.
Markets rallied following the release of the FOMC decision.
The Dow Jones Industrial Average finished the session up 401 points, or just over 1%.
Treasury yields headed mostly lower, with the benchmark 10-year note most recently at 4.28%, off 0.01 percentage point.
“The sum total of this ‘no news is good news’ press conference is that markets continue to have a green light to run higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“We aren’t surprised to see the initial reaction from investors to be to push stock prices up and expect that to continue until some new shock hits the system because this Fed isn’t going to stand in the way of the bull market.”
Raises GDP forecast
Officials sharply accelerated their projections for GDP growth this year and now see the economy running at a 2.1% annualized rate, up from the 1.4% estimate in December.
The unemployment rate forecast moved slightly lower from the previous estimate to 4%, while the projection for core inflation as measured by personal consumption expenditures rose to 2.6%, up 0.2 percentage point from before but slightly below the most recent level of 2.8%.
The unemployment rate for February was 3.9%.
The outlook for GDP also rose incrementally for the next two years.
Core PCE inflation is expected to get back to target by 2026, same as in December.
The FOMC’s post-meeting statement was almost identical to the one delivered at its last meeting in January save for an upgrade on its job growth assessment to “strong” from the January characterization that gains had “moderated.”
The decision to stand pat on rates was approved unanimously.
Markets had been watching closely for clues about where the Fed would go from here with monetary policy.
Earlier this year, traders in the fed funds futures market had strongly priced in a likelihood that the central bank would start cutting at this week’s meeting and continue doing so until it had totaled as many as seven decreases by the end of the year.
However, recent developments have changed that outlook dramatically.
Higher-than-expected inflation data to start 2024 triggered caution from top Fed officials, and the January FOMC meeting concluded with the central bank saying it needed more evidence that prices were decelerating before it would gain “greater confidence” on inflation and start cutting.
Statements from Powell and other policymakers since then added to the sentiment of a patient, data-driven approach, and markets have had to reprice.
Powell and his cohorts have indicated that with the economy still growing at a healthy pace and unemployment below 4%, they can take a more measured approach when loosening monetary policy.
“The economy is strong, inflation has come way down,” Powell said, “and that gives us the ability to approach this question carefully and feel more confident that inflation is moving down sustainably at 2% when we take that step to begin dialing back our restrictive policy.”
The expectation heading into this week’s meeting is for the first cut to happen in June and two more to follow, bringing markets and Fed officials back into alignment.
Beyond that, markets also were looking for some direction on the Fed’s balance sheet reduction program.
In a process that began in June 2022, the central bank is allowing up to $60 billion a month in maturing proceeds from Treasurys plus up to $35 billion in mortgage-backed securities to roll off each month rather than be reinvested.
The process is often referred to as “quantitative tightening” and has resulted in about a $1.4 trillion drawdown in the Fed’s holdings.
Powell confirmed the issue was discussed at the meeting but noted that no decisions were made on the extent and timing of the potential balance sheet reduction.
“While we did not make any decisions today, the general sense of the committee is that it will be appropriate to slow the pace of runoff fairly soon, consistent with the plans we previously issued,” he said.
https://www.cnbc.com/2024/03/20/fed-mee ... 2024-.html
Re: THE ECONOMY
REUTERS
"Fed sees three 2024 rate cuts and shallower path as Powell backs go-slow approach"
By Howard Schneider and Ann Saphir
March 20, 2024
Summary
* Policy rate stays in 5.25%-5.50% range
* U.S. central bank says inflation remains 'elevated'
* Fed upgrades economic outlook in slightly hawkish shift
WASHINGTON, March 20 (Reuters) - Federal Reserve Chair Jerome Powell said on Wednesday recent high inflation readings had not changed the underlying "story" of slowly easing price pressures in the U.S., but added that recent data also had not bolstered the central bank's confidence that the inflation battle has been won.
Powell, speaking after a policy meeting at which officials left rates unchanged and held onto their outlook for three cuts in borrowing costs this year, said the timing of those reductions still depended on officials becoming more secure that inflation can continue to decline towards the Fed's 2% target in an economy that continues to outperform expectations.
Inflation reports at the beginning of the year showed price pressures remained "elevated," in the Fed's view, but "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%," Powell told reporters.
"I also don't think that those readings added to anyone's confidence" of a continued decline in inflation.
The decision on when to cut rates will depend on more data, Powell said, to determine if the disappointing readings that started the year continue.
"We want to be careful," the Fed chief said, reiterating a go-slow approach to rate cuts that has been buttressed by the economy's ongoing strength, leaving officials in no rush to ease monetary policy while the economy and the job market continue to grow.
While officials affirmed their view for three rate cuts this year, they also upgraded their outlook for economic growth and projected slightly slower progress on inflation over the course of the year.
The Fed's benchmark overnight interest rate, as expected, was held steady on Wednesday in the 5.25%-5.50% range where it has been since July.
