Evelyn Reynolds

More stories

  • 138 Shares149 Views

    in Economy

    Solar Manufacturing Lured to U.S. by Tax Credits in Climate Bill

    A combination of government policies is finally succeeding in reversing a long decline in solar manufacturing in the United States.Six years ago, an executive from Suniva, a bankrupt solar panel manufacturer, warned a packed hearing room in Washington that competition from companies in China and Southeast Asia was causing a “blood bath” in his industry. More than 30 U.S.-based solar companies had been forced to shut down in the previous five years alone, he said, and others would soon follow unless the government supported them.Suniva’s pleas helped spur the Trump administration to impose tariffs in 2018 on foreign-made solar panels, but that did not reverse the flow of jobs in the industry from going overseas. Suniva’s U.S. factories remained shuttered, with dim prospects for reopening.That is, until now. Last month, Suniva announced plans to reopen a Georgia plant, buoyed by tariffs, protective regulations and, crucially, lavish new tax breaks for Made-in-America solar manufacturing that President Biden’s signature climate law, the Inflation Reduction Act, created.Solar companies have long been the beneficiaries of government subsidies and trade protections, but in the United States, they have never been the object of so many simultaneous efforts to support the industry — and so much money from the government to back them up.The combination of billions of dollars of tax credits for new facilities and tougher restrictions on foreign products appears to be driving a wave of so-called reshoring of solar jobs. Those efforts are succeeding where more modest approaches did not, although critics argue that the gains come at a high cost to taxpayers and may not hold up in the long run.In the year since the climate law was passed, companies have announced nearly $8 billion in new investments in solar factories across the United States, according to data from the Massachusetts Institute of Technology and the Rhodium Group, a nonpartisan research firm. That is more than triple the amount of total investment announced from 2018 through the middle of 2022.Suniva plans to reopen and expand a factory to make solar cells in Norcross, Ga., by spring. REC Silicon will restart this month a polysilicon plant in Moses Lake, Wash., that it shut down in 2019. Maxeon, a Singapore-based producer of solar cells and modules, will start work next year on a $1 billion site in New Mexico.In each of those cases, executives cited the incentives in the climate law as a driving factor in their investment decisions.In recent years, China overtook foreign competitors through huge government investments that allowed it to build factories 10 times as large as American ones.Gilles Sabrie for The New York Times“It was kind of exactly what we had in mind in terms of what would be needed, to pull these kinds of manufacturing initiatives forward,” said Peter Aschenbrenner, Maxeon’s chief strategy officer.China has loomed large over the industry for more than a decade. American demand for solar power has grown sharply since 2010 — by about 24 percent each year in that time, according to the Solar Energy Industries Association, a trade group. But much of that spending went to cheaper foreign solar panels, often made by Chinese companies or with Chinese parts. That raised concerns of American overreliance on China, which is restricting supplies of other key products and whose solar production has been troubled by human rights concerns.U.S. solar manufacturing employment peaked in 2016, with just over 38,000 workers. By 2020, nearly one-fifth of those jobs were gone.Factory solar jobs have begun to grow again.E2, an environmental nonprofit organization, estimated that new investments announced in the first year of the climate law would create 35,000 temporary construction jobs and 12,000 permanent jobs across the entire solar industry in the years to come. Thousands of those permanent jobs are related to manufacturing, including an expected 2,000 at Maxeon’s planned plant in New Mexico.Economists and executives said that surge was largely due to public subsidies that flipped the economics of the solar industry in favor of domestic production.Mr. Aschenbrenner said Maxeon’s cost of domestic solar manufacturing would fall roughly 10 percent, just through a new manufacturing tax credit in the climate law that targets the production of both solar cells and solar modules. That is enough to offset the higher wage and construction costs of American factories, he said.The law also includes credits for customers, like homeowners and utilities, that install solar panels and begin generating electricity from them. If the customer buys panels that are sourced from the United States, like the ones Maxeon is planning, the value of that credit grows 10 percent.Those incentives could be enough to build an American industry that, within a matter of years, could be large and efficient enough to compete with China even without subsidies, Mr. Aschenbrenner said.Others are more skeptical. Analysts at Wood Mackenzie, an energy consultancy, estimate that nearly half the solar module capacity announced by 2026 will not materialize, given that some manufacturers announce long-term plans to gauge feasibility and interest.The recent embrace of subsidies and tariffs by politicians of both parties also irks some economists, who say that while such programs can save or create jobs, they do so at an extremely high cost.A 2021 study by the Peterson Institute of International Economics of past industrial policy programs found that the Obama administration’s 2009 investment in Solyndra, a solar company that ultimately went bankrupt, cost taxpayers about $216,000 for each job created, more than four times prevailing industry wages. Other programs were even more expensive.REC Silicon, a Norwegian maker of polysilicon, entered into a deal with QCells to supply that company’s planned U.S. plants.Megan Varner/Reuters“With certain kinds of technology, you can subsidize and protect your way to having factories,” said Scott Lincicome, who studies trade policy at the Cato Institute, a libertarian think tank. “The question is always about at what cost?”In addition to the costs incurred to taxpayers, protections for the U.S. industry are making solar products more expensive in the United States than in other countries, Mr. Lincicome said. That slows the adoption of solar technology, in contrast to climate goals.Trends in the global solar industry have often been closely linked with government action. The industry started booming over a decade ago when Germany and Japan began offering subsidies for solar power.In recent years, China overtook foreign competitors through huge government investments that allowed it to build factories 10 times as large as American ones. Since 2011, China has invested more than $50 billion in the sector, ultimately capturing more than 80 percent of the global share of every stage in the manufacturing process, according to the International Energy Agency.Tariffs also shaped the industry’s evolution. The United States imposed levies on Chinese solar products in 2012. The next year, China retaliated with tariffs of up to 57 percent on U.S. polysilicon, a raw material for solar panels.That proved to be the death knell for the factory that REC Silicon, a Norwegian maker of polysilicon, was operating in Washington State, said Chuck Sutton, the company’s vice president of global sales and marketing. With few companies still standing outside China, REC Silicon “basically didn’t have any customers left,” he said.REC Silicon worked with the Trump administration to get China to commit to buying more American polysilicon as part of a 2019 trade deal. But China never followed through on those purchases.The turnaround for REC Silicon came, Mr. Sutton said, with the new tax credits this year. The manufacturer entered into a deal with QCells to supply its polysilicon to QCells’ planned U.S. plants. The deal allowed REC Silicon to reopen its Washington site, Mr. Sutton said.To compete with China, the industry needed “a whole-of-government approach,” Mr. Card of Suniva said, that included both tariffs and tax credits for domestic manufacturing.“They are not opposing forces,” he said. “They work together and make each other stronger.” More

