Evelyn Reynolds

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    Atlanta Fed President Bostic says officials can’t wait for inflation to hit 2% before cutting

    Atlanta Fed President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
    The comments come with markets already widely expecting the Fed to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.

    speaking at Jackson Hole on August 23, 2024.  
    David A. Grogan | CNBC

    Atlanta Federal Reserve President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
    Previously one of the more hawkish policymakers, or in favor of tighter policy to fight inflation, Bostic noted that his focus is shifting more toward the employment side of the Fed’s mandate as signs increase of labor market softening.

    “I believe we cannot wait until inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering,” he wrote in a message posted on the Atlanta Fed’s website.
    The Fed’s preferred measure showed inflation running at a 2.5% rate in July, and just a slightly higher 2.6% core rate when excluding food and energy. Bostic did not specify how much or when he thinks the Fed should start easing.
    However, the missive comes with markets already widely expecting the central bank’s Federal Open Market Committee to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.
    As an FOMC voting member this year, Bostic’s views carry extra weight and add another level of assurance that the Fed will enact its first easing since the emergency measures it took more than four years ago in the early days of the Covid crisis.
    His comments also come two days before what is expected to be a pivotal nonfarm payrolls report as most economists see the labor market losing momentum. Bostic said his experiences with business leaders in the Atlanta area reflect that concern.

    “Rest assured, I do not sense a looming crash or panic among business contacts. However, the data and our grassroots feedback describe an economy and labor market losing momentum,” he said. “The upside to this is that the slowdown in activity is feeding a continuing, welcome decline in the pace of inflation.”
    Indeed, he cited multiple factors indicating that inflation is progressing convincingly back to the Fed’s target as the labor market moderates.
    “Given the circumstances before us — eroding pricing power and a cooling labor market — I’ve rebalanced my focus toward both sides of the dual mandate for the first time since early 2021,” he said.

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    Weak manufacturing measures raise specter of U.S. economic slowdown

    The ISM monthly survey of purchasing managers showed that just 47.2% reported expansion in August, above the July reading but below the consensus forecast.
    Another weak economic reading raises the probability the Fed will be cutting interest rates by at least a quarter percentage point later this month.

    Workers assemble second-generation R1 vehicles at electric auto maker Rivian’s manufacturing facility in Normal, Illinois, U.S. June 21, 2024. 
    Joel Angel Juarez | Reuters

    U.S. factories remained in slowdown mode in August, fueling fears about where the economy is headed, according to separate manufacturing gauges.
    The Institute for Supply Management monthly survey of purchasing managers showed that just 47.2% reported expansion during the month, below the 50% breakeven point for activity.

    Though that was slightly above the 46.8% recorded for July, it was below the Dow Jones consensus call for 47.9%.
    “While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
    “Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty,” he added.
    While the index level suggests contraction in the manufacturing sector, Fiore pointed out that any reading above 42.5% generally points to expansion across the broader economy.
    It was a weaker-than-expected reading last month that sent markets further into a tailspin, ultimately costing the S&P 500 about 8.5% before recovering most of the losses. Stocks added to declines following the latest ISM release on Tuesday, with the Dow Jones Industrial Average off nearly 500 points.

    Another weak economic reading raises the probability the Federal Reserve will be cutting interest rates by at least a quarter percentage point later this month. Following the ISM report, traders raised the odds of a more aggressive half-point reduction to 39%, according to the CME Group’s FedWatch measure.
    With the survey, the employment index edged higher to 46% while inventories jumped to 50.3%. Regarding inflation, the prices index nudged higher to 54%, possibly giving the Fed some pause when deciding on the extent of the fully priced-in rate cut.
    The ISM results were backed up by another PMI reading from S&P, which showed a decrease to 47.9 in August from 49.6 in July.
    The S&P employment index showed a decline for the first time this year, while the input cost measure climbed to a 16-month high, another sign that inflation remains present if well off its mid-2022 highs.
    “A further downward lurch in the PMI points to the manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward-looking indicators suggest this drag could intensify in the coming months,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

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    Will Automation Replace Jobs? Port Workers May Strike Over It.

    A contract covering longshore workers on the East and Gulf Coasts will expire at the end of September, but talks have been stalled over the use of equipment that can function without human operators.When a dockworkers’ union broke off contract talks with management in June, raising the likelihood of a strike at more than a dozen ports on the East and Gulf Coasts that could severely disrupt the supply chain this fall, it was not over wages, pensions or working conditions. It was about a gate through which trucks enter a small port in Mobile, Ala.The International Longshoremen’s Association, which has more than 47,000 members, said it had discovered that the gate was using technology to check and let in trucks without union workers, which it said violated its labor contract.“We will never allow automation to come into our union and try to put us out of work as long as I’m alive,” said Harold J. Daggett, the union’s president and chief negotiator in talks with the United States Maritime Alliance, a group of companies that move cargo at ports.The I.L.A., which represents workers at economically crucial ports in New Jersey, Virginia, Georgia and Texas, has long resisted automation because it can lead to job losses.Longshoremen have grim memories of how past innovation reduced employment at the docks. Shipping containers, introduced in the 1960s, allowed ports to move goods with fewer workers. “You don’t have to pay pensions to robots,” said Brian Jones, a foreman at the Port of Philadelphia, who said he’d vote for a strike if it came to it. He began working at the port in 1974, when bananas from Costa Rica were unloaded box by box. Asked why he was still working at 73, Mr. Jones said, “I like the action, and the money doesn’t hurt.”Workers throughout the economy are worried that technology will eliminate their jobs, but at the ports it threatens one of the few blue-collar jobs that can pay more than $100,000. The United States has done less to automate port operations than countries like China, the Netherlands and Singapore. But the technology is now advancing more quickly, especially on the West Coast.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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    Has the Spread of Tipping Reached Its Limit? Don’t Count on It.

