Evelyn Reynolds

The Federal Reserve is poised to lower interest rates this week. Recent jobs data have been a reminder that a soft landing is not yet assured.An object in motion stays in motion. Is a labor market trend that’s well underway any different?That’s the question looming for officials at the Federal Reserve as they try to pull off a feat that has never really been accomplished before: gently cooling an economy that was experiencing rip-roaring inflation without tanking the job market in the process.So far, the Fed’s attempt at a soft landing has worked out better than just about anyone, including central bankers themselves, expected. Inflation has cooled significantly, with the Consumer Price Index down to 2.5 percent from a peak of 9.1 percent just two years ago. And even with the Fed’s policy interest rate at its highest level in more than two decades, consumer spending has held up and overall growth has continued to chug along.Fed officials are eager to keep it going. That is why all signals suggest that they will lower interest rates at the conclusion of their meeting on Wednesday — and the only real question is whether they will cut them by a typical quarter of a percentage point or by a half percentage point. They are also likely to forecast that they will lower interest rates further before the end of the year, perhaps predicting that they will cut them by a full point from their current 5.33 percent.But even as the Fed turns an important corner on its fight against inflation, real risks remain. And those center on the labor market.Unemployment has been slowly, but steadily, rising. Wage growth has been consistently slowing. Job openings have come down, and hiring rates have come down along with them. And while all of those developments are what the Fed wanted — the point of this exercise was to slow an overheated job market and prevent it from fueling future inflation — central bankers have been clear that they do not want to see it continue.“We do not seek or welcome further cooling in labor market conditions,” Jerome H. Powell, the Fed chair, said in his latest speech.Unemployment and Underemployment RiseThe jobless rate historically jumps during recessions.

Notes: Unemployment is the share of people actively looking for work; underemployment also includes people who are no longer actively looking and those who work part time but would prefer full-time jobs. Seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesWage Growth Is Cooling SteadilyAfter spiking in 2022, wage gains for rank-and-file workers have been coming down.

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Year-over-year change in average hourly earnings
Note: Data is for production and nonsupervisory employees and is not seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesJob Openings Fall, Just as More People Look for ThemAfter years in which jobs were much more plentiful than available workers, that ratio is on the cusp of flipping.

Data are seasonally adjusted.Source: The Bureau of Labor StatistticsBy 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

Corporate consolidation and technology have upended many jobs in recent decades. But few arcs are more surprising than that of the Hollywood producer.In more than three decades as a studio executive and producer, Kevin Misher has worked on some of the most beloved movies in Hollywood, including “Rudy,” “Meet the Parents” and “Public Enemies.”As recently as 2012, his production company, Misher Films, supported three development executives and three assistants. It had a studio deal worth more than $1 million in many years, which allowed it to acquire scripts and hire writers while meeting payroll.But today, even as Mr. Misher continues to produce high-profile movies like “Coming 2 America” and “You People,” as well as television shows, documentaries and podcasts, his company has slimmed down amid the industry’s changing economics. Years often pass between the time producers start a project and the time they are paid. Deals for producers have dried up as studios have sought greater efficiencies. Mr. Misher’s six employees have dwindled to one, along with a partner who earns a portion of his fees.“Those deals sustained you — they were a paycheck,” Mr. Misher said. “They allowed you to make a basic wage while waiting for a payout.”The unraveling of these arrangements has not only made life harder for an accomplished producer like Mr. Misher, whose job is to originate movies by identifying promising material, and to oversee the hundreds or thousands of people involved in writing and filming. It has also hollowed out the field’s middle tier and made it almost impossible for young people to enter the profession.“It starts to self-select for people who come in already with money,” said Mr. Misher, part of a group of more than 100 producers called Producers United, who are seeking more favorable financial terms through discussions with Hollywood studios. “The perspective gets narrower, it isn’t as innovative or diverse.”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

