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    Congress Grasps for Stimulus Deal as Fed Dispute Poses Final Hurdle

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Latest Vaccine InformationU.S. Deaths Surpass 300,000F.A.Q.AdvertisementContinue reading the main storySupported byContinue reading the main storyCongress Grasps for Stimulus Deal as Fed Dispute Poses Final HurdleLeaders struggled to clear away the last sticking points in the $900 billion compromise plan, including a stubborn disagreement over the central bank’s lending powers.Senator Pat Toomey, Republican of Pennsylvania, at the Capitol on Saturday. His proposal on the Federal Reserve is the primary issue remaining in efforts to finalize a $900 billion stimulus deal.Credit…Stefani Reynolds for The New York TimesEmily Cochrane and Dec. 19, 2020, 7:32 p.m. ETWASHINGTON — Congressional leaders worked feverishly on Saturday to resolve an impasse over a Republican push to curtail the powers of the Federal Reserve that was threatening to derail a compromise $900 billion stimulus plan, racing against a Sunday-night deadline to avoid a government shutdown.After a monthslong impasse on a pandemic aid package, Democrats and Republicans were tantalizingly close to completing the emergency plan to rush direct payments, unemployment benefits and food and rental assistance to millions of Americans, relief to businesses, and provide funds for vaccine distribution.But with time running out for a deal, they remained divided over a proposal by Senator Patrick J. Toomey, Republican of Pennsylvania, to ensure the termination of a series of pandemic relief programs created this year by the Fed and potentially curtail the central bank’s ability to fight financial crises in the future.“We’re right within reach,” Speaker Nancy Pelosi privately told House Democrats in a party conference call on Saturday. But she said Mr. Toomey’s late-stage demands to rein in the Fed were slowing the process.By Saturday evening, Senator Richard J. Durbin of Illinois, the second-ranking Democrat, said the dispute had cost negotiators another day in their efforts to cement a deal.“It won’t be tonight,” Mr. Durbin said. “It really is up to Mr. Toomey at this point, what he will accept.”Everything else, he said, is “pretty close.”The emerging deal would send direct payments of $600 to many Americans and provide enhanced federal jobless payments of $300-per-week until early spring. It would also provide hundreds of billions of dollars to prop up small businesses, schools and other institutions struggling amid the pandemic.But Democrats said that Mr. Toomey’s proposal, which has been embraced by Republicans, amounted to an attempt to undercut President-elect Joseph R. Biden Jr. and his administration’s ability to continue supporting the country’s economic recovery.As drafted, it would prevent the Fed and the Treasury Department from re-establishing programs that have helped to keep credit flowing to municipal borrowers, medium-sized businesses and corporations during the pandemic recession. It would also bar the creation of “similar” programs going forward.Lawmakers and aides in both parties acknowledged that the Fed provision presented the most significant hurdle to a final agreement, even though negotiators were still haggling over a number of outstanding technical details, including how to provide for food assistance and the scope of unemployment benefits.Senator Chuck Schumer of New York, the Democratic minority leader, criticized the Toomey proposal.Credit…Stefani Reynolds for The New York TimesSenator Chuck Schumer, Democrat of New York and the minority leader, said on the Senate floor that Mr. Toomey’s language was the “number one outstanding issue.”With government funding set to lapse Sunday and both chambers hoping to merge the stimulus package with a catchall measure to cover all federal spending for the remainder of the fiscal year, time was dwindling to find a resolution.The Coronavirus Outbreak More

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    How May We Serve You? For Restaurant Chains, It Depends on the Location

