Action Will Fall Far Short of Words. As widely expected, the Federal Open Markets Committee announced Wednesday that it will keep the Federal Funds rate unchanged. At the same time, 12 of 19 Fed officials suggested that the rate will be increased one more time this year – on November 1 or December 13. The remaining seven colleagues expect ...

Rate projections suggest many Fed officials see a rising ‘neutral rate’. On Wednesday, Federal Reserve officials surprised markets by signaling interest rates won’t fall as much as previously planned. The tweak might be more important than it looks. In their projections and commentary, some officials hint that rates might be higher not just ...

The complexity of central banks’ ‘last mile’ on inflation is part of a bigger economic challenge. “I know it’s complicated.” That was European Central Bank president Christine Lagarde’s response to a question on the policy outlook earlier this month. Lagarde isn’t the only central bank chief signalling the complex road ahead as their ...

A transition to an all-electric-car future won’t mean less labor but more—much of it overseas. Many claim that the United Auto Workers strike is, at core, a reaction to an "inevitable" transition to an all-electric-car future. They say that this future involves fewer jobs because electric vehicles (EVs) are supposedly simpler machines ...

Federal Reserve officials forecast higher interest rates through 2026 this week, a sign that borrowing costs are not heading back to the rock-bottom levels normal before the pandemic. The era of ultralow interest rates may be over. At the very least, policymakers don’t expect the type of low borrowing costs that prevailed before the pandemic ...

The big spending has fueled higher inflation, resulted in larger-than-projected deficits, and contributed to a record level of debt. As election season approaches, Democrats are touting the economic results of Biden administration policies aimed at improving the lives of working Americans and creating a more equitable economy. But ...

The Federal Reserve's Federal Open Market Committee (FOMC) voted to hold its federal funds rate target range at 5.25 to 5.50 percent on Wednesday. However, FOMC members also signaled that another rate hike is likely in the fourth quarter of this year. In the latest Summary of Economic Projections, twelve of nineteen FOMC members projected ...

The Federal Reserve policy committee took a big hawkish shift on Wednesday, dimming hopes for a quick shift to rate cuts in 2024. After the Fed meeting ended with no change in the key policy rate, as expected, the S&P 500 traded modestly lower. But stocks lost their footing late in the day as market-based interest rates on government bonds ...

Companies need to decide how they will deal with increasing pressure on profit margins — setting the direction for the economy. Consumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.Categories that provided relief to companies’ bottom lines over the past year — freight and ...

AUSTIN – Whatever stories Americans are told about the strength of the economy under President Joe Biden, they are not going to be persuaded to look past the issue of their own living standards. For most Americans, these have declined somewhat as price increases have outpaced wage growth. In a recent CNN interview, Paul Krugman of The New ...

The United Auto Workers has taken to the picket lines in a particularly acrimonious strike, targeting, for the first time, all three of the big Detroit automakers simultaneously.Popular opinion appears to lie firmly on the union side. And I’m all for the auto workers getting paid more — they have legitimate concerns. But this increasingly ...

Factory workers want more pay and fewer hours, but that’s at odds with how U.S. manufacturers have lost ground. For the United Auto Workers, it makes perfect sense to demand more pay and better work-life balance from Detroit’s three automakers. After all, workers throughout this historically tight labor market are getting exactly that. But ...

A funny thing happened to me on the internet the other day. Like many economists, I’ve been looking at various measures of underlying inflation to try to peer through the economic fog, and I thought I should post an update on one measure that I’ve emphasized in the past: consumer prices excluding food, energy, used cars and shelter. To ...

The UAW strike might represent labor’s last stand in the Midwest—but the union future might lie in service jobs in blue states, especially if California legislators get their way. The United Auto Workers' strike might seem to signal a resurgence of union power, but the strike is in part a product of the government's creating incentives ...

The Federal Reserve is unlikely to declare victory this week. But investors will watch for any hint that the end to rate increases is coming. Federal Reserve officials are expected to leave interest rates unchanged at their meeting on Wednesday, buying themselves more time to assess whether borrowing costs are high enough to weigh down the ...

There are several warning signs that the Fed's aggressive monetary policy is going too far. Rudi Dornbusch, the late MIT economist, used to say that he could understand the Mexican central bank making mistakes. What he could not understand was how the same people could make the same mistakes time after time. Judging by how little attention ...

This figure from The Wall Street Journal illustrates where the jobs are. More and more of it is in government. Public sector jobs (federal, state, and municipal) account for nearly 20% of payroll gains. This is in part because of the government replacing teachers and public safety workers who quit their jobs during the pandemic. But it is ...