  • 175 Shares179 Views

    in Economy

    Most Americans still have to commute every day. Here’s how that experience has changed.

    Percentage change in duration of one-way commutes from 2019 to 2022 9.8% shorter –8.9 –8.1 –7.7 –7.5 –7.5 –6.6 –6.5 –6.3 –6.1 –6.1 –6.0 Atlanta Washington San Francisco Boston Kansas City, Mo. Chicago Minneapolis New York City Los Angeles Philadelphia Columbus Denver Source: Replica | Note: Change is from autumn of 2019 to autumn of 2022. More

  • 125 Shares129 Views

    in Economy

    Janet Yellen, U.S. Treasury Secretary, Will Meet With Chinese Counterpart

    The high-level meetings in San Francisco will lay the groundwork for talks between President Biden and China’s top leader, Xi Jinping.Treasury Secretary Janet L. Yellen will hold two days of high-level meetings with her Chinese counterpart, Vice Premier He Lifeng, this week, as the United States and China look to build upon an effort that started earlier this year to improve communication between the world’s two largest economies.The meetings will take place on Thursday and Friday in San Francisco ahead of the Asia-Pacific Economic Cooperation summit, which begins on Saturday. The meetings will help lay the groundwork for expected talks at the summit between President Biden and China’s top leader, Xi Jinping. The Treasury Department said that the United States hoped Ms. Yellen’s meetings would “further stabilize the bilateral economic relationship” and make progress on key economic issues.The revival of economic diplomacy between the two countries comes at a fraught moment for the global economy, which is grappling with sluggish output and wars in Ukraine and the Middle East.A senior Treasury Department official said the Biden administration continued to seek a better understanding of China’s economic policies. Ms. Yellen is expected to talk to Mr. He about issues like debt relief for developing countries and the financing of international efforts to combat climate change. The discussions are also intended to address any misunderstandings from recent national security actions that the Biden administration has taken, such as restrictions on investments that Americans can make in Chinese industries.The talks in San Francisco follow Ms. Yellen’s trip to Beijing in July. After that visit, the Treasury Department established financial and economic working groups to promote more regular dialogue between the United States and China.As Treasury secretary, Ms. Yellen has been trying to help the United States diversify its supply chains so that it relies more on allies and domestic production and less on China, which over the past decade has similarly worked to become less reliant on imports.In a speech at the Asia Society last week, Ms. Yellen said that the United States would continue to respond to China’s economic practices while seeking ways to work together where possible. But she also made clear that she opposed efforts to sever economic ties with China.“A full separation of our economies, or an approach in which countries including those in the Indo-Pacific are forced to take sides, would have significant negative global repercussions,” Ms. Yellen said. “We have no interest in such a divided world and its disastrous effects.” More