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyHow May We Serve You? For Restaurant Chains, It Depends on the LocationLarge dine-in chains are finding it difficult to enact uniform approaches to the pandemic when dealing with different regulations across the country about how they can operate.With 43 locations scattered across the United States, Fogo De Chão has been dealing with a patchwork of pandemic regulations. At this location, in Rosemont Ill., only two panels of an outdoor structure must be kept open.Credit…Lyndon French for The New York TimesJulie Creswell and Dec. 18, 2020, 5:00 a.m. ETExecutives at the Brazilian steakhouse chain Fogo de Chão thought they had seen the worst of it.Earlier in the year, when seemingly each hour brought news of another city or state abruptly shutting down because of the pandemic, executives switched from email to the messaging system WhatsApp to communicate in real time with the general managers of their 43 U.S.-based restaurants scattered around the country.“The first time we heard a state issue a stay-at-home order we were like, ‘What does that mean? What are they talking about?’” said Barry McGowan, the chief executive of Fogo de Chão. “Then it was like dominoes falling. Boom. Boom. Boom.”Communicating with vendors was hit or miss. Trucks full of food pulled up to restaurants that had been closed.The restaurant chain created a takeout menu in just three days. It reached out to landlords to negotiate breaks on its leases. And as orders to stay closed were lifted, it spent about $1 million renting tents and other equipment to set up outdoor dining at many of its restaurants where indoor dining was still restricted.For a while, it worked. Diners flocked to the restaurants and spent lavishly. Before the pandemic, Fogo de Chão sold about 500 premium steaks, like Wagyu and Tomahawk rib-eyes, per week. That shot up to 1,300 per week by July.But with virus cases rising again across the country, new restrictions have been placed on indoor and outdoor dining, though they are far from uniform (no indoor dining in Philadelphia, Chicago and New York City, indoor dining curfews in New Jersey and Massachusetts, no restaurant dining at all in much of California). For larger dine-in chains like Fogo de Chão, the ever-changing patchwork of rules poses a particular logistical challenge: How do you come up with a companywide approach when different locations are dealing with their own specific regulations?For a while, Fogo de Chão was selling more premium steaks per week during the pandemic than it had previously.Credit…Lyndon French for The New York Times“What you have is a massive deviation from standard in terms of how a chain is operating restaurant locations in different states, which then requires a whole set of processes and management to make sure that you comply with the regulations,” said Sean Ryan, a partner at Kearney, a consulting firm. “It’s costly and time consuming.”Restaurants must work with local health departments that hand down specific guidance on measures that must be taken to prevent the spread of the virus. Some require outdoor dining tents or structures that have no more than two walls to provide adequate ventilation. Others want three sides of tents to remain open.And just as they did earlier in the pandemic, restaurants are quickly adapting once again, by shifting deliveries of food, alcohol, linens and other products from locations that are temporarily closed to ones that remain open. Some are doing the same with personnel.“Restaurateurs are in a state of despair,” said Phil Kafarakis, an industry analyst and the former chief innovation officer for the National Restaurant Association. “People are in total panic mode right now and are starting to take drastic measures to continue to survive.”The restaurant industry has been clobbered by the coronavirus pandemic this year. By some estimates, nearly 110,00 restaurants have permanently closed and 2.1 million employees remained unemployed as of October. Several large casual and upscale dining chains like Chuck E. Cheese, California Pizza Kitchen and some Il Mulino restaurants spiraled into bankruptcy.The new restrictions come at a rough time since the holiday season is typically the busiest period for the industry.Some local health departments require restaurants to set up outdoor dining tents or structures that have no more than two walls. Others want three sides of tents to remain open.Credit…Lyndon French for The New York TimesMaggiano’s Little Italy chain, which operates over 50 restaurants in the United States, typically would be filled with company parties and family celebrations at this time of year.Business & EconomyLatest UpdatesUpdated Dec. 18, 2020, 7:11 a.m. ETStocks close the week on an uncertain note.Catch up: Coinbase files for initial public offering.Restaurant chains are finding it difficult to navigate differing regulations.But because of various dining restrictions, 2020 would be different, executives at Brinker International, which owns Maggiano’s and Chili’s Grill and Bar, warned Wall Street analysts in September. “Our anticipation right now is we won’t see that same similar environment playing out,” said Joe Taylor, Brinker’s chief financial officer. This week, Brinker withdrew its guidance for the quarter as a number of its locations were again shut down.Still, in many ways, the large dine-in chains are better positioned for the new restrictions than they were in the spring.