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    Fed Is in No Rush to Cut Rates as Economy Holds Up

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    Federal Reserve officials are expected to leave interest rates unchanged at their meeting this week. They will also release a fresh set of economic projections.Federal Reserve officials are entering an uncertain summer. They are not sure how quickly inflation will cool, how much the economy is likely to slow or just how long interest rates need to stay high in order to make sure that quick price increases are fully vanquished.What they do know is that, for now, the job market and broader economy are holding up even in the face of higher borrowing costs. And given that, the Fed has a safe play: Do nothing.That is the message central bankers are likely to send at their two-day meeting this week, which concludes on Wednesday. Officials are expected to leave interest rates unchanged while avoiding any firm commitment about when they will cut them.Policymakers will release a fresh set of economic projections, and those could show that central bankers now expect to make just two interest rate cuts in 2024, down from three when they last released forecasts in March. Economists think that there is a small chance that officials could even predict just one cut this year. But whatever they forecast, officials are likely to avoid giving a clear signal of when rate reductions will begin.Investors do not expect a rate cut at the Fed’s next meeting in July, after which policymakers will not meet again until September. That gives officials several months of data and plenty of time to think about their next move. And because the economy is holding up, central bankers have the wiggle room to keep rates unchanged as they wait to see if inflation will decelerate without worrying that they are on the brink of plunging the economy into a sharp downturn.“They’ll continue to suggest that rate cuts are coming later this year,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities. He said that he expected a reduction in September, and that he did not think the Fed would give any hint at timing this week.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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    Feeling Consumers’ Pain, Retailers Bring Back Discounts

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    The pandemic shopping boom led many stores and brands to widen profit margins by charging more. Now value is the watchword as shoppers grow choosier.U.S. consumers, fatigued by a three-year bout of inflation, want lower prices. And large retailers that have increased prices, partly to contend with their own rising costs, appear to be responding to customer concerns — to an extent.Walgreens said last week that it was lowering prices on over 1,000 items. Target recently announced modest price cuts on 5,000 food products and household goods. Craft and furniture stores like Michael’s and Ikea have also said they will drop prices on popular items.A broader range of companies have indicated on quarterly earnings calls that they plan to slow price increases and seek other ways to expand profitability.Signaling empathy with customers facing higher living costs is an increasingly important marketing strategy, retail analysts say. But regardless of motivation, a shift is in motion that may help ease inflation in the coming months.“Retailers have recognized they have to make some movement on pricing because the customer now is getting to the point where they’re shopping around more, they’re cutting down on the amount that they buy,” said Neil Saunders, managing director at GlobalData Retail, a research and consulting firm.In some ways, the industry seems to be entering a new phase.After a slog for retailers during much of the 2010s, when they often resorted to heavy discounts to gain or maintain market share, the pandemic upended consumer habits. Suddenly, bank accounts were buoyed by emergency federal aid, and millions of consumers unable or unwilling to spend on in-person services shifted to buying goods.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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    Why Are People So Down About the Economy? Theories Abound.

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    Things look strong on paper, but many Americans remain unconvinced. We asked economic officials, the woman who coined “vibecession” and Charlamagne Tha God what they think is happening.The U.S. economy has been an enigma over the past few years. The job market is booming, and consumers are still spending, which is usually a sign of optimism. But if you ask Americans, many will tell you that they feel bad about the economy and are unhappy about President Biden’s economic record.Call it the vibecession. Call it a mystery. Blame TikTok, media headlines or the long shadow of the pandemic. The gloom prevails. The University of Michigan consumer confidence index, which looked a little bit sunnier this year after a substantial slowdown in inflation over 2023, has again soured. And while a measure of sentiment produced by the Conference Board improved in May, the survey showed that expectations remained shaky.The negativity could end up mattering in the 2024 presidential election. More than half of registered voters in six battleground states rated the economy as “poor” in a recent poll by The New York Times, The Philadelphia Inquirer and Siena College. And 14 percent said the political and economic system needed to be torn down entirely.What’s going on here? We asked government officials and prominent analysts from the Federal Reserve, the White House, academia and the internet commentariat about what they think is happening. Here’s a summary of what they said.Kyla Scanlon, coiner of the term ‘Vibecession’Price levels matter, and people are also getting some facts wrong.The most common explanation for why people feel bad about the economy — one that every person interviewed for this article brought up — is simple. Prices jumped a lot when inflation was really rapid in 2021 and 2022. Now they aren’t climbing as quickly, but people are left contending with the reality that rent, cheeseburgers, running shoes and day care all cost more.“Inflation is a pressure cooker,” said Kyla Scanlon, who this week is releasing a book titled “In This Economy?” that explains common economic concepts. “It hurts over time. You had a couple of years of pretty high inflation, and people are really dealing with the aftermath of that.”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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    GDP Gain in First Quarter Revised Downward in U.S.

