Economy

WASHINGTON (Reuters) -The United States on Friday imposed sanctions targeting Iran’s ballistic missile and drone procurement programs as well as officials it said were involved in hacking U.S. infrastructure, as Washington looks to increase pressure on Tehran.The U.S. Treasury Department said in a statement it had imposed sanctions on four Iran- and Hong Kong-based companies involved in providing materials and technology to Iran’s ballistic missile and drone programs as well as a Hong Kong-based firm for selling Iranian commodities to Chinese entities.The Treasury also said it placed sanctions on six officials of Iran’s Islamic Revolutionary Guard Corp’s Cyber Electronic Command (IRGC-CEC) for malicious cyber activities against critical infrastructure in the United States and elsewhere.Iran’s mission to the United Nations did not immediately respond to a request for comment. China’s embassy to the United States criticized the sanctions as “unlawful unilateral” steps.The sanctions, announced in separate statements, represent Washington’s latest efforts to punish Tehran, whose proxies in Iraq, Lebanon, Syria, Yemen and the Gaza Strip have attacked U.S. and Israeli targets.The United States blamed a weekend attack on a U.S. base in Jordan that killed three American soldiers and wounded more than 40 on Iran-backed militants and the Biden administration has promised a response that will include retaliatory strikes.The weekend attack was the first to kill U.S. troops in the Middle East since the start of the Israel-Hamas war in October after a cross-border rampage by Iran-backed Hamas militants that killed about 1,200 people.The Treasury said it had imposed sanctions the four Iran- and Hong Kong-based entities for operating as covert procurement entities for Iran’s Pishtazan Kavosh Gostar Boshra (PKGB) and its managing director Hamed Dehghan, who it said support Iranian military organizations, including the Islamic Revolutionary Guard Corps (IRGC). The Treasury named the three Hong Kong firms it accused of being part of the procurement network for Iran’s ballistic missile and drone programs as FY International Trading Co., Limited, Duling Technology HK Limited and Advantage Trading Co., Limited.Hong Kong-based China Oil and Petroleum Company Limited was also hit with sanctions on Friday, with the Treasury accusing it of being a front company for the IRGC’s Quds Force. The Treasury said it has arranged contracts and sold hundreds of millions of dollars’ worth of Iranian commodities and was involved in trade with China-based entities to benefit the Quds Force.Liu Pengyu, a spokesperson for the Chinese embassy in Washington, criticized the sanctions.”These are typical acts of putting unlawful unilateral sanctions and long-arm jurisdiction, severely undercutting Chinese interests,” Liu said. “China is deeply concerned and firmly against … such moves.”Narin Sepehr Mobin Istatis (NSMI), an Iran-based subsidiary of PKGB, was also among those sanctioned in Friday’s action, which freezes any U.S. assets belonging to those targeted and generally bars Americans from dealing with them. Those that engage in certain transactions with them also risk being hit with sanctions.In a separate statement, the Treasury said it had imposed sanctions on six IRGC-CEC officials: Hamid Reza Lashgarian, Mahdi Lashgarian, Hamid Homayunfal, Milad Mansuri, Mohammad Bagher Shirinkar, and Reza Mohammad Amin Saberian. More