“There were so many unknown variables during the springtime,” said R.J. Hottovy, an analyst at the consulting firm Aaron Allen & Associates. “This time around, restaurant operators had a specific game plan in place.”Left with empty dining rooms, casual and upscale dining chains moved quickly to beef up or offer to-go options the first time around. They launched curbside pickup and signed on with food delivery partners like DoorDash and Grubhub. Some states loosened liquor laws, allowing chains to offer alcoholic beverages for takeout. And when restaurants were allowed to serve diners again, with restrictions, many rented tents or opened up patios to create outdoor seating.But chains saw uneven performance among their restaurants.By the end of summer, Olive Garden restaurants were averaging $70,000 in sales per week. But sales at the chain’s superstar restaurant in Times Square in New York, which was offering only takeout during the summer, plummeted to $17,500 per week, down from roughly $288,000 per week, executives of Darden Restaurants, which owns Olive Garden, LongHorn Steakhouse and The Capital Grille, told Wall Street analysts in September.Sales at the Olive Garden in Times Square plunged to $17,500 per week during the summer, when it was serving only takeout, down from roughly $288,000 per week.Credit…Gabby Jones for The New York TimesDarden’s stock, along with that of many restaurant companies, bounced back this fall and winter, partly on the success many have had in offering to-go or outdoor dining, as well as the expectation that diners will return in droves to eating out once vaccines become widely available in the United States.“Chain restaurants, like humans, are amazingly adaptable entities,” said Mr. Ryan of Kearney.Indeed, just a few weeks ago, the caipirinhas flowed freely and $135 Wagyu rib-eye steaks sizzled as they were delivered to diners under a tent at the Beverly Hills location of Fogo de Chão. The location was the chain’s busiest, but many of its other restaurants were also rebounding strongly.By early November, the chain, which in based in Plano, Texas, and was acquired in 2018 by the investment firm Rhone Capital, was making 93 percent of the revenues it had made at the same time last year and had hired back about 90 percent of the employees who had been furloughed earlier in the year. Sixteen of its restaurants located largely in states with fewer dining restrictions were seeing higher sales than those last year.But as states have put in new restrictions, Fogo de Chão has gone back to its earlier playbook. It is moving food around and a few weeks ago reached out again to landlords to negotiate lease payments.Many large chains, including Olive Garden, saw uneven performance among their restaurants during the pandemic.Credit…Gabby Jones for The New York TimesThe once-bustling tent in Beverly Hills sits empty after health officials shut down outdoor dining in Los Angeles County for three weeks. About 2,300 miles away in a suburb of Detroit, another tent sits empty. Fogo de Chão had to remove three sides of the tent, per local health regulations, and now has to figure out a way to add barriers to block the freezing winds.But inside a cozy “Winter Wonderland”-themed tent in Rosemont, Ill., a suburb of Chicago, where restaurants need only two side panels open, customers are able to nosh on shrimp cocktails and sip on bottles of South American wine every night as they sit around heaters and under twinkling lights with Christmas music spilling through speakers.In an effort to keep as many workers employed as possible, Fogo de Chão is offering to shift some employees from locations that are temporarily closed to ones that are thriving, including those in Las Vegas, Orlando, Dallas and Rosemont.“Our goal is to keep our employees employed through the holidays,” Mr. McGowan said. “Our hope is that in January we can open up our patios and tents in parking lots again. And then, the vaccine will come and hopefully, by March or April, we’re back to some sort of normal.”AdvertisementContinue reading the main story More