  • 113 Shares179 Views

    in Economy

    Job Action Against Tesla Puts Sweden’s Unions in Spotlight

    The automaker’s mechanics in Sweden are striking for a collective agreement, and dockworkers say they will support the battle. Tesla is expected to join the talks on Monday.More than a week after Tesla mechanics in Sweden began a strike to compel the U.S. automaker to accept a collective labor agreement, union officials said Tesla representatives would meet with the union on Monday.Tesla did not respond to a request for comment.Tesla doesn’t make cars in Sweden, and the country is a relatively small market for the automaker. But the job action by dozens of mechanics is beginning to reverberate. Dockworkers at the country’s four largest ports said they would stop unloading shiploads of Teslas on Tuesday in support of the strikers.The trade union IF Metall has for years called on the automaker to enter into talks about adopting a collective agreement that would set the basis for wages and benefits for the roughly 120 mechanics who are employed by Tesla to work at its service facilities in Sweden. About 90 percent of all workers in Sweden are covered by such agreements.Since the union called the strike on Oct. 27, dozens of the mechanics who are union members have been staying home, disrupting service appointments for some Tesla drivers. Not all of the union members have taken part, said Jesper Pettersson, a spokesman for IF Metall, acknowledging reports that some service facilities appeared largely unaffected.“It is not an easy thing to be on strike,” he added.But the action, combined with the threat of other unions getting involved, appeared to be enough to force Tesla to the bargaining table. A meeting between the union and company representatives was scheduled for Monday, Mr. Petterson said.Despite its relatively small size, Sweden has the world’s third-highest share of electric vehicle sales, at 32 percent, after Norway and Iceland, according to the World Resources Institute, a research organization. Tesla enjoys a growing fan base and its Model Y, a sport-utility vehicle manufactured in Germany, has been the top-selling electric vehicle in Sweden this year.Tesla’s owner, Elon Musk, has for years resisted efforts to unionize Tesla workers, and in 2018 threatened the compensation of U.S. employees seeking to join a union, (a statement later found to violate labor laws). German Bender, a labor market analyst at Arena, a think tank in Stockholm, said Tesla may “see this small conflict in Sweden as posing a risk of contagion to other markets.” In Germany, IG Metall, a union affiliated with Sweden’s IF Metall, has been seeking to organize Tesla’s factory in Grünheide, outside of Berlin. And in the United States, on the heels of the significant gains in wage and benefits won by the United Automobile Workers after a six-week wave of walkouts at the three big Detroit automakers, union’s leaders have set their sights on Tesla’s U.S. workers as part of a wider push to organize nonunion factories across the United States.The power of organized labor in Sweden is considerable. About 70 percent of the country’s work force belongs to a union, and Swedish law allows for solidarity strikes in support of other unions’ efforts.That is what happened in 1995, when another well-known U.S. company started doing business in Sweden. Toys “R” Us was unwilling to accept a collective labor agreement, and its retail workers in Sweden went on strike. Although the company employed only 80 people in the country, other unions rallied to their cause, including postal, transport and municipal workers who disrupted mail delivery and trash removal. After three months, the company signed an agreement.In support of IF Metall, the Swedish Transport Workers’ Union said that, starting at noon on Tuesday, dockworkers would not unload any more Tesla cars.“When IF Metall asks for Transport’s support, it is both important and obvious that we help, to stand up for the collective agreement and the Swedish labor market model,” the transport workers’ union said.IF Metall has not requested support from any other unions, pending the outcome of Monday’s talks, Mr. Pettersson said.Sweden relies on collective agreements hammered out between employers and unions within each industrial sector, to set basic terms for employment. Under the agreement that IF Metall is seeking, Tesla workers would gain a broader insurance package, guaranteed training to transition to a different job if theirs is cut and annual wage increases, the union said. Even workers who do not belong to a union are covered by collective agreements.Foreign-based firms are not the only ones reluctant to support the country’s century-old model of collective bargaining agreements. Some homegrown enterprises, like Klarna, the buy-now-pay-later giant, and the streaming provider Spotify have pushed back against them, citing the need to remain flexible and nimble in the rapidly changing tech industry.After eight months of negotiations, two of the unions representing employees at Klarna had threatened to walk off their jobs next week. They were able to secure an agreement late Friday, avoiding a strike, the company said. More