The vehemence of workers over wages and other issues caught the company and union leaders off guard.When thousands of Boeing employees rejected a new labor contract, precipitating a strike that began on Friday, they were at odds not just with management but also with the leaders of their union, who backed the proposed deal.Now, any attempt to reach an agreement must take account of the demands of the rank and file of the International Association of Machinists and Aerospace Workers. What they want — significantly larger pay raises and far more lucrative retirement benefits than their leaders and Boeing agreed to — may be too much for management. But labor experts said the strength of the strike vote — 96 percent in favor — should help the union get a better deal.“Those overwhelming numbers are kind of embarrassing, certainly from a public relations standpoint for the union,” said Jake Rosenfeld, a sociologist who studies labor at Washington University in St. Louis. “But they also simultaneously present the union with leverage when it does resume negotiations.”And Boeing is in a difficult spot after a slowdown in commercial jet production — required by regulators after a panel blew out of a passenger jet fuselage in January — led to big financial losses. A long strike at Boeing’s main production base in the Seattle area would add significantly to the losses and possibly tip its credit rating into junk territory, a chilling development for a company with nearly $60 billion in debt.The federal mediation service said on Friday that the union and Boeing management would resume talks in the coming days.“We’re going to go back to the bargaining table, and bargain for what our members deserve,” Jon Holden, the president of District 751, the part of the machinists’ union that represents most of the workers on strike, said in an interview. “We’ll push this company farther than they ever thought they’d go.”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

A week’s worth of inflation data showed that price pressures have eased substantially since their meteoric rise in 2021-22.
Fed officials head into their two-day policy meeting Tuesday closer to their goal of low inflation, but how much they will ease interest rates remains an open question.
“The federal funds rate has been over 5%, has been there for over a year to fight inflation. That fight is won. They need to start getting out of the way,” economist Claudia Sahm said.

US Federal Reserve Chair Jerome Powell arrives to testify before the Senate Banking, Housing, and Urban Affairs Hearings to examine the Semiannual Monetary Policy Report to Congress at Capitol Hill in Washington, DC, on July 9, 2024.
Chris Kleponis | AFP | Getty Images

Federal Reserve officials head into their policy meeting Tuesday closer to their goal of low inflation, but how much they will ease back on interest rates remains an open question.
A week’s worth of inflation data showed that price pressures have eased substantially since their meteoric rise in 2021-22. One gauge of consumer prices showed 12-month inflation at its lowest since February 2021, while wholesale price measures indicated pipeline price increases are mostly under control.

Both readings were certainly enough to clear the way for an interest rate cut at the Federal Open Market Committee meeting, which concludes Wednesday with a rate decision and an updated forecast on where central bankers see things heading in the future.
“We got two more months of good inflation data” since the last Fed meeting, Claudia Sahm, chief economist for New Century Advisors, said in a CNBC interview Friday. “That’s what the Fed asked for.”
The question, though, turns now to how aggressively the Fed should act. Financial markets, which provide a guidepost on where the central bank is heading, were no help.
Futures markets for most of the past week had lasered in on a quarter percentage point, or 25 basis point, rate cut. However, that turned on Friday, with traders switching to an almost even chance of a either a 25- or a half point, or 50-basis point-reduction, according to the CME Group’s FedWatch tool.
Sahm is among those who think the Fed should go bigger.

The inflation data “on its own would have gotten us 25 next week, as it should, and will get us a whole string of cuts after that,” she said. “The federal funds rate has been over 5%, has been there for over a year to fight inflation. That fight is won. They need to start getting out of the way.”
That means, Sahm said, starting off with a 50 basis-point reduction as a way to put a floor under potential labor market decay.
“The labor market [since] last July has gotten weaker,” she said. “So there’s an aspect of just recalibrating. We got some more information. [Fed officials] need to kind of clean it up, do a 50 basis point cut and then be ready to do more.”

Confidence about inflation

The inflation reports indicate that the battle to bring inflation back down to 2% isn’t exactly over, but things are at least moving in the right direction.
The all-items consumer price index nudged up just 0.2% in August, putting the full-year inflation rate at 2.5%. Excluding food and energy, core inflation stood at 3.2%, a good deal farther away from the Fed’s target.
However, most of the core strength has come from stubbornly high shelter costs, boosted by the Bureau of Labor Statistics’ byzantine “owners equivalent rent” measure that asks homeowners what they could get if they rented out their residence. The yardstick, which comprises about 27% of the total CPI weighting, rose 5.4% from a year ago.
Despite lingering pressures, consumer surveys indicate confidence that inflation has been subdued if not completely arrested. Respondents to a University of Michigan survey in September expected inflation to run at 2.7% over the next 12 months, the lowest reading since December 2020.
Taking all the various inflation dynamics into account, Fed Chair Jerome Powell said in late August that his “confidence has grown” that inflation is trending back to 2%.
That leaves employment. Powell said in the same speech, delivered at the Fed’s annual retreat in Jackson Hole, Wyoming, that the Fed does “not seek or welcome further cooling in labor market conditions.”
The Fed has two jobs — stable prices and a healthy job market — and the primary mission looks about to change.
“If Powell wants to deliver on his, ‘we want no further weakening, no further cooling,’ they are going to have to, like, really move here, because that cooling trend is well established,” Sahm said. “Until it is interrupted, we are going to continue to see payrolls drift down and [the] unemployment rate drift up.”