    Americans are being asked to tip more often and in more places than ever before: at fast food counters and corner stores, at auto garages and carwashes, even at self-checkout kiosks. That has rankled many customers and divided both employers and tipped workers.It may soon get worse. Both major-party presidential candidates have embraced proposals to eliminate income taxes on tips, a move that would, in effect, subsidize tipping and prompt more businesses to rely on it.Economists across the political spectrum have panned the tax idea, arguing that it is unfair — favoring one set of low-wage workers over others — and could have unintended consequences. Even some tipped workers and groups that represent them are skeptical, worrying that over the long term the policy could result in lower pay.But the debate alone underscores how service-sector workers have emerged from the pandemic as an economically and politically potent force. The spread of tipping in recent years was, in part, a result of the intense demand for workers, and the leverage it gave them. The presidential candidates’ dueling proposals signal that they see the nation’s roughly four million tipped workers as a constituency worth wooing.“I do think it’s a reflection of this change in which people are finally hearing and recognizing that these workers matter,” said Saru Jayaraman, president of One Fair Wage, an advocacy organization. “Tipped workers had never seen their needs named in any way by any presidential candidate, ever.”Ms. Jayaraman isn’t a fan of the tax exemption idea, though she is optimistic that the attention being paid to the issue could lead to policies she considers more important. One is the elimination of the subminimum wage, which allows businesses in some states to pay workers as little as $2.13 an hour as long as they receive enough in tips to bring them up to the full minimum wage.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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    For Generations of Alaskans, a Livelihood Is Under Threat

    Petersburg, Alaska, is as pretty a seaside town as any you’ll find across the filigree of fjords and foggy islands that make up the state’s maritime coast. Statuary and floral designs evidence its proud Scandinavian heritage, and bald eagles soar across the narrow strait that separates it from a national forest. It doesn’t have room for the giant cruise ships that disgorge thousands of passengers into Ketchikan and Juneau, but it is perfectly situated for its sustaining industry: fishing.Norwegian fishermen settled in Petersburg in the 1800s, finding it an ideal jumping off point to pursue salmon, crab and halibut. Hundreds of vessels now dock in there and sell their catch to the two major processors, which head and gut the fish before either canning or freezing it on its eventual path to the dinner table. One of the plants was built more than a century ago, and its owner is the town’s largest private employer.Few people know the business better than Glorianne Wollen, a fisherman’s daughter who operates a large crab boat in a partnership and also serves as harbor master, working from a tiny desk tucked into a bustling office with a little dog at her feet. A Petersburg native, she’s seen a lot of change.“In the good old days, the town was very alive with discussion, everybody was involved so everybody had a stake, everybody knew what was going on, things happened in real time,” Ms. Wollen recalled. That buzz receded as boats got bigger and more efficient, pursued more species and stayed on the water for more of the year to maximize their investment.“It takes two guys to do what 20 used to,” she said. “There’s just fewer of us.”Petersburg doesn’t have room for the giant cruise ships that dock in other Alaskan cities, but it is perfectly situated for its sustaining industry: fishing“There’s just fewer of us,” said Glorianne Wollen, a Petersburg native and fisherman’s daughter who now serves as the town’s harbor master.The Ranks of Alaska Fishermen Are ThinningAcross all fisheries, the number of people holding permits who harvest fish commercially each year has fallen precipitously since the 1980s.

    Source: Commercial Fisheries Entry Commission, State of AlaskaBy The New York TimesSalmon Prices Have Been Mostly Flat for DecadesAdjusted for inflation, prices that fishermen are paid per pound of salmon they deliver to processors rose slightly in the 2010s and took a big hit in 2023.