  • 138 Shares99 Views

    in Economy

    WeWork Bankruptcy Would Deal Another Blow to Ailing N.Y. Office Market

    The fallout would be particularly hard for landlords already struggling with piling debt and companies scaling back their office footprint.For years, landlords around the world clamored to get WeWork into their office buildings, a love affair that made the co-working company the largest corporate tenant in New York and London.Now, WeWork is perhaps days away from a bankruptcy filing — and its demise could not come at a worse time for office landlords.With fewer employees going into the office since the pandemic, companies have slashed the amount of space they lease, causing one of the worst crunches in decades in commercial real estate.Many landlords have accepted lower rents from WeWork in recent years to keep it afloat, but its bankruptcy would be an enormous blow. The pain would be centered on landlords that have leased a large proportion of their space to the company, particularly in New York, and are struggling to make payments on the debt tied to their buildings. Some landlords might quickly accept lower rents from WeWork as part of a bankruptcy reorganization and keep doing business with any new entity that emerges, but others might have to fight in court to get anything.“If you look at a lot of the vacancy in New York City, you will find that a fair amount of that was space that was leased to WeWork — and there will be even more abandoned after a bankruptcy,” said Anthony E. Malkin, the chief executive of the company that owns the Empire State Building and an early skeptic of WeWork.WeWork, despite its efforts to cut costs, still had an empire of 777 locations in 39 countries at the end of June, compared with 764 locations in 38 countries nearly two years earlier. On Friday, its website listed 47 locations in New York, where at the end of March it leased 6.9 million square feet of office space, equivalent to more than 60 percent of all co-working space, according to Savills, a real estate services firm. In London, WeWork listed 38 locations.Speculation of a possible bankruptcy filing intensified in August when WeWork warned that it might not be in business much longer. Its shares have fallen 90 percent since then.Last month, WeWork said it would miss interest payments totaling $95 million. After a 30-day grace period, the company reached a deal with creditors for a seven-day forbearance, which expires Tuesday.A WeWork office space in London. The city has 38 WeWork locations.Tolga Akmen/Agence France-Presse — Getty ImagesIn New York, where a fifth of office space is unleased or being offered for the sublet, the highest amount in decades, the fallout from a WeWork bankruptcy would be felt most in older office buildings in Midtown and downtown Manhattan. Nearly two-thirds of WeWork’s leases in Manhattan were in these so-called Class B and Class C buildings, according to the real estate advisory firm Avison Young.“We believe the value of Class B and Class C buildings will probably be 55 percent less than they were prior to the pandemic,” said Stijn Van Nieuwerburgh, a real estate professor at Columbia Business School who has been tracking the decline in office building valuations. “These are the buildings that are struggling the most and will have a tough time with a WeWork bankruptcy.”Owners of these older buildings were thrilled a few years ago to lease entire floors — or even entire buildings — to WeWork, but they now find themselves under siege. In cases where WeWork has stopped paying rent on the leases, landlords have been unable to make debt payments on buildings that are being valued sharply lower than they were a few years ago.That’s the quandary facing Walter & Samuels, a real estate firm that has WeWork as a tenant in five of its office buildings in New York. At one, 315 West 36th Street, a small edifice built in 1926 in Manhattan’s garment district, WeWork leased about 90 percent of the space and stopped paying rent earlier this year, according to Morningstar Credit. Walter & Samuels stopped making payments on a $77 million loan on the building, Morningstar said.The loan’s special servicer said the appraised value of the building had fallen to $42 million, down from $127 million when the loan was made five years ago, and the servicer is moving to foreclose, according to Morningstar.Executives at Walter & Samuels did not respond to emails seeking comment.WeWork occupies nearly all of the office space at 980 Avenue of the Americas, a mixed-use development owned by the Vanbarton Group. Joey Chilelli, a managing director at the company, said the firm could consider a range of options for the space if WeWork vacated, including turning it into residences.