(Reuters) -Federal Reserve policymakers seeking greater confidence that inflation is on track to their 2% goal may have gotten the opposite on Friday when data showed U.S. job growth surged last month at well above the pre-pandemic pace, and wage growth accelerated. The numbers – 353,000 new jobs added across a broad range of sectors and hourly earnings up 4.5% from a year earlier – do not put U.S. central bank officials off course for interest rate cuts later this year. But ongoing labor market strength could make the road to rate cuts a longer one. Revisions published Friday to last year’s data show the U.S. economy added 3.1 million jobs last year, more than the 2.7 million earlier estimated, despite the Fed’s aggressive rate hikes. This week, Fed Chair Jerome Powell said the job market need not necessarily weaken to get progress on inflation, which fell sharply from 5.5% at the start of last year, to 2.6% by the end by the Fed’s preferred measure.But continued outsized job gains could add to the Fed’s caution about easing policy too soon.”The Fed would be very wary of cutting into a reaccelerating economy,” wrote Evercore ISI economists. “Strong growth and employment makes the Fed want to accumulate more evidence subdued inflation can continue.”The central bank on Wednesday kept its benchmark overnight interest rate in the 5.25%-5.50% range, where it has been since July. Powell said that would likely mark the peak, and that rate cuts would only come once policymakers have “greater confidence that inflation is moving sustainably down to 2%.”Data delivering a sufficient degree of confidence was unlikely to be in hand before the Fed’s meeting next month, Powell said. Fed Governor Michelle Bowman, speaking at a banking conference late Friday in Hawaii, cautioned against cutting rates “too soon.” She said that the strong job growth suggested last year’s labor market rebalancing was stalling out and accelerating wage increases posed upside inflation risk. To Chicago Fed President Austan Goolsbee, though, the jobs report was reassuring.”We wouldn’t want to make much of any one month, but the continued strength of the labor market, if that continues, would lessen my worry that the job market side of our mandate is deteriorating,” Goolsbee told the Wall Street Journal in an interview. Rising worker productivity may mean Fed officials will need to rethink how much economic and employment growth can occur without stoking inflation, he said, according to the paper. So while some analysts may see the strong hiring as a reason for the Fed to wait on rate cuts, “you can’t really do that if there are positive supply shocks working their way through the system.” Some Wall Street analysts that had held on to their forecasts for a March rate cut abandoned those Friday in favor of May or June. Traders of rate-future contracts are now pricing in an 80% chance the Fed will leave rates on hold next month but begin a series of five quarter-point rate cuts at their April 30-May 1 meeting.REVISIONS, SKEPTICISMSome analysts downplayed the January jobs report, noting that statistical adjustments meant to account for seasonal patterns in hiring and firing may end up overstating the strength of job gains.Other recent data appears to encourage faith in inflation’s further decline this year along with worries about the labor market, including a string of strong productivity data and reports of rising layoffs. Analysts and Fed policymakers will watch next Friday’s annual revision to the estimates for consumer inflation, which fell by almost half to 3.4% by December. Last year’s update to the prior year’s consumer price index data erased what had looked like good progress on inflation in 2022, and Fed Governor Christopher Waller says he will be watching this year’s revisions closely. CBS’ “60 Minutes” program on Sunday will air an interview with Powell conducted on Thursday. It was not clear if the Fed chair, who gets early access to critical economic data, had the jobs report in hand at the time of the interview. More

WASHINGTON (Reuters) – U.S. President Joe Biden will put forth his proposed U.S. spending plan on March 11, according to the White House Office of Management and Budget.The document is a wish-list for how the government should spend its money in the fiscal year starting in October. It takes on special symbolic significance in a year when the Democratic president is seeking re-election.Congress would need to pass Biden’s proposals for them to take effect. Republican control of the House of Representatives, and particularly the influence of a hard-line group of Republicans loyal to likely Biden 2024 opponent Donald Trump, make agreement hard to come by.The two sides are currently in a standoff over immigration policy, with Republicans holding up an October request by Biden for $61 billion for Ukraine as it battles Russian invaders and $14 billion for Israel in the aftermath of the Oct. 7 raids by Hamas.Last March, Biden traveled to a union hall in the competitive election state of Pennsylvania to present a $6.8 trillion budget plan that included higher taxes on the wealthy and more spending from the military to healthcare subsidies.That plan was never enacted in any way close to the way the president proposed, with Biden and congressional lawmakers engaged in tense negotiations over short-term spending deals to prevent the government from having to shut down.Congress still has not fully funded the government for the current fiscal year, which ends in September.Last month, they signed their third stopgap funding bill, known as a “continuing resolution” or “CR,” which extends last fiscal year’s spending levels until two deadlines of March 1 and March 8 for various government agencies. Lawmakers will need to pass additional bills providing for the full-year budget. More

