Evelyn Reynolds

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    Biden Announces Tariffs on Chinese Metals Routed Through Mexico

    The measure aims to close a loophole that officials said allowed metals made partly in China to come into the United States duty free.The Biden administration took steps on Wednesday to prevent China from circumventing American tariffs on Chinese steel and aluminum by routing those imports through Mexico.The administration said it would impose tariffs on imports of Mexican metals that are partially made in China. American officials said the move would close a trade loophole that has allowed cheap, state-subsidized Chinese metals to circumvent existing U.S. tariffs.The United States will now impose a 25 percent tariff on Mexican steel that is melted or poured outside of North America before being turned into a finished product. Previously, that steel would have entered the country duty free.Mexican aluminum coming into the United States will face a tariff of 10 percent if it contains metal that has been smelted or cast in China, Belarus, Iran or Russia, said Lael Brainard, the director of the White House’s National Economic Council.Mexico, which recently increased its own tariffs on steel and aluminum from certain countries, will require importers to provide more information about where their steel products come from, the announcement said. The changes will take effect immediately.Officials in the Biden administration said the United States wanted to protect American factories that produce steel and aluminum, including those that have recently received new investments from government funds.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Key inflation report looms on Thursday as traders grow more confident in Fed rate cut

    Economists surveyed by Dow Jones are looking for CPI to rise 0.1% from May, and 3.1% from the same month a year before.
    Thursday’s report comes after Federal Reserve Chair Jerome Powell delivered two days of testimony on Capitol Hill this week.
    Shelter and medical care services could be key areas to watch, according to one chief investment officer.

    An Aldi supermarket in Alhambra, California, on June 27, 2024.
    Eric Thayer | Bloomberg | Getty Images

    A widely anticipated inflation report on Thursday may solidify expectations for the Federal Reserve to cut interest rates in coming months.
    The consumer price index, or CPI, report for June is due out at 8:30 a.m. ET. Recent economic releases have suggested that inflation and economic growth are both cooling, including last week’s report that unemployment in June ticked up to 4.1%.

    Thursday’s report comes after Federal Reserve Chair Jerome Powell delivered two days of testimony on Capitol Hill this week. The central bank chief did not indicate when exactly rate cuts will begin. However, Powell did say the Fed sees the risks to the economy as more in balance between inflation and recession and that the central did not need to wait until inflation hit the 2% level to cut rates.

    What to watch for

    Economists surveyed by Dow Jones are looking for CPI to rise 0.1% month over month, and 3.1% year over year. The core CPI, which strips out more volatile food and energy prices, is expected to rise 0.2% from May and 3.4% since June last year.
    In May, CPI was unchanged month over month and up 3.3% on an annual basis.
    Focusing on the trends of unemployment and inflation could bolster the case for rate cuts, said Matt Brenner, managing vice president, investments and product management at MissionSquare Retirement.
    “The level on inflation is still elevated relative to the Fed’s [2%] target. The level on unemployment is still very low historically at 4.1%. But the trend in both is that unemployment is gradually starting to pick up and that inflation continues its downward trajectory,” said Brenner.

    “For some time the Fed has been more focused on levels, and now it seems that they may be starting to tilt more towards a focus on trend. And if that’s the case, then the chances of a rate cut go up,” Brenner added.
    The price changes in the components that make up the CPI index will also be a focus on Thursday, especially if the number comes in different from expectations. Shelter and medical care services could be key areas to watch, said Wilmington Trust Chief Investment Officer Tony Roth.
    Both shelter and medical services are also key parts of the personal consumption expenditures index, the Fed’s preferred inflation measure, rather than CPI.
    “We’ve seen medical services [be] pretty tame, and that’s important because medical services makes up a much bigger portion of the PCE, which is the more important of the two inflation prints,” Roth said.

    Market effect

    The CPI report comes as markets are on the upswing.
    Stocks and bonds have both rallied in July as traders grow more confident in a rate cut sometime this year. The S&P 500 crossed 5,600 for the first time on Wednesday.

    Stock chart icon

    The stock market has rallied in July, with the S&P 500 hitting another record high on Wednesday.

    Fed funds futures pricing shows traders are expecting the Fed to hold rates steady at its meeting later this month, and then cut in September, according to the CME FedWatch Tool. A month ago, the chances of another pause in September were close to a toss-up, according to the same tool, which uses 30-day fed funds futures to come up with implied probabilities.
    The expected hold in July could keep Thursday’s CPI report from being a big market mover, Bank of America rates strategist Meghan Swiber said in a note to clients Wednesday.
    “Cooling activity and limitations on near-term cut pricing should confine market response in either direction,” Swiber said.
    However, Wilmington Trust’s Roth said stocks could rally if the inflation reading is cooler than expected because some investors have not shaken their fears from earlier this year, when inflation briefly ran hotter.
    “I don’t think that the market has fully appreciated the weakness in the economy, or the fact that inflation is clearly in the rear view mirror,” Roth said.
    — CNBC’s Michael Bloom contributed reporting.

