Aurelia Butler

The White House believes the US economy can still nail a “soft landing” as the large-scale government investments enacted by Joe Biden help buoy the labour market in the months and years ahead, a top adviser to the president said.The comments from Heather Boushey, a member of the White House council of economic advisers, come as many economists fear a significant slowdown and possibly a recession as the Federal Reserve barrels forward with the most aggressive plan to raise interest rates and root out high inflation since the early 1980s.Fed officials projected this month that the US would narrowly avoid a contraction in 2023, with output increasing by just 0.5 per cent. US central bankers expect the nation’s unemployment rate to rise from 3.7 per cent in November to 4.6 per cent by the end of next year, implying the likely loss of tens of thousands of jobs. But Boushey told the Financial Times that a series of laws passed by Congress and signed by the president during his first two years in office had created “funding streams” for infrastructure, clean energy and semiconductor manufacturing that would help blunt any downturn for the “real economy”.While there continued to be “challenges” and “unforeseen things”, from Covid-19 to the war in Ukraine, hurting the outlook, she said, the recent legislation would be “pushing in the other direction”.“We remain optimistic that we will be able to see the soft landing that we are looking for,” she said. “Time will tell but I think the pieces are in place to have a fighting chance to do so.”The US labour market performed more strongly than expected over the past three months, even with the Fed’s monetary tightening in high gear: it recorded average monthly job gains of 272,000 — a sign of resilience that has been met with relief by the White House.“We have delivered the sharpest recovery in jobs of any recent recovery — to see that is still ongoing is really remarkable.”Boushey pointed to three specific pieces of legislation that would support the US labour market: the Bipartisan Infrastructure Law passed in November 2021, the Chips and Science Act and the Inflation Reduction Act passed in the summer of 2022.“We are seeing private sector investments on top of public sector investments in the real economy and in the industrial base of the United States, which we know have strong multiplier effects,” she said.Meanwhile, inflation has started to ease, something that has comforted the Biden administration, with the annual increase in the consumer price index dropping from a peak of 9.1 per cent in June to 7. 1 per cent in November, though it remains at a level Fed officials deem far too high.According to the American Automobile Association, the average petrol price in the US was $3.1 per gallon this week, lower than its level of $3.6 per gallon a month ago and even lower than $3.2 per gallon a year ago, before Russia’s full-scale invasion of Ukraine.While the Fed is primarily responsible for fighting inflation, the White House has tried to take action to curb price rises this year, including big releases of oil from the Strategic Petroleum Reserve. “The [consumer price index is] down two full points from where it was last summer, that’s a marked achievement,” Boushey said. “We had a plan, the president executed on that plan, and you can see the benefits for the American people.”The Fed’s efforts to cool the economy are far from complete. This year it raised its benchmark interest rate from near zero to a target range of 4.25 to 4.50 per cent. According to the most recent projections released in mid-December, most officials see it rising above 5 per cent next year and staying there at least until 2024.A soft or “softish” landing was still “possible”, Fed chair Jay Powell said at his final press conference of the year, though he added that “events of the last few months have raised the degree of difficulty”. In early December, 85 per cent of economists polled by the Financial Times in a joint survey with the University of Chicago’s Booth School of Business projected a recession next year.The US economy is vulnerable not just because of the impact of the Fed’s policies but also due to the risk of new external shocks, including from the war in Ukraine and China’s struggle to contain Covid-19 as it relaxes its lockdowns.

Domestically, the White House is likely to have less flexibility to tackle any economic or financial crises because Republicans are due to take control of the House of Representatives in January.However, Boushey was confident that complete gridlock could be avoided. “Divided government is always a challenge, but one of the things that President Biden has demonstrated is that he is willing to work with anyone — Democrat, Republican, independent — to get things done.” The biggest risk posed by Washington to the US economy would be if Congress fails to agree on an increase in the debt limit next year, which could lead to a default on government debt. Republicans have already warned that they will demand deep spending cuts in exchange for a vote to raise the debt ceiling, which Democrats and the White House would oppose, leading to a high-stakes stand-off.“The debt ceiling does remain a challenge,” Boushey said. “Government defaulting on their debt would be potentially very bad for the US economy . . . and would not benefit the American people. So the president will be doing everything he can do to have us not enter that situation.” More