    Source: Alaska Department of Fish and GameBy The New York Times More

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    The Fed’s Preferred Inflation Gauge Stays Cool, Keeping a Rate Cut Imminent

    Inflation remained cool in July, based on the Personal Consumption Expenditures index, keeping the Federal Reserve on track for rate cuts.Inflation held steady in July on a yearly basis and consumer spending was robust, fresh data released on Friday showed, the latest sign that progress toward cooler price increases remains firmly intact even as the economy holds up.The release of the Federal Reserve’s favorite inflation number, the Personal Consumption Expenditures index, showed that yearly inflation was 2.5 percent. That was in line with both the previous month and with economist forecasts.After stripping out food and fuel prices, both of which jump around, a “core” index was up 2.6 percent from a year earlier. That figure gives economists a clearer grasp on the underlying trend in inflation.This month, Fed officials and Wall Street analysts are likely to look closely at the monthly inflation numbers. Because inflation climbed slowly last summer, the annual numbers are being measured against cool readings from last year. When comparing July’s prices to June’s, inflation climbed slightly: 0.2 percent in both the headline and the core measures.The likely takeaway for Fed officials is that inflation continues to gradually moderate — keeping them on track to begin lowering interest rates next month. While the yearly number remains above the Fed’s 2 percent goal, it is down substantially from a peak of more than 7 percent in 2022.This is the last P.C.E. report the Fed will receive before its Sept. 17-18 policy meeting, although officials will get a Consumer Price Index report on Sept. 11. That inflation measure comes out earlier in the month than the personal consumption measure and feeds into the P.C.E. report.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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    Gaza Debate Reopens Divisions Between Left-Wing Workers and Union Leaders

    Last week’s Democratic National Convention surfaced differences over the war in Gaza that could widen fissures between labor activists and union officials.When members of the Chicago Teachers Union showed up to march at the Democratic National Convention last week, many expressed two distinct frustrations.The first was over the war in Gaza, which they blamed for chewing up billions of dollars in aid to Israel that they said could be better spent on students, in addition to a staggering loss of life. The second was disappointment with their parent union, the American Federation of Teachers, which they felt should go further in pressuring the Biden administration to rein in Israel’s military campaign.“I was disappointed in the resolution on Israel and Palestine because it didn’t call for an end to armed shipments,” said Kirstin Roberts, a preschool teacher who attended the protest, alluding to a statement that the parent union endorsed at its convention in July.Since last fall, many rank-and-file union members have been outspoken in their criticism of Israel’s response to the Oct. 7 attacks, in which Hamas-led militants killed more than 1,000 people and took about 250 hostages. The leaders of many national unions have appeared more cautious, at times emphasizing the precipitating role of Hamas.“We were very careful about what a moral stance was and also what the implications of every word we wrote was,” the president of the American Federation of Teachers, Randi Weingarten, said of the resolution her union recently adopted.In some ways, this divide reflects tensions over Israel and Gaza that exist within many institutions — like academia, the media and government.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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    The Fed’s favorite inflation indicator increased 0.2% in July, as expected

    Core personal consumption expenditures prices increased 0.2% in July and 2.6% from a year ago. The 12-month figure was slightly softer than the 2.7% estimate.
    All-item inflation came in respectively at 0.2% and 2.5%, in line with forecasts.
    Personal income increased 0.3%, slightly higher than the 0.2% estimate, while consumer spending rose 0.5%, in line with the forecast.

    Inflation edged higher in July, according to a measure favored by the Federal Reserve as the central bank prepares to enact its first interest rate reduction in more than four years.
    The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.2% on the month and was up 2.5% from the same period a year ago, exactly in line with the Dow Jones consensus estimates.

    Excluding volatile food and energy prices, core PCE also increased 0.2% for the month but was up 2.6% from a year ago. The 12-month figure was slightly softer than the 2.7% estimate.
    Fed officials tend to focus more on the core reading as a better gauge of long-run trends. Both core and headline inflation on a 12-month basis were the same as in June.
    Core prices less housing increased just 0.1% on the month. As other inflation components ease, shelter has proven to be stubborn, again rising 0.4% in July, according to Friday’s report.
    Elsewhere in the report, the department’s Bureau of Economic Analysis said personal income increased 0.3%, slightly higher than the 0.2% estimate, while consumer spending rose 0.5%, in line with the forecast. Spending continued at a solid clip even though the personal savings rate fell to 2.9%, the lowest since June 2022.
    From a prices standpoint, inflation changed little over the past month. The BEA said that goods prices fell by less than 0.1% though services increased 0.2%.

    On a 12-month basis, goods also were off by less than 0.1%, while services jumped 3.7%. Food prices were up 1.4% and energy accelerated 1.9%.
    Markets reacted little to the news, with equity futures pointing to a slightly higher open on Wall Street and Treasury yields higher as well.
    The report comes with the markets pricing in a 100% chance of a rate cut in September, with the only uncertainty being whether the Fed will take the incremental step of lowering benchmark rates by a quarter percentage point or being more aggressive and moving a half-point lower.
    In recent days, policymakers such as Chair Jerome Powell have expressed confidence that inflation is progressing back to the Fed’s 2% goal.
    The Fed is expected now to switch from a nearly complete focus on bringing down inflation to at least an equal concentration on supporting the labor market. Though the unemployment rate is still low at 4.3%, it has been trending higher over the past year, and surveys suggest a slowdown in hiring and a perception among workers that jobs are getting tougher to come by.

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