The updated quarterly economic projections showed the personal consumption expenditures price index excluding food and energy rising at a 2.6% rate by the end of the year, compared to 2.4% in the projections issued in December.
Nevertheless, 10 of the Fed's 19 officials still see the policy rate falling by at least three-quarters of a percentage point by the end of this year, a median view first set in December and maintained despite recent stronger-than-expected inflation.
U.S. stocks extended their gains following the release of the Federal Open Market Committee's policy statement while the U.S. dollar slipped against a basket of currencies.
U.S. Treasury yields fell.
Investors strengthened bets of a first rate cut in June.
"The May meeting is not live for a cut, barring a financial accident, as the Committee continue to seek further confidence that inflation is returning to target before firing the starting gun on the easing cycle," said Michael Brown, a market analyst at Pepperstone.
Back in December, eleven officials had seen three quarter-percentage-point cuts on tap for the year, and the new policy view came alongside an upgraded outlook for the economy.
Growth is now seen at 2.1% for the year compared to just the 1.4% projected in December, while the unemployment rate is seen ending the year at 4%, lower than the 4.1% anticipated in December and barely changed from the 3.9% jobless rate recorded in February.
LONGER-RUN RATE HIGHER
One key measure, the longer-run policy rate, was moved higher by a tenth of a percentage point, from 2.5% to 2.6%, reflecting the views of some Fed officials that the economy can support higher interest rates overall in the future.
The Fed kicked off an aggressive monetary policy tightening cycle two years ago in response to a surge in inflation that would eventually hit a 40-year peak, but it has kept its policy rate in the current range since last July.
The latest projections show the median policymaker expects the Fed's benchmark overnight interest rate to fall three-quarters of a percentage point in 2025, less than the 1 percentage point projected in December as part of a slightly slowed rate cut path, and by three-quarters of a point in 2026 as well, the same as anticipated previously.
"Economic activity has been expanding at a solid pace."
"Job gains have remained strong and the unemployment rate has remained low," the Fed said in its unanimously approved statement after the end of a two-day meeting.
The statement also repeated that officials are still seeking "greater confidence" in a continued decline of inflation before they begin cutting interest rates, language adopted at the Fed's Jan. 30-31 meeting that is likely to stay in place until just before the first rate reduction.
Investors ahead of the meeting had settled firmly on an anticipated June start to rate cuts.
That view was largely reinforced by the outcome of the meeting, but it also leaves the median rate outlook near a tipping point, a fact that could give outsized influence to upcoming inflation reports.
Reporting by Howard Schneider; Additional reporting by Saqib Ahmed and Lindsay Dunsmuir; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 024-03-20/
"Fed sees three 2024 rate cuts and shallower path as Powell backs go-slow approach"
By Howard Schneider and Ann Saphir
March 20, 2024
Summary
* Policy rate stays in 5.25%-5.50% range
* U.S. central bank says inflation remains 'elevated'
* Fed upgrades economic outlook in slightly hawkish shift
WASHINGTON, March 20 (Reuters) - Federal Reserve Chair Jerome Powell said on Wednesday recent high inflation readings had not changed the underlying "story" of slowly easing price pressures in the U.S., but added that recent data also had not bolstered the central bank's confidence that the inflation battle has been won.
Powell, speaking after a policy meeting at which officials left rates unchanged and held onto their outlook for three cuts in borrowing costs this year, said the timing of those reductions still depended on officials becoming more secure that inflation can continue to decline towards the Fed's 2% target in an economy that continues to outperform expectations.
Inflation reports at the beginning of the year showed price pressures remained "elevated," in the Fed's view, but "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%," Powell told reporters.
"I also don't think that those readings added to anyone's confidence" of a continued decline in inflation.
The decision on when to cut rates will depend on more data, Powell said, to determine if the disappointing readings that started the year continue.
"We want to be careful," the Fed chief said, reiterating a go-slow approach to rate cuts that has been buttressed by the economy's ongoing strength, leaving officials in no rush to ease monetary policy while the economy and the job market continue to grow.
While officials affirmed their view for three rate cuts this year, they also upgraded their outlook for economic growth and projected slightly slower progress on inflation over the course of the year.
The Fed's benchmark overnight interest rate, as expected, was held steady on Wednesday in the 5.25%-5.50% range where it has been since July.
The updated quarterly economic projections showed the personal consumption expenditures price index excluding food and energy rising at a 2.6% rate by the end of the year, compared to 2.4% in the projections issued in December.
Nevertheless, 10 of the Fed's 19 officials still see the policy rate falling by at least three-quarters of a percentage point by the end of this year, a median view first set in December and maintained despite recent stronger-than-expected inflation.
U.S. stocks extended their gains following the release of the Federal Open Market Committee's policy statement while the U.S. dollar slipped against a basket of currencies.
U.S. Treasury yields fell.
Investors strengthened bets of a first rate cut in June.
"The May meeting is not live for a cut, barring a financial accident, as the Committee continue to seek further confidence that inflation is returning to target before firing the starting gun on the easing cycle," said Michael Brown, a market analyst at Pepperstone.