“My baseline outlook is that inflation will decline further with the policy rate held at the current level,” Bowman said in remarks prepared for delivery to a banking conference in Maui, Hawaii, noting that recent declines in inflation have been “encouraging.” If inflation continues to decline sustainably toward the Fed’s 2% goal, she said, “it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive.”But stronger-than-expected job market data published Friday suggests a pickup in wage growth and a stalling out of last year’s progress toward labor market rebalancing, she said, adding that labor market tightness could keep underlying inflation elevated. “I will remain cautious in my approach to considering future changes in the stance of policy,” Bowman said. “Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run.” Bowman voted with her Fed colleagues on Wednesday to keep the Fed’s policy rate on hold in the 5.25%-5.5% range, where it has been since last July. Most Fed policymakers expect a round of rate cuts this year, with markets currently betting they will begin at their April 30-May 1 meeting. More

NEW YORK (Reuters) – Robust U.S. economic data is confronting investors with an unexpected question: whether strong growth can keep driving stocks higher even if the Federal Reserve delivers less monetary-policy easing than the market had hoped.Expectations that the Fed would pivot to cutting rates sent stocks soaring at the end of 2023 and pushed the S&P 500 to a record high in January. The index is up 4% this year after surging 24% in 2023.That narrative has been jolted by evidence that the economy may be running too hot for the Fed to cut rates without risking an inflationary rebound. Friday’s blockbuster U.S. employment number was the latest sign of stronger-than-expected growth, after Fed Chairman Jerome Powell days earlier deflated hopes the central bank would begin lowering rates in March.”Looking back on the fourth quarter and the recent rally in stocks, a lot of it was driven from the thought of a Fed pivot, and the Fed pivot is evaporating in front of our eyes,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.Market expectations of a near-term rate cut dimmed after the jobs data, with futures tied to the Fed’s main policy rate reflecting a 70% chance of the central bank lowering borrowing costs at its May 1 meeting, from over 90% on Thursday, according to the CME FedWatch Tool. The probability of a March cut stood at about 20%, from just under 50% a week ago.With Friday’s jobs report, “the six or seven rate cuts that markets had been pricing in seems very offside,” Seema Shah, chief global strategist at Principal Asset Management, said in a written commentary.Friday’s jobs report showed nonfarm payrolls increased by 353,000 jobs last month – well above the 180,000 increase expected by economists polled by Reuters. The economy also added 126,000 more jobs in November and December than previously reported.Plenty of investors believe the strong growth is a positive for stocks, especially if accompanied by better-than-expected corporate earnings. The S&P 500 hit a fresh high on Friday after the jobs data, helped by the soaring shares of Facebook parent Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN), which rose 20% and 8%, respectively, following their corporate results.For 2024, S&P 500 earnings are expected to jump nearly 10% after a 3.6% rise in 2023, according to LSEG data. Those expectations will be tested in the coming week with another heavy batch of reports, including from Eli Lilly (NYSE:LLY), Walt Disney (NYSE:DIS) and ConocoPhillips (NYSE:COP).”I’ll trade a stronger economy with less rate cuts than a weaker economy with more rate cuts,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.Analysts at Capital Economics forecast a “banner” year for U.S. stocks, finishing 2024 over 10% above current levels at 5,500. Optimism over the business potential of artificial intelligence, which helped power stocks such as Nvidia (NASDAQ:NVDA) last year, will likely drive those gains, they said.However, sustained above trend growth poses another issue – fears of an inflationary rebound.”January job growth figures were strong, possibly too strong,” said Russell Price, chief economist at Ameriprise, in a Friday note. “There were multiple signs of strong wage growth which could filter through to resurgent … inflation pressures if maintained.”A longer period of high interest rates also could increase stress for areas of the economy that are already hurting such as commercial real estate.Shares of New York Community Bancorp (NYSE:NYCB), a major CRE lender in New York, have tumbled in recent days, setting off broader regional banking concerns, after the company slashed its dividend and posted a surprise loss.Ramped-up growth, along with expectations of rates staying at current levels for longer, could drive Treasury yields up. Higher yields can pressure equities because they compete with stocks for investors, while higher rates raise the cost of capital in the economy.The benchmark 10-year Treasury yield, which moves inversely to bond prices, hit 4.05% on Friday.Investors are still pricing in around 125 basis points of Fed cuts this year, LSEG data shows. That is down from around 150 basis points priced in earlier this week, but still far more than the 75 basis points the Fed has projected. More