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    U.A.W. Monitor Reveals Details About Investigation Into Union Leader

    A court-appointed monitor said he was looking into allegations that a union official was punished for resisting actions that would have benefited the union president’s partner and her sister.A court-appointed monitor disclosed on Monday that he was investigating accusations that the president of the United Automobile Workers union retaliated against a vice president for resisting actions that would have benefited the president’s domestic partner and her sister.The monitor made the disclosure in a court filing seeking access to internal union documents as part of an investigation that began in February into potential financial misconduct.Since then, the monitor and the union have clashed over how much access the monitor should have to union documents, and the pace at which the union has produced them. In Monday’s filing, the monitor, Neil Barofsky, sought an order granting him extensive access.The union declined to comment.The monitor was appointed as part of a 2021 consent decree that ended a federal corruption case against the union. It concerned 11 top officials who were convicted of felonies, including two former U.A.W. presidents.The U.A.W.’s current president, Shawn Fain, was an obscure union official before winning the top job in March 2023 on a platform of reforming the union, getting tough with large U.S. automakers and organizing nonunion companies.Under Mr. Fain, the union waged a set of six-week-long strikes last year that won members substantial wage and benefit increases. The union then capitalized on the momentum of the strike by unionizing a Volkswagen plant in Chattanooga, Tenn., this April — the first foreign-owned plant in the South to be unionized — before losing another high-profile election in May at two Mercedes plants in Alabama.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Chair Powell says holding rates high for too long could jeopardize economic growth

    Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
    “Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said in remarks for appearances this week on Capitol Hill.

    Jerome Powell, chairman of the US Federal Reserve, during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, DC, US, on Tuesday, July 9, 2024.
    Tierney L. Cross | Bloomberg | Getty Images

    Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
    Setting the stage for a two-day appearance on Capitol Hill this week, the central bank leader said the economy remains strong as does the labor market, despite some recent cooling. Powell cited some easing in inflation, which he said policymakers stay resolute in bringing down to their 2% goal.

    “At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
    The commentary coincides with the approaching one-year anniversary of the last time the Federal Open Market Committee raised benchmark interest rates.
    The Fed’s overnight borrowing rate currently sits in a rage of 5.25%-5.50%, the highest level in some 23 years and the product of 11 consecutive hikes after inflation hit its highest level since the early 1980s.
    Markets expect the Fed to begin cutting rates in September and likely following up with another quarter percentage point reduction by the end of the year. FOMC members at their June meeting, however, indicated just one cut.

    ‘Strengthen our confidence’

    In recent days, Powell and his colleagues have indicated that inflation data has been somewhat encouraging after a surprise jump to start the year. Inflation as judged by the Fed’s preferred personal consumption expenditures price index was at 2.6% in May after peaking above 7% in June 2022.

    “After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
    The statement is part of congressionally mandated semiannual updates on monetary policy. After delivering the remarks, Powell will face questioning from Senate Banking Committee members on Tuesday, then the House Financial Services Committee on Wednesday.
    In past appearances, Powell has veered away from making dramatic policy announcements while having to dodge politically loaded questions from committee members. The questioning could get contentious this year as Washington is on edge amid a volatile presidential campaign.
    Several Democratic committee members urged Powell to lower rates soon.
    “I’m concerned that if the Fed waits too long to lower rates, the Fed could undo the undo the progress we’ve made on creating good paying jobs,” Sen. Sherrod Brown (D-Ohio), the committee chair, told Powell. “If unemployment trends upward, you must act immediately to protect Americans jobs. Workers have too much to lose if the Fed overshoots [its] inflation target and causes a completely unnecessary recession.”
    However, Powell has stressed that the Fed is not political and does not get involved in taking policy sides outside of its own roles. In his prepared remarks, he emphasized the importance of “the operational independence that is needed” for the Fed to do its job.
    His other remarks focused squarely on the stance of policy in relation to the broader economy. Recent data has shown the unemployment rate creeping higher and broad growth as measured by gross domestic product receding. Both the manufacturing and services sectors reported being in contraction during June.
    But Powell said the data is showing that “the U.S. economy continues to expand at a solid pace” despite the deceleration in GDP.
    “Private domestic demand remains robust, however, with slower but still-solid increases in consumer spending,” he said.