UK shoppers are rushing to buy energy-efficient appliances amid the cost of living squeeze, providing a boost for otherwise struggling retailers as they grapple with high day-to-day costs. Consumers have been increasingly opting for devices such as air fryers and heat pump tumble dryers as well as loft insulation for their homes to help reduce their energy bills, according to UK retailers. Sales of air fryers at Argos are up 420 per cent year on year, while Currys is selling 18,000 to 20,000 air fryers a week, compared with 1,000 to 2,000 around the same period last year, according to Ed Connolly, chief commercial officer. Sales of microwaves, also a cheaper alternative to ovens, are up 70 per cent.Andrew Gossage, managing director of the online domestic appliance retailer and supplier Ultimate Products, said retailers were “begging” for air fryer stock. “The general softness of demand is being compensated for by these products with an energy-saving message,” he added.Households are paying more for their food and energy bills as a result of surging inflation since global gas prices soared in the wake of Russia’s full-scale invasion of Ukraine. UK inflation hit a 41-year high in October, with food price inflation up 16.5 per cent, the highest for 45 years, according to the Office for National Statistics, albeit inflation slowed to 10.7 per cent in November. Kingfisher, the owner of DIY stores B&Q and Screwfix, said DIY sales had been boosted by demand for energy-efficient products in its most recent fiscal quarter despite the “challenging” environment.Chris Bargate, strategy and development director at B&Q, said the DIY chain was “absolutely seeing a trend” in consumers spending more on energy-saving products. “We’re quite a broad church,” Bargate said. “B&Q sells everything from houseplants to fitted kitchens and everything in between. What you tend to find is consumer behaviour can switch within categories. The fact that we’re well positioned in the energy space, I think, is helping us to be resilient.”Consumers are also looking to conserve heat across the UK, where the average home is outside of the top three rating bands for energy efficiency, according to theONS. Sales of loft insulation at the DIY chain Wickes are up 85 per cent on the same period last year. “There’s been a real adrenaline punch into the marketplace across the course of November,” said David Wood, chief executive of the DIY chain, despite insulation getting pricier due to the energy-intensive nature of using kilns and furnaces to make the glass-based product. Customers of AO World, the online domestic appliance retailer, have been “opting up” to purchase items with a high energy rating, including heat pump tumble dryers, over lower-priced, entry-level appliances, according to the company’s large appliance expert, Naeem Adam. “The nation is becoming more mindful of their energy consumption and so whilst they realise that these models may cost more to purchase, the running costs over time will, in fact, save them money,” Adam said. More

The stock gained 3.3% on the day. It is set to round off 2022 with a 68% drop – the most among the big U.S. technology firms – as fears mount over slowing demand in China and top boss Elon Musk’s growing distractions with Twitter. “The shorts are piling on and the stock is way oversold here, which could drive a bounce-back rally,” Wedbush analyst Dan Ives said.The company, whose meteoric rise over the last few years had burned many bearish investors, is the third most shorted stock in dollar value after Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT), according to financial analytics firm S3 Partners. About 2.85% of Tesla shares, or $8.36 billion, are shorted, S3 Partners said, adding that short selling was up by more than 8.98 million shares this year due to a drop in the stock price, which was partly driven by Musk’s share sales to fund his Twitter purchase.Tesla short sellers stand to book a profit of $16.94 billion, their first gain since at least 2016, compared with a $10.26 billion loss last year.”When Tesla’s stock begins to tick upwards there should be a flurry of short covering … as shorter-term short sellers look to realize their outsized mark-to-market profits before they evaporate,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.Short sellers borrow shares to sell them on the open market in the hope of buying them back at a cheaper price and pocketing the difference.There could be more short selling until a firm-priced floor is established, Dusaniwsky said. The stock also saw high trading volumes on Wednesday with 211.54 million shares changing hands, 79% above the 25-day average volume. More