U.S. employers added 353,000 jobs in January, far exceeding forecasts, and revised figures showed last year was even stronger than previously reported.The United States produced an unexpectedly sizable batch of jobs last month, a boon for American workers that shows the labor market retains remarkable strength after three years of expansion.Employers added 353,000 jobs in January on a seasonally adjusted basis, the Labor Department reported on Friday, and the unemployment rate remained at 3.7 percent.The report also put an even shinier gloss on job growth for 2023, including revisions that added more than 100,000 to the figure previously tallied for December. All told, employers added 3.1 million jobs last year, more than the 2.7 million initially reported.After the loss of 14 percent of the nation’s jobs early in the Covid-19 pandemic, the labor market’s endurance despite aggressive interest rate increases has caught economists off guard.“I think everyone is surprised at the strength,” said Sara Rutledge, an independent economics consultant. “It’s almost like a ‘pinch me’ scenario.”Ms. Rutledge helped tabulate the National Association for Business Economics’ latest member survey, which found rising optimism that the country would avoid a recession — matching a turnaround in measures of consumer sentiment as inflation has eased.Unemployment has been under 4 percent for 24 monthsUnemployment rate More

Factory orders gained 0.2% after rebounding 2.6% in November, the Commerce Department’s Census Bureau said on Friday. The increase was in line with economists’ expectations. Orders increased 0.8% on a year-on-year basis in December. Manufacturing, which accounts for 10.3% of the economy, is being constrained by high interest rates. The outlook is, however, promising. The Federal Reserve left interest rates unchanged on Wednesday. Fed Chair Jerome Powell told reporters that rates had peaked and would move lower in coming months. The Institute for Supply Management’s manufacturing PMI neared the recovery zone in January.Civilian aircraft orders gained 0.4% in December after soaring 84.1% in November, while orders for motor vehicles, parts and trailers increased 0.9%. There were also increases in orders for primary metals, computers and electronic products as well as electrical equipment, appliances and components.Shipments of manufactured goods were unchanged. Manufactured goods inventories edged up 0.1%, while unfilled orders increased 1.3% after rising by the same margin in November. The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.2% instead of 0.3% as estimated last month.Shipments of these so-called core capital goods were unchanged instead of edging up 0.1% as previously reported. Business spending on equipment rebounded slightly in the fourth quarter. More

Economies all over the world are lowering inflation while avoiding serious recession — but growth in the United States stands out.The world is starting 2024 on an optimistic economic note, as inflation fades globally and growth remains more resilient than many forecasters had expected. Yet one country stands out for its surprising strength: the United States.After a sharp pop in prices rocked the world in 2021 and 2022 — fueled by supply chain breakdowns tied to the pandemic, then oil and food price spikes related to Russia’s invasion of Ukraine — many nations are now watching inflation recede. And that is happening without the painful recessions that many economists had expected as central banks raised interest rates to bring inflation under control.But the details differ from place to place. Forecasters from the Federal Reserve to the International Monetary Fund have been most surprised at the remarkable strength of the U.S. economy, while growth in places like the United Kingdom and Germany remains more lackluster. The question is why America has pulled out ahead of other developed economies in the pack.The I.M.F. said this week that it expected the United States to grow 2.1 percent, a sharp upgrade from the previous estimate of 1.5 percent. Other major advanced economies are also expected to grow, albeit less quickly. The euro area is expected to notch out 0.9 percent growth, as is Japan, and the United Kingdom is forecast to expand by 0.6 percent. “This is a good situation, let’s be honest, this is a good economy,” Jerome H. Powell, the chair of the U.S. Federal Reserve, said at a news conference this week — two of nearly 20 times that he called the data “good” during his remarks.Evidence of that strength continued on Friday, when a blockbuster jobs report showed that employers had added 353,000 jobs in January and wages grew at a rapid clip.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