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    Fed Chair Powell Welcomes Cooling Inflation

    Jerome H. Powell, the chair of the Federal Reserve, delivered optimistic remarks to Senators as inflation and the job market slow gently.Jerome H. Powell, the chair of the Federal Reserve, indicated on Tuesday that recent inflation data had given the central bank more confidence that price increases were returning to normal, and that continued progress along these lines would help to pave the way toward a central bank rate cut.“The Committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent,” Mr. Powell said.He added that data earlier this year failed to provide such confidence, but that recent inflation readings “have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”Mr. Powell delivered the remarks on Tuesday in an appearance before the Senate Banking Committee. While Mr. Powell avoided zeroing in on a specific month for when the Fed might begin to cut interest rates, he also did little to push back on growing expectations that a reduction could come in September. Fed officials meet in late July, but few economists expect a move that early.Mr. Powell said he was “not going to be sending any signals about the timing of any future actions” in response to a lawmaker question about when rate cuts might come.The chair’s congressional testimony came at a delicate moment for the central bank. Fed officials are trying to figure out when to begin cutting interest rates, which they have held at the highest rate in decades for roughly a year now. But as they weigh that choice, they must strike a careful balance: They want to keep borrowing costs high long enough to cool the economy and fully stamp out rapid inflation, but they also want to avoid overdoing it, which could crash the economy too much and cause a recession.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Reliability of U.S. Economic Data Is in Jeopardy, Study Finds

    A report says new approaches and increased spending are needed to ensure that government statistics remain dependable and free of political influence.Federal Reserve officials use government data to help determine when to raise or lower interest rates. Congress and the White House use it to decide when to extend jobless benefits or send out stimulus payments. Investors place billions of dollars worth of bets that are tied to monthly reports on job growth, inflation and retail sales.But a new study says the integrity of that data is in increasing jeopardy.The report, issued on Tuesday by the American Statistical Association, concludes that government statistics are reliable right now. But that could soon change, the study warns, citing factors including shrinking budgets, falling survey response rates and the potential for political interference.The authors — statisticians from George Mason University, the Urban Institute and other institutions — likened the statistical system to physical infrastructure like highways and bridges: vital, but often ignored until something goes wrong.“We do identify this sort of downward spiral as a threat, and that’s what we’re trying to counter,” said Nancy Potok, who served as chief statistician of the United States from 2017 to 2019 and was one of the report’s authors. “We’re not there yet, but if we don’t do something, that threat could become a reality, and in the not-too-distant future.”The report, “The Nation’s Data at Risk,” highlights the threats facing statistics produced across the federal government, including data on education, health, crime and demographic trends.But the risks to economic data are particularly notable because of the attention it receives from policymakers and investors. Most of that data is based on surveys of households or businesses. And response rates to government surveys have plummeted in recent years, as they have for private polls. The response rate to the Current Population Survey — the monthly survey of about 60,000 households that is the basis for the unemployment rate and other labor force statistics — has fallen to about 70 percent in recent months, from nearly 90 percent a decade ago.

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    Current Population Survey response rate
    Source: Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Here’s Where Climate Change Is Driving Up Home Insurance Rates

    Source: Keys and Mulder, National Bureau of Economic Research (2024) Note: State average is shown in counties with few or no observations. Enid, Okla., surrounded by farms about 90 minutes north of Oklahoma City, has an unwelcome distinction: Home insurance is more expensive, relative to home values, than almost anywhere else in the country. Enid […] More

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    New Plan to Target Russia’s Oil Revenue Brings Debate in White House

    Treasury officials want to impose penalties on tankers that help Russian oil evade sanctions. White House aides worry that risks making gasoline more expensive.Officials in President Biden’s Treasury Department have proposed new actions aimed at crippling a fleet of aging oil tankers that are helping deliver Russian oil to buyers around the world in defiance of Western sanctions.Their effort is aimed at punishing Russia but it has stalled amid White House concerns over how it would affect energy prices ahead of the November election.In an attempt to drain Russia of money needed to continue fighting its war in Ukraine, the United States and its allies have imposed penalties and taken other novel steps to limit how much Moscow earns from selling oil abroad. But Russia has increasingly found ways around those limits, raising pressure on the Biden administration to tighten its enforcement efforts.Treasury officials want to do that, in part, by targeting a so-called shadow fleet of oil tankers that is allowing Russia to sell oil above a $60-per-barrel price cap that the United States and its allies imposed in 2022.That cap was intended to restrict Moscow’s ability to profit from its energy exports while allowing its oil to continue flowing on international markets to prevent a global price shock. But Russia has largely circumvented the cap, allowing it to reap huge profits to fund its war efforts.While Treasury officials want to knock Russian tankers out of commission, economic advisers inside the White House worry that would risk inflaming oil prices this summer and push up U.S. gasoline prices, which could hurt Mr. Biden’s re-election campaign. They have not signed off on the proposals, even as current and former Treasury officials present them with analyses suggesting the risks of a major effect on the oil market are low.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More