Back in December, eleven officials had seen three quarter-percentage-point cuts on tap for the year, and the new policy view came alongside an upgraded outlook for the economy.
Growth is now seen at 2.1% for the year compared to just the 1.4% projected in December, while the unemployment rate is seen ending the year at 4%, lower than the 4.1% anticipated in December and barely changed from the 3.9% jobless rate recorded in February.
LONGER-RUN RATE HIGHER
One key measure, the longer-run policy rate, was moved higher by a tenth of a percentage point, from 2.5% to 2.6%, reflecting the views of some Fed officials that the economy can support higher interest rates overall in the future.
The Fed kicked off an aggressive monetary policy tightening cycle two years ago in response to a surge in inflation that would eventually hit a 40-year peak, but it has kept its policy rate in the current range since last July.
The latest projections show the median policymaker expects the Fed's benchmark overnight interest rate to fall three-quarters of a percentage point in 2025, less than the 1 percentage point projected in December as part of a slightly slowed rate cut path, and by three-quarters of a point in 2026 as well, the same as anticipated previously.
"Economic activity has been expanding at a solid pace."
"Job gains have remained strong and the unemployment rate has remained low," the Fed said in its unanimously approved statement after the end of a two-day meeting.
The statement also repeated that officials are still seeking "greater confidence" in a continued decline of inflation before they begin cutting interest rates, language adopted at the Fed's Jan. 30-31 meeting that is likely to stay in place until just before the first rate reduction.
Investors ahead of the meeting had settled firmly on an anticipated June start to rate cuts.
That view was largely reinforced by the outcome of the meeting, but it also leaves the median rate outlook near a tipping point, a fact that could give outsized influence to upcoming inflation reports.
Reporting by Howard Schneider; Additional reporting by Saqib Ahmed and Lindsay Dunsmuir; Editing by Paul Simao
https://www.reuters.com/markets/rates-b ... 024-03-20/
Re: THE ECONOMY
REUTERS
"Intel latest to get US funds for chips, more grants and loans planned"
Reuters
March 20, 2024
WASHINGTON, March 20 (Reuters) - Intel Corp on Wednesday was the latest semiconductor company to be awarded billions of dollars in grants and loans from the U.S. government in President Joe Biden's effort to supercharge domestic chip output.
Below is a list of the awards made so far and those expected in the weeks and months ahead.
INTEL
The Biden administration said it has inked a preliminary agreement with Intel for $8.5 billion in grants and up to $11 billion in loans for plants and upgrades to manufacturing sites in Arizona, Ohio, Oregon and New Mexico.
GLOBALFOUNDRIES
In February, the Biden administration awarded $1.5 billion to GlobalFoundries, the world's third-largest contract chipmaker, to build a semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont.
MICROCHIP TECHNOLOGY
In January, Commerce announced Microchip Technology would get $162 million in government grants, allowing the company to triple production of mature-node semiconductor chips and microcontroller units at two U.S. factories.
BAE
The U.S. Commerce Department in December said it planned to award $35 million to BAE Systems to quadruple production in New Hampshire for key semiconductor chips used in F-35 fighter jets and commercial satellites.
FUTURE AWARDS
Awards for South Korea's Samsung and Taiwan's Taiwan Semiconductor Manufacturing Co are expected in the coming weeks and months.
Reporting by Chris Sanders; Editing by David Gregorio
https://www.reuters.com/technology/inte ... 024-03-20/
"Intel latest to get US funds for chips, more grants and loans planned"
Reuters
March 20, 2024
WASHINGTON, March 20 (Reuters) - Intel Corp on Wednesday was the latest semiconductor company to be awarded billions of dollars in grants and loans from the U.S. government in President Joe Biden's effort to supercharge domestic chip output.
Below is a list of the awards made so far and those expected in the weeks and months ahead.
INTEL
The Biden administration said it has inked a preliminary agreement with Intel for $8.5 billion in grants and up to $11 billion in loans for plants and upgrades to manufacturing sites in Arizona, Ohio, Oregon and New Mexico.
GLOBALFOUNDRIES
In February, the Biden administration awarded $1.5 billion to GlobalFoundries, the world's third-largest contract chipmaker, to build a semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont.
MICROCHIP TECHNOLOGY
In January, Commerce announced Microchip Technology would get $162 million in government grants, allowing the company to triple production of mature-node semiconductor chips and microcontroller units at two U.S. factories.
BAE
The U.S. Commerce Department in December said it planned to award $35 million to BAE Systems to quadruple production in New Hampshire for key semiconductor chips used in F-35 fighter jets and commercial satellites.
FUTURE AWARDS
Awards for South Korea's Samsung and Taiwan's Taiwan Semiconductor Manufacturing Co are expected in the coming weeks and months.
Reporting by Chris Sanders; Editing by David Gregorio
https://www.reuters.com/technology/inte ... 024-03-20/