The BRICS — Brazil, Russia, India, China and South Africa — are expanding and studying an alternative currency system to the dollar. The U.S. dollar enjoys unrivaled global status, but rising federal deficits and U.S. sanctions on businesses and banks in Russia and other nations are causing governments to seek alternatives. How successful ...

Five things to watch in the Summary of Economic Projections. Can the Federal Reserve engineer a soft landing, in which it defeats excessive inflation without tipping the US economy into recession? This week, Fed officials will offer important clues as to whether that’s achievable.The Sept. 19-20 meeting of the policy-making Federal Open ...

It's growing more expensive for employers to offer health insurance. Employer insurance costs are expected to climb 6.5% in 2024, according to a new survey from major benefits consulting firms Mercer and Willis Towers Watson. Employers spend about $14,600, on average, to insure a single employee, a 5% percent increase from ...

Electrification of vehicles is leading not only to shrinking worker incomes but to a fundamental fracturing of the Democratic Party coalition. The big economic news at the end of last week was the start of a strike by the United Auto Workers (UAW) union against all three major U.S. automakers. This is the first strike against President ...

Odds of the Fed reducing inflation without a recession have improved, but hazards loom. On the eve of recessions in 1990, 2001 and 2007, many Wall Street economists proclaimed the U.S. was on the cusp of achieving a soft landing, in which interest-rate increases corralled inflation without causing a recession. Similarly, this summer’s ...

Sacramento subverts democracy to extort fast-food restaurants. California Gov. Gavin Newsom professes to be deeply worried about democracy. Good for him. Yet he doesn’t seem concerned by how unions and Democrats in Sacramento are subverting democracy to extort fast-food businesses to do ...

September is usually a nice month weather-wise. After the dog days of summer, the temperature starts to cool with occasional hot spells reminiscent of the summer. On the other hand, the month can be a rough one for stocks. The S&P 500 is down 1.3% mtd so far. That's not so bad. Then again, the month's worst performing sector is ...

At the end of last week Apple shed over $200 billion in market value. Its decline rendered it the worst performing member of the Dow Jones Industrial Average. Why the correction in its share price? It's always a bit of a fool's errand to explain the movements of shares processing endless amounts of news from all over the world, but the ...

The White House’s policies have led to a strong economy, which usually reduces the government’s funding shortfall. Not this time. Economists are playing a game of “can-you-top-this,” seeing who can ramp up their US economic growth forecasts the most. (Those at JPMorgan now predict a 3.5% annualized rate for the current quarter, up from the ...

Former World Bank president David Malpass thinks government policy is the primary cause of inflation and slow growth. I agree, but not for the same reasons. Malpass makes three distinct arguments: Specific prices ("rising fuel prices and wage costs") are the chief source of inflation risk. Higher economic growth can help us overcome a host ...

But Central Bank Will Learn Little From Move. Much as anticipated in last week's SriKonomics, headline US inflation marched upward in August, consumer price figures released by the Bureau of Labor Statistics on Wednesday indicated. Rising domestic price of gasoline was a major factor. In addition, as overall inflation slowed from a ...

There’s plenty of reason to keep investigating the Biden family business. An impeachment inquiry isn't a vote to impeach, and there is enough evidence on the record to warrant more investigation into the President's role in promoting the Biden family business dealings with foreign firms. Say this for the Biden White House: It knows its ...

Almost all the available evidence suggests that the U.S. economy is achieving what many economists had thought impossible — a soft landing in which inflation returns to acceptable levels without a recession. Yet polls suggest that the public remains very down on the state of the economy. Why? I and others have been arguing that there’s a big ...

The state's population stagnation is likely to continue for decades as younger people flee for opportunities elsewhere. After spending late summer in a picturesque town in the Pacific Northwest, I'm eager to get home to California and enjoy the sunshine and warm weather. But it's not just the climate that I miss. There's something fabulous ...

Inflation is back! Or so the commentariat would have you believe. The Consumer Price Index (CPI) grew 0.6 percent in August, significantly higher than the previous six monthly increases. Consumer prices have grown 3.7 percent over the last twelve months. If prices were to grow as fast as they did in August for the next twelve months, the ...

This progress has been widely shared, to the great benefit of the people at the bottom of the distribution. Today's hyperpartisan and frequently negative news cycle ignores one significant and uplifting story: the precipitous decline of global inequality. It's a subject that deserves our attention, for it reveals the power of markets, trade, ...

They should be less about collective bargaining and more like guilds that offer various kinds of insurance — for health, retirement and even wages. The labor movement is having a moment. In a tight employment market, there is money to be had — or profits to be more generously shared — and workers have gotten some big wins recently. Even reality ...