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    Consumers eased up on spending in the face of rising prices and high interest rates, Commerce Department data shows.Economic growth slowed more sharply early this year than initially estimated, as consumers eased up on spending amid rising prices and high interest rates.U.S. gross domestic product, adjusted for inflation, grew at a 1.3 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down from 3.4 percent in the final quarter of 2023 and below the 1.6 percent growth rate reported last month in the government’s preliminary first-quarter estimate.The data released on Thursday reflects more complete data than the initial estimate, released just a month after the quarter ended. The government will release another revision next month.The preliminary data fell short of forecasters’ expectations, but economists at the time were largely unconcerned, arguing that the headline G.D.P. figure was skewed by big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger.The revised data may be harder to dismiss. Consumer spending rose at a 2 percent annual rate — down from 3.3 percent in the fourth quarter, and 2.5 percent in the preliminary data for the last quarter — and measures of underlying demand were also revised down. An alternative measure of economic growth, based on income rather than spending, cooled to 1.5 percent in the first quarter, from 3.6 percent at the end of 2023.Still, the new data does little to change the bigger picture: The economy has slowed but remains fundamentally sound, buoyed by consumer spending that remains resilient even after the latest revisions. That spending is supported by rising incomes and the result of a strong job market that features low unemployment and rising wages. There is still no sign that the recession that forecasters spent much of last year warning about is imminent.Business investment, a sign of confidence in the economy, was actually revised up modestly in the latest data. Income growth, too, was revised up.Inflation, however, remains stubborn. Consumer prices rose at a 3.3 percent annual rate in the first three months of the year, slightly slower than in the preliminary data but still well above the Federal Reserve’s long-run target of 2 percent.In response, policymakers have raised interest rates to their highest level in decades and have said they will keep them there until inflation cools further. The modestly slower growth reflected in Thursday’s data is unlikely to change that approach.The Fed will get a more up-to-date snapshot of the economy on Friday, when the government releases data on inflation, income and spending in April. More

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    Walmart Opens the Year With Stronger Sales and Profit

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    The NewsWalmart, the largest retailer in the United States, on Thursday reported higher sales and profit in the first quarter, giving insight into how consumer spending is weathering the high-interest-rate environment.Walmart has performed better than retailers dependent on apparel sales, in part because it sells essential goods like groceries.Cj Gunther/EPA, via ShutterstockThe Numbers: Sales grew in stores and especially online.Walmart said its comparable-store sales in its U.S. business rose 3.8 percent from the quarter a year earlier. Its global e-commerce business jumped 21 percent. Walmart has performed better than retailers dependent on apparel sales, in part because it also sells essential goods like groceries. Consumers are continuing to find places to cut back on their purchasing.Transactions were up 3.8 percent, while the average ticket price showed with each visit people were spending about the same as they did this time last year. The retailer said consumers from “upper-income households” helped it gain market share, reiterating a trend it has noted since Americans started navigating high inflation a couple of years ago.Walmart’s quarterly profit, of $5.1 billion, was triple the result a year earlier.The retailer’s stock rose in premarket trading, as investors reacted to last quarter’s results and the company’s upgraded forecast for growth this year.What They’re Saying: Smooth sailing on a choppy sea.“In a sea of challenged and volatile and confusing consumer spending,” said David Silverman, a retail analyst at Fitch Ratings, “what’s interesting is how strong and consistent this quarter and many of Walmart’s last few quarters have been.” He said Walmart’s focus as a value-oriented retailer had been a strength during this period.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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    U.S. Economy Grew at 1.6% Rate in First-Quarter Slowdown