“We have tried to do everything we could earlier this year when they went to every landlord and asked for rent reductions and concessions,” Mr. Chilelli said. “If they are able to reduce their footprint, it will hurt the office market again.”A WeWork bankruptcy would be felt most in older office buildings in Midtown and downtown Manhattan.Hilary Swift for The New York TimesMichael Emory, the founder of Allied, a real estate investment trust that operates office buildings in Canada’s largest cities, said his company walked away from a potential deal with WeWork in Toronto in 2015 because there were drawbacks for Allied. But he said he had watched other developers, particularly in New York, lease space to the company, believing that co-working providers would occupy a large percentage of office space for years.Also, Mr. Emory said, WeWork focused on landlords that were eager to fill up their office buildings and then sell them based on the new occupancy and rental income.A bankruptcy filing “will be very consequential for the New York market,” he said.WeWork declined to comment for this article.At its peak, when investors were feverishly bullish about the company and the vision of Adam Neumann, its eccentric co-founder, WeWork was valued at $47 billion. Its model was to rent office space, spruce it up and charge its customers — established companies, start-ups and individuals — to use the space for as long as they needed it.The flexibility of using a WeWork space — and its community vibe: “Our mission is to elevate the world’s consciousness,” the company declared — was supposed to attract businesses away from stodgy offices that tied tenants down with yearslong leases.But the economics of WeWork’s business were always upside down: What the company took in from customers was not enough to cover the cost of renting and operating its locations. It kept growing anyway, and from the end of 2017, it lost a staggering $15 billion. After WeWork withdrew an initial public offering in 2019, its largest outside investor — the Japanese conglomerate SoftBank — provided a lifeline with a multibillion-dollar takeover.Before that debacle, WeWork had ardent fans in the commercial real estate world who believed the company was pioneering an exciting new service.“We know these folks, we know them well,” Steven Roth, the chief executive of Vornado Realty Trust, one of the largest office landlords in New York, said in 2017. “We think what they’re doing is unbelievably impressive.”Mr. Roth declined to comment for this article. Vornado leased space to WeWork in a building in Manhattan and another in Washington, and they teamed up outside Washington to introduce WeLive residences, one of WeWork’s much-hyped but failed subsidiaries, including the for-profit private school WeGrow.Vornado no longer has WeWork as a tenant. In 2019, after questions about WeWork’s financial health mounted in the industry, Vornado’s chief financial officer said the company had limited its exposure to WeWork.The president of BXP, a part owner of an office development in the Brooklyn Navy Yard, said WeWork had stopped paying rent there.Karsten Moran for The New York TimesJLL, a real estate services firm, once predicted that co-working firms would be leasing 30 percent of all office space in the United States by the end of this decade. Such predictions did not seem outlandish just before the pandemic, when WeWork and other co-working providers accounted for 15 percent of both new and renewed leases signed in New York, according to JLL, up from 2 percent in 2010. Co-working providers accounted for less than 1 percent of all leases signed in New York last year, JLL said.And some landlords believed they would be somewhat insulated from problems at WeWork.“WeWork is out there taking on these start-ups en masse, realizing that some will stay, some will go,” Raymond A. Ritchey, an executive at BXP, formerly known as Boston Properties, said in 2014. “But they tend to be taking that risk as opposed to the landlord on a direct basis.”BXP is a part owner of a shiplike office development in the Brooklyn Navy Yard, Dock 72, where WeWork has been a major tenant since it opened in 2019 but was struggling to fill its space. At the end of last year, BXP was leasing nearly 500,000 square feet of space to WeWork across its portfolio.Douglas T. Linde, the president of BXP, said Thursday on an investor call that WeWork had stopped paying rent at two of its locations, including Dock 72. “We don’t expect WeWork to exit all the assets,” he said, “nor do we expect them to remain in place in the current footprint.”Some landlords might be able to get other co-working companies to take over WeWork’s spaces, or operate their own version, avoiding a situation in which their buildings appear desolate. But they are unlikely to take in the revenue they were initially getting from WeWork, which did end up going public, in 2021, by merging with a special-purpose acquisition company.Mr. Malkin, the Empire State Building landlord, said he had always doubted WeWork’s business model. Also, he never wanted WeWork in his company’s buildings because, he said, it packed too many people into its spaces, causing overuse of elevators and toilets.“Why would you want to do business with these people?” Mr. Malkin said. More

  • 125 Shares129 Views

    in Economy

    Job Growth Slows, Sowing a Mix of Concern and Calm

    U.S. employers added 150,000 workers in October, falling short of expectations, but the labor market retains spark nearly three years into a recovery.The labor market has been relentlessly hot since the U.S. economy began to recover from the shock of the pandemic. But there are signs of cooling as the holidays approach.Employers added 150,000 jobs in October on a seasonally adjusted basis, the Labor Department reported on Friday, a number that fell short of economists’ forecasts.Hiring figures for August and September were revised downward, subtracting more than 100,000 jobs from earlier reports. And the unemployment rate, based on a survey of households, rose to 3.9 percent from 3.8 percent in September.Unemployment ticked up in OctoberUnemployment rate More