History shows that even in ‘narrow’ markets, actively managed funds don’t do as well over the long term. Active portfolio managers claim that agile stock picking is the best way to invest. Many have lately argued that simple indexing is a bad strategy in today’s environment because the stock market is dangerously “narrow.” Seven ...

Mild price pressures excluding energy keep Fed on track to pause rate increases next week. Consumer prices rose in August at the fastest pace in more than a year due to a jump in energy costs, illustrating the potential obstacles to wringing inflation out of the economy without a sharper slowdown. The consumer-price index, a closely ...

Consumer prices rose 3.7 percent in the year through August, marking another month of accelerating inflation. The Federal Reserve will closely parse the data as it prepares its next interest-rate decision. Federal Reserve officials are likely to remain wary about the outlook for inflation after a report released Wednesday: Overall price ...

After the pandemic, at one point it seemed in-store shopping would come back, but working in the office would not. But as people slowly return to the office, online sales remains strong. Ecommerce sales as a share of retail sales shot up during the pandemic, fell a bit, and is rising back to pandemic highs. Our relationship with online ...

In August 2023 the AIER Everyday Price Index (EPI) rose 0.87 percent, lifting the index from 285.2 to 287.7. This was the largest monthly percent increase since January 2023 (0.93 percent). Additionally, 287.7 is the highest recorded index value, besting the previous EPI high of 287.1 registered in June 2022. AIER Everyday Price Index vs. ...

MILAN – Mobilizing the investment needed to complete the net-zero transition will require broad public backing and participation. Given that people living in poverty are less likely to support climate action, simultaneous efforts to improve living standards are essential. With the 78th session of the United Nations General Assembly and ...

Stores fleeing from rising theft will leave residents in cities like New York with fewer places to shop, less merchandise to buy, and higher prices to pay. The rising social disorder and crime of the 1970s and 1980s drove out not only hundreds of thousands of residents from New York City, but also many businesses. Within a few years, ...

The consumer price index jumped, as expected, in August, as gas prices revved higher, pushing up the headline inflation rate for a second straight month. The slightly unpleasant surprise came from a bigger-than-expected rise in core CPI inflation, which excludes prices for energy and groceries. The S&P 500 opened slightly higher on Wednesday ...

But geography and innovation mean cobalt, lithium and copper can never be weaponized as effectively as oil and gas. From OPEC’s oil embargo on the U.S. in the 1970s to Russia’s cutoff of gas to Western Europe last year, unsavory regimes have weaponized their control of oil and gas to pursue strategic goals. The transition to green energy has ...

Remember “American carnage?” Donald Trump’s 2017 inaugural address was peculiar in many ways, but one of the most striking oddities was his obsession with a problem — urban crime — that had greatly diminished over the past generation. For reasons we still don’t fully understand, violent crime in America fell rapidly from around 1990 to ...

Writing in the Wall Street Journal, Alan Blinder notes the ambiguities in Fed Chairman Jerome Powell's recent address in Jackson Hole: Powell can't give much forward guidance when he doesn't know what comes next. The Fed is truly data-dependent now, in a way it wasn't a year ago, and no one knows what the next few months will bring. ...

The U.S. labor market remains strong despite the Federal Reserve's efforts to slow the economy to bring down inflation. The national unemployment rate is near historic lows at 3.8% and there are still more job openings than unemployed persons. In some metropolitan (metro) areas, unemployment rates are below 2%. Yet despite the extremely ...

Good news for Vladimir Putin and Mohammed bin Salman Al Saud, but not for Americans at the pump. After falling below $70 in late June, the oil price (WTI crude) moved up steadily until the second week of August, when it reached $84 or so. It then slipped back to just below $80 before resuming its climb later in the month. It now stands at ...

Households are still reaping the benefits of a surge in home equity and aren’t in the mood to save. That’s good news for the economy. Arguably, the biggest question about the US economy right now is whether consumers can maintain their pace of spending. Student loan payments resume in October. Pandemic-era excess savings are expected to run out ...

Early this year many economists held a very grim view about the prospects for reducing inflation without a major economic slowdown and a big rise in unemployment. One prominent economist declared that underlying inflation was at least 4.5 percent and that “all the hoped-for saviors” — that is, forces that might bring inflation down painlessly ...

The Fed’s bond purchases make matters worse by enabling Washington’s fiscal irresponsibility. The Federal Reserve’s monetary policy is broken. Normalization of interest rates has been needed for years to allow markets, not regulators, to allocate capital. But with interest rates at 5.5% and the dollar strong, the inflation battle must shift to ...