The case for a quarter

To be sure, there’s considerable sentiment for the Fed to lower by just a quarter-point at next week’s meeting, reflecting that the central bank still has more work to do on inflation, and that it is not overly worried about the labor market or a broader economic cooling.
“That’s really the key that they need to kind of hone in on, which is that they are normalizing policy and not trying to provide accommodation for an economy that is really in trouble,” said Tom Simons, U.S. economist at Jefferies. “I think they’ve done a very good job of expressing that point of view so far.”
Even with the quarter-point move, which Simons forecasts, the Fed would have plenty of room to do more later.
Indeed, market pricing anticipates rates could come down by 1.25 percentage points by the end of 2024, an indication of some sense of urgency at bringing benchmark borrowing costs down from their highest levels — currently 5.25% to 5.50% — in more than 23 years.
“The whole reason why they’ve been so cautious about cutting is because they’re concerned that inflation is going to come back,” Simons said. “Now, they have more confidence based on data that suggested [inflation] isn’t coming back right now. But they do need to be very careful to monitor potentially changing dynamics.” More

Under pressure from Chinese competitors, Amazon, Walmart and other U.S. retailers have been exploring ways to avoid tariffs. Could a new Biden administration rule change that?Major American retailers including Amazon and Walmart have been quietly exploring shifting toward a business model that would ship more goods directly to consumers from Chinese factories and require fewer U.S. workers in retail stores and logistics centers.The plans have been driven by the rocketing popularity of Chinese e-commerce platforms like Shein and Temu, which have won over consumers with their low prices. These platforms ship inexpensive products directly to consumers’ doorsteps, allowing them to bypass American tariffs on Chinese goods, along with the hefty costs associated with brick-and-mortar stores, warehousing and distribution networks.Rising competition from Shein, Temu and other Chinese companies is pushing many major U.S. retailers to consider shifting to a similar model to qualify for an obscure, century-old U.S. trade law, according to several people familiar with the plans. The law, known as de minimis, allows importers to bypass U.S. taxes and tariffs on goods as long as shipments do not exceed $800 in value.But that trend toward changing business models may have been disrupted on Friday, when the Biden administration abruptly moved to close off de minimis eligibility for many Chinese imports, including most clothing items. In an announcement Friday morning, the Biden administration said it would clamp down on the number of packages that come into the country duty-free using de minimis shipping, particularly from China.The Biden administration’s changes will not go into effect immediately. The proposal will be subject to comment by industry before being finalized in the coming months, and some imports from China would still qualify for a de minimis exemption.But Friday’s action may head off a change that has been looming in global retail. Amazon has been preparing a new discount service that would ship products directly to consumers, allowing those goods to bypass tariffs, according to people familiar with the plans. Even companies that preferred to keep their business models as-is — like Walmart — have been forced to consider using more de minimis to compete.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

Thousands of workers who build commercial planes in the Seattle and Portland, Ore., areas rejected a tentative contract recommended by union leaders.Thousands of machinists and aerospace workers walked off the job on Friday, after rejecting a proposal that would have delivered raises and improvements to benefits but fell short of what the union initially sought.Lindsey Wasson for The New York TimesThousands of Boeing workers walked off the job on Friday after rejecting a contract offer from the company, a potentially costly disruption as Boeing tries to increase airplane production after a safety crisis.The strike, the first at Boeing in 16 years, is expected to bring operations to a halt in the Seattle area, home to most of Boeing’s commercial plane manufacturing. The slowdown could also further disrupt the company’s fragile supply chain.Kelly Ortberg, the company’s new chief executive, had urged employees to approve the deal. “A strike would put our shared recovery in jeopardy, further eroding trust with our customers,” he said in a video statement on Wednesday.Boeing plays a substantial role in the U.S. economy. It employs almost 150,000 people across the country — nearly half of them in Washington State — and is one of the nation’s largest exporters. The company, which also makes military jets, rockets, spacecraft and Air Force One, is a global symbol of America’s manufacturing strength.The union said the strike vote passed by 96 percent, well above the two-thirds required to initiate a walkout, after 95 percent rejected the proposed contract.The contract had been agreed upon by union leaders and company management on Sunday after months of talks. It included many gains for workers, but fell short of what the union initially sought. Union leaders had hoped to get bigger raises and other concessions from the company, but said it was still “the best contract we’ve negotiated in our history.”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