The US said it would require negative Covid-19 tests for air passengers travelling from China as countries rushed to impose restrictions after the abrupt end of Beijing’s zero-Covid containment policy resulted in a surge in cases. Washington’s move on Wednesday came just hours after Italy announced it will test all air passengers arriving from China for the virus, becoming the first western country to set new rules following the jump in infections. The Centers for Disease Control and Prevention said that from January 5, travellers boarding flights to the US from China, Hong Kong and Macau would need a negative Covid-19 test or proof they had recovered from a previous infection. The requirements also apply to passengers arriving in the US via a third country and to those connecting to other destinations through the US. The new measures are intended to “slow the spread” of the virus in the US following the surge in China and are being implemented because of “the lack of adequate and transparent epidemiological and viral genomic sequence data being reported from” Beijing, the CDC said in a statement. The Chinese embassy in the US did not immediately respond to a request for comment.Related read: Hong Kong has dropped almost all of its remaining Covid-19 restrictions and scrapped compulsory testing for arrivals as the city aims to revive its pandemic-hit economy and catch up with Beijing’s abrupt exit from zero-Covid.Three more stories in the news1. China’s elite hoard Paxlovid as demand soars China’s elites are stockpiling supplies of Paxlovid, Pfizer’s Covid-19 antiviral drug, and giving it away to curry favour with business associates as an unprecedented Covid wave leaves hospitals stripped of resources and ordinary people struggling to access medication. Multiple public and private hospitals told the FT that the drug was either out of stock or that its use was being severely restricted. First person: Having dodged the virus for nearly three years, it was ironically in Beijing — Xi’s zero-Covid citadel — that it finally caught up with me, Asia editor Joe Leahy writes.2. Exxon sues EU to block new windfall tax on oil companies ExxonMobil is suing the EU in a bid to force it to scrap the bloc’s new windfall tax on oil groups, arguing Brussels exceeded its legal authority by imposing the levy. The lawsuit is the most significant response yet against the tax from the oil industry, which has been targeted by western governments amid a surge in energy prices following Russia’s invasion of Ukraine.3. Wall Street stocks slip as Hong Kong-listed shares climb US stocks fell on Wednesday, all but erasing hopes of a festive rally to end a dire year for equities, though Hong Kong-listed shares climbed as China eased its zero-Covid restrictions. Wall Street’s benchmark S&P 500 was down 0.66 per cent by mid-afternoon, while the tech-heavy Nasdaq Composite was down 0.8 per cent.What else we’re reading Sri Lanka farmers count the cost of government fertiliser ban For centuries, Sri Lanka has been renowned for its vast and varied produce, its fertile soil fostering everything from cinnamon and black pepper to fruits and fragrant teas. But over the past 18 months, the country has become a cautionary tale for global agriculture.Three ways Big Tech got it wrong It’s time to unlearn the lessons of Big Tech, writes Brooke Masters. For 20 years, the Silicon Valley giants and their peers have set the standard for corporate success with a simple set of strategies: innovate rapidly and splash out to woo customers. But those days are over.Race is on to develop new generation of weight-loss drugs Changing attitudes, surging demand and tight supply for a new class of obesity drugs has sparked a race to develop medications for a market projected to be worth $50bn in annual revenues by the end of the decade. More than four in 10 American adults are clinically obese, according to the Centers for Disease Control and Prevention. Is a game-changer on the way?Most popular FT world news story: US scientists make fusion energy breakthrough As the year reaches its close, we are sharing some of our most-read stories across different sections of the FT. Today we highlight our most read world news story.Earlier this month, US government scientists made a breakthrough in the pursuit of limitless, zero-carbon power by achieving a net energy gain in a fusion reaction for the first time. FT’s Tom Wilson was first to break the story.Go deeper: But what does this milestone mean for achieving the dream of fusion power? Tom Wilson explains.

Thanks to readers who took yesterday’s poll. Fifty-nine per cent of respondents said they feel they are more productive at home than in the office. Take a break from the news The past 12 months have brought outstanding cinematic debuts by women, a Tom Cruise megahit and dissident voices from Russia and Iran. In the world of film, 2022 was a year of comebacks, flops and arrests. Explore FT critic Danny Leigh’s top 10 films of the year. More