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    Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year.The U.S. economy remained resilient early this year, with a strong job market fueling robust consumer spending. The trouble is that inflation was resilient, too.Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down sharply from the 3.4 percent growth rate at the end of 2023 and fell well short of forecasters’ expectations.Economists were largely unconcerned by the slowdown, which stemmed mostly from big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger, offering no hint of the recession that forecasters spent much of last year warning was on the way.“It would suggest some moderation in growth but still a solid economy,” said Michael Gapen, chief U.S. economist at Bank of America. He said the report contained “few signs of weakness overall.”But the solid growth figures were accompanied by an unexpectedly rapid acceleration in inflation. Consumer prices rose at a 3.4 percent annual rate in the first quarter, up from 1.8 percent in the final quarter of last year. Excluding the volatile food and energy categories, prices rose at a 3.7 percent annual rate.Taken together, the first-quarter data was the latest evidence that the Federal Reserve’s efforts to tame inflation have stalled — and that the celebration in financial markets over an apparent “soft landing” or gentle slowdown for the economy had been premature.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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    Why Better Times (and Big Raises) Haven’t Cured the Inflation Hangover

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    Frustrated by higher prices, many Pennsylvanians with fresh pay raises and solid finances report a sense of insecurity lingering from the pandemic.A disconnect between economic data and consumer sentiment is being felt by Pennsylvania residents, including, from left, Donald Woods, a retired firefighter in West Philadelphia; Darren Mattern, a nurse in Altoona; and Lindsay Danella, a server in Altoona.Left: Caroline Gutman for The New York Times. Center and right: Ross Mantle for The New York TimesIn western Pennsylvania, halfway through one of those classic hazy March days when the worst of winter has passed, but the bare trees tilting in the wind tell everyone spring is yet to come, Darren Mattern was putting in some extra work.Tucked at a corner table inside a Barnes & Noble cafe in Logan Town Centre, a sprawling exurban shopping complex in Blair County, he tapped away at two laptops. His work PC was open with notes on his clients: local seniors in need of at-home health care and living assistance, whom he serves as a registered nurse. On his sleeker, personal laptop he eyed some coursework for the master’s degree in nursing he’s finishing so he can work as a supervisor soon.Mr. Mattern, warm and steady in demeanor, says the “huge blessing” of things evident in his everyday life at 35 — financial security, a home purchase last year, a baby on the way — weren’t possible until recently.He had warehouse jobs for most of his 20s, making a few dollars above minimum wage (in a state where that’s still $7.25 an hour), until he took nursing classes in the late 2010s. Shortly after becoming certified, he pushed through long days in a hospital during the height of the Covid pandemic at a salary of $40,000. Today, he has what he calls “the best nursing job pay-wise I’ve ever had,” at $85,000.Mr. Mattern’s trajectory is one bright line in a broad upward trend that hundreds of thousands of Pennsylvanians, and millions of other Americans, have experienced since the pandemic recession — a comeback in which unemployment has been below 4 percent for the longest stretch since the 1960s, small-business creation has flourished and the stock market has reached new heights.There’s a disconnect, however, between the raw data and a national mood that is somewhat improved but still sour. A surge in average weekly pay and full-time employment has helped offset the demoralizing effects of a two-year bout of heavy inflation as the global economy chaotically reopened. But it has not neutralized them.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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    Consumers Hate ‘Price Discrimination,’ but They Sure Love a Discount

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    The Wendy’s debacle is a warning shot for brands: If you want to play with prices, make sure to communicate why and whom it could help.It’s been a strange and maddening couple of years for consumers, with prices of essential goods soaring and then sinking, turning household budgets upside down.Listen to this article with reporter commentaryOpen this article in the New York Times Audio app on iOS.Perhaps that’s why, in late February, the internet revolted over Wendy’s plan to test changing its menu prices across the day. If the Breakfast Baconator winds up costing $6.99 at 7 a.m. and $7.99 three hours later, what in life can you really count on anymore?The company later issued a statement saying it would not raise prices during busy parts of the day, but rather add discounts during slower hours. Nevertheless, the episode won’t stop the continued spread of so-called dynamic pricing, which describes an approach of setting prices in response to shifting patterns of demand and supply. It might not even stop the growth of “personalized pricing,” which targets individuals based on their personal willingness to pay.And in many circumstances, customers may come around — if they feel companies are being forthright about how they’re changing prices and what information they’re using to do it.“There’s a need for some transparency, and it has to make sense to consumers,” said Craig Zawada, a pricing expert with PROS, a consultancy that helped pioneer dynamic pricing by airlines in the 1980s and now works across dozens of other industries. “In general, from a buyer standpoint, there has to be this perception of fairness.”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