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    Unemployment Claims Show Impact of Layoffs as Virus Surges

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyUnemployment Claims Show Impact of Layoffs as Virus Surges“It’s going to be a challenging few months,” one economist says. A new pandemic relief bill from Congress could soften the blow.Vacant retail shops in Columbus, Ohio. The rate of jobless claims has been rising as coronavirus cases remain high across the country.Credit…Maddie McGarvey for The New York TimesDec. 17, 2020, 6:25 p.m. ETThe surge in coronavirus cases is rippling through the economy, forcing employers to lay off workers at an extraordinarily high rate even as new vaccines and the possibility of more federal aid offer hope for next year.The number of Americans filing initial claims for unemployment insurance remained elevated last week, the Labor Department reported Thursday. After dropping earlier in the fall, claims have moved higher, dwarfing the pace of past recessions.Consumer caution, coupled with new restrictions on business activity like indoor dining, has pummeled the hospitality industry, lodging, airlines and other service businesses. The debut of a coronavirus vaccine offers the prospect of relief, but until mass inoculations begin next year, the economy will remain under pressure.“Businesses are closing, and as a result, we are seeing job losses mount — and that’s exactly what we were fearful of going into the winter,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “It’s going to be a challenging few months, no doubt.”Already, the pace of retail sales has dipped, as has the rate of overall economic growth. Few expect coronavirus cases to ease this winter, further holding back economic activity, but progress on a new aid bill on Capitol Hill could soften the blow.Last week brought 935,000 new claims for state benefits, compared with 956,000 the previous week. Adjusted for seasonal variations, last week’s figure was 885,000, an increase of 23,000.There were 455,000 new claims for Pandemic Unemployment Assistance, a federally funded program for part-time workers, the self-employed and others ordinarily ineligible for jobless benefits. That total, which was not seasonally adjusted, was up 40,000 from the week before.The move to limit business and consumer activity by government authorities was evident in the new data. In Illinois, which banned indoor dining on Nov. 20, claims rose by over 35,000. In California, where restrictions went into effect on Dec. 3, new filings jumped by nearly 24,000.At the end of November, more than 20 million workers were collecting unemployment benefits under state or federal programs, Labor Department data indicates. Although the unemployment rate fell to 6.7 percent in November from a high of 14.7 percent in April, the persistent layoffs highlight the economic fragility of many Americans.Business & EconomyLatest UpdatesUpdated Dec. 17, 2020, 4:35 p.m. ETThe Washington Post has 3 million digital subscribers.Coinbase, a top cryptocurrency company, files for initial public offering.Amazon wrongfully fired a worker in retaliation for organizing, a labor agency says.“We are not moving in the right direction,” said Gregory Daco, chief U.S. economist at Oxford Economics. “With the looming expiration of benefits, it’s even more worrisome.”The pain in the labor market is particularly acute for less-skilled workers, whose jobs and finances have been hit much harder than those of more affluent Americans.The S&P 500, the Dow Jones industrials and the Nasdaq composite index closed at record highs Thursday, capping a strong rally in recent weeks. Initial public offerings have been white-hot, minting thousands of paper millionaires in Silicon Valley and elsewhere.The housing market, too, has been robust, propelled by low interest rates that make mortgages more affordable as city dwellers escape to the suburbs.Total wages and salaries have bounced back to where they before the pandemic, at $9.6 trillion a month, after dipping below $8.7 trillion at the depths of the recession in the spring. But the proportion of Americans in the labor force remains well below where it was a year ago, underscoring the deep hole the economy is slowly working its way out of.Republican and Democratic leaders in Congress continued talks on Thursday on another pandemic relief bill, something that economists have warned is overdue. Without action, two key programs for unemployed workers — Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, which provides extra weeks of aid after state benefits end — will expire this month, cutting off payments to millions.In addition to extending those programs, the $900 billion package is expected to include stimulus payments of $600 to individuals, a $300 weekly supplement to unemployment benefits, and rental and food assistance. The $2.2 trillion CARES Act, approved in March, has been credited with helping the economy survive the depths of the lockdown in many parts of the country last spring. But partisan battles in Washington have held up renewed federal assistance for months.Economists have warned that without a new aid package from Washington, economic growth could be flat in the first quarter of 2021. What’s more, the abrupt end of unemployment benefits for millions could put a further crimp in consumer spending.Data released on Wednesday showed a 1.1 percent drop in retail sales in November, a disappointing start to the crucial holiday season. Gus Faucher, chief economist at PNC Financial Services, expects economic growth to be weak for the next few months before picking up later in 2021.“Until we get a lot of people vaccinated, the economy will face a difficult test,” he said. “I don’t know if we will see an outright contraction or the loss of jobs, but the pace of improvement will slow markedly.”AdvertisementContinue reading the main story More

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    Fed Leaves Rates Unchanged and Commits to Ongoing Bond Purchases