  • 150 Shares99 Views

    in Economy

    Here’s where the jobs are for October 2023 — in one chart

    The October jobs report showed a cooling labor market in the U.S., with many sectors showing minimal or negative growth as the economy added a relatively meager 150,000 jobs overall.
    A bright spot came in health care and social assistance, which added more than 77,000 jobs. Within that, ambulatory health care gained 32,000 jobs.

    If private education was included in that category, as some economists choose to do, there would have been 89,000 jobs added in that group.
    Government employment grew by 51,000, making it the second-strongest category in October. That sector has now returned to its pre-pandemic level, the U.S. Bureau of Labor Statistics said in the report.
    “It’s usually a bad thing when job growth is led by the public service, but in this case, it is long overdue. The private sector jobs recovery was much stronger and much faster than that of the public sector,” said Julia Pollak, chief economist at ZipRecruiter.
    Other areas showed meager job growth and saw employment shrink. Mining and logging, utilities and retail trade combined to add just 2,500 jobs. Information shed 9,000 jobs, while transportation and warehousing lost more than 12,000 jobs.
    “Many workers in trucking, for example, are finding very, very soft economic conditions. You lose one job and it is not easy to find another. The same is true in tech,” Pollak said.

    Manufacturing was the weakest sector in October, dropping 35,000 jobs. The decline was due largely to strike activity, the BLS report said. That should improve in November now that the United Auto Workers union has now reached tentative agreements with the three major Detroit automakers.Don’t miss these stories from CNBC PRO: More

  • 263 Shares189 Views

    in Economy

    Bad news for the economy is good news for the stock market … as long as it doesn’t get too bad

    Stocks rallied sharply after the Labor Department said nonfarm payrolls rose by 150,000 in October — 20,000 fewer than expected.
    Slow, controlled growth is something the markets and the Fed are seeking in the current climate, negative growth is not.

    Traders work on the floor of the New York Stock Exchange (NYSE) on November 02, 2023 in New York City. 
    Spencer Platt | Getty Images

    Friday’s market reaction to the jobs report comes down to a simple premise: bad news is good news, as long as it isn’t too bad.
    Stocks rallied sharply after the Labor Department said nonfarm payrolls rose by 150,000 in October — 20,000 fewer than expected but a difference attributable pretty much completely to the auto strikes, which appear to be over.

    For the Federal Reserve, the relatively muted job creation coupled with wage gains nearly in line with expectations adds up to a scenario in which the central bank doesn’t really have to do anything. It can just continue to let the data flow in, without having to move on interest rates as it evaluates the impact of its previous 11 hikes.
    “The Fed finally got what it’s been looking for — a meaningful slowdown in the labor market,” said Mike Loewengart, head of model portfolio construction for Morgan Stanley’s Global Investment Office.
    “We’ve seen one or two head fakes in this direction before, but the fact that this report followed other weaker-than-expected economic data points this week may encourage investors who have been waiting for a less-hawkish Fed,” he added.
    Markets reacted in more ways than one to the report. Traders in fed funds futures reduced the probability for a December rate hike to less than 10% and now see the first cut coming as soon as May, according to CME Group tracking.
    However, that cut could be the really bad news, as it likely would signal the Fed’s concern that the economy is slowing so much that it needs a boost from monetary policy. Slow, controlled growth is something the markets and the Fed are seeking in the current climate, negative growth is not.

    “Investors who are eager for the Fed to be cutting rates should be careful what they wish for,” Michael Arone, chief investment strategist at State Street Global Advisors, said in an interview earlier this week.
    Despite market pricing, it seems like cuts aren’t around the corner if recent statements from Fed officials are any indication. Fed Chairman Jerome Powell said Wednesday that cuts have not been a part of the conversation among policymakers.
    “It seems like that’s still a ways off in my mind,” Richmond Fed President Thomas Barkin said during an interview Friday on CNBC’s “Squawk on the Street.” “You could imagine scenarios where demand comes off and you have to do something. You could imagine a scenario where inflation is starting to settle and you want to lower real rates. Both of those imaginary things still feel pretty far out the distance.”
    Don’t miss these stories from CNBC PRO: More