With the Federal Reserve holding benchmark rates at their highest in 23 years, the government has laid out $1.049 trillion on debt service, up 30% from the same period a year ago.
The jump in debt service costs came as the U.S. budget deficit surged in August, edging closer to $2 trillion for the full year.

A view shows a bronze seal beside a door at the U.S. Treasury building in Washington, U.S., January 20, 2023. 
Kevin Lamarque | Reuters

The U.S. government for the first time has spent more than $1 trillion this year on interest payments for its $35.3 trillion national debt, the Treasury Department reported Thursday.
With the Federal Reserve holding benchmark rates at their highest in 23 years, the government has laid out $1.049 trillion on debt service, up 30% from the same period a year ago and part of a projected $1.158 trillion in payments for the full year.

Subtracting the interest the government earns on its investments, net interest payments have totaled $843 billion, higher than any other category except Social Security and Medicare.
The jump in debt service costs came as the U.S. budget deficit surged in August, edging closer to $2 trillion for the full year.
With one month left in the federal government’s fiscal year, the August shortfall popped by $380 billion, a dramatic reversal from the $89 billion surplus for the same month a year prior that was due largely to accounting maneuvers involving student debt forgiveness.
That took the 2024 deficit to just shy of $1.9 trillion, or a 24% increase from the same point a year ago.
The Fed is widely expected to lower rates next week, but just by a quarter percentage point. However, in anticipation of additional moves in future months, Treasury yields have tumbled in recent weeks.
The benchmark 10-year note last yielded about 3.7%, down more than three-quarters of a percentage point since early July.

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The producer price index increased 0.2% in August, the Bureau of Labor Statistics said Thursday. That matched the Dow Jones consensus estimate.
Initial filings for unemployment benefits totaled 230,000 for the week ended Sept. 7, up 2,000 from the previous period and higher than the 225,000 estimate.

Wholesale prices rose in August about in line with expectations, the final inflation data point as the Federal Reserve gets set to lower interest rates.
The producer price index, a measure of final demand goods and services costs that producers receive, increased 0.2% on the month, the Bureau of Labor Statistics said Thursday. That matched the Dow Jones consensus estimate.

Excluding food and energy, PPI increased 0.3%, slightly hotter than the 0.2% consensus estimate. The core increase was the same when excluding trade services.
On a 12-month basis, headline PPI rose 1.7%. Excluding food, energy and trade, the annual rate was 3.3%.
In other economic news Thursday, the Labor Department said initial filings for unemployment benefits totaled 230,000 for the week ended Sept. 7, up 2,000 from the previous period and higher than the 225,000 estimate.
Stock market futures were little changed after the report while Treasury yields were mostly lower.
On the PPI measure, services prices pushed much of the gain, with a 0.4% monthly increase driven by a rise in services less trade, transportation and warehousing. Another big contributor was a 4.8% jump in guestroom rental.

Goods prices were flat on the month, reversing a 0.6% gain in July.
The release comes a day after the BLS reported that consumer prices rose 0.2% on the month in line with expectations. However, that report also showed that core prices climbed 0.3%, slightly more than expected and pushed higher mostly by an increase in shelter-related expenses.
On an annual basis, headline CPI inflation decreased to 2.5% while core held at 3.2%.
Neither report is expected to keep the Fed from lowering benchmark interest rates by a quarter percentage point when its two-day policy meeting concludes Wednesday. The central bank’s key overnight borrowing rate is currently targeted in a range between 5.25%-5.5%.
Market pricing had indicated some uncertainty over how much the central bank would cut, but recent data along with statements from policymakers have pushed Wall Street into looking in a more traditional quarter-point move, rather than a more aggressive half-point reduction.
Fed officials of late have turned their attention more to a slowing labor market.
The jobless claims report indicated that layoffs have not spiked, though the weekly number has risen slightly over the past several months.
Continuing claims, which run a week behind edged just higher to 1.85 million, an increase of just 5,000 from the previous period.

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