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Latest Vaccine InformationU.S. Deaths Surpass 300,000F.A.Q.AdvertisementContinue reading the main storySupported byContinue reading the main storyFed Leaves Rates Unchanged and Commits to Ongoing Bond PurchasesCentral bank officials left rates near-zero at their December meeting and tied bond buying to their employment and price goals.Jerome H. Powell, the Federal Reserve Chair, said Wednesday that the central bank will keep interest rates near zero to support the economy as coronavirus cases surge nationwide, adding that “a full economic recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.”CreditCredit…Al Drago for The New York TimesDec. 16, 2020Updated 5:26 p.m. ETWASHINGTON — Federal Reserve officials pledged to help the economy through the painful pandemic era, making clear at their final meeting of the year that the central bank would continue cushioning businesses and households by keeping interest rates at rock bottom and buying government-backed debt for the foreseeable future.The Fed’s chair, Jerome H. Powell, said at a news conference after the meeting that the central bank would keep its effort to bolster demand going “for some time,” adding that the “the next few months are likely to be very challenging.”The Fed cut interest rates to near-zero in March and has been buying about $120 billion in government-backed debt each month to soothe markets and help shore up growth. The central bank explicitly tied its bond-buying program to its goals of full employment and stable inflation in its December policy statement. The move suggested that the Fed expected to continue its purchases for some time, given how far the economy is from meeting those goals.The committee said the Fed would continue to increase its holdings of Treasury securities at the current pace “until substantial further progress has been made toward the committee’s maximum employment and price stability goals.”Mr. Powell said the policy decisions were intended to show that the Fed would “deliver powerful support to the economy until the recovery is complete.”He used his post-meeting remarks to paint a picture of a bifurcated economy, one in which many businesses and households face acute economic pain in the near-term, coupled with the expectation that the economy would snap back once vaccines were widely available — a development that he guessed could come about as soon as midyear.The United States could then see a long period of unbroken growth, Mr. Powell predicted, signaling that he and his colleagues were prepared to leave rates low for years on end as they try to return the labor market and broader economy to full strength.Government policies are “trying to work together to try to create a bridge across this economic chasm that was created by the pandemic, and for many Americans, that bridge is there, and they’re across it,” he said.“But there’s a group for which they don’t have a bridge yet,” Mr. Powell added, suggesting later that more help from Congress is needed to help fill the gap. “It’s the 10 million people who lost their jobs, it’s the people who may lose their homes. You see the many, many millions of Americans who are waiting in food lines in their cars these days.”He said the economy would need the Fed’s support for some time because while officials expect it to grow at a healthy clip starting in the middle of next year, “it is going to be a while before we really are back to the levels of labor market conditions that we had early this year.”The central bank’s summary of economic projections, released Wednesday, underlined Mr. Powell’s patient point. They showed that Fed officials had a slightly more optimistic outlook for growth and unemployment at the end of 2020 and in coming years than they had been in September. The central official now sees unemployment declining to 5 percent in 2021, versus a previous prediction of 5.5 percent, and sees gross domestic product coming in at 4.2 percent versus 4 percent.Despite that upgrade, the median Fed official continued to project interest rates near-zero through the end of 2023, demonstrating the central bank’s plan to move glacially coming out of the crisis.While the Fed promised to do what it could to help the economy, Mr. Powell also stressed its limitations. He repeated his call for more fiscal stimulus, saying that the continuing rise in virus cases and the lapse in funding for several programs that were helping households and businesses stay afloat posed challenges.The Coronavirus Outbreak More

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    How Are You Managing the Holidays in a Pandemic?

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Latest Vaccine InformationU.S. Deaths Surpass 300,000F.A.Q.AdvertisementContinue reading the main story$900 Billion Pandemic Relief Deal Takes Shape: Live Business UpdatesHow Are You Managing the Holidays in a Pandemic?Dec. 16, 2020, 11:31 a.m. ETDec. 16, 2020, 11:31 a.m. ETCredit…Philip Cheung for The New York TimesThe economic upheaval caused by the pandemic is making this a very unusual holiday season.Millions have lost jobs and face the imminent loss of federal unemployment benefits. For many, plans for travel and shopping outings have been upended because of health restrictions or financial hardship. For those with the opportunity to take on extra hours or seasonal work, there may be an incentive to do so.How are you celebrating differently this year? What economic or personal choices have you had to make in observing the holidays? Are you cutting back on meals — or adjusting your charitable giving? We’d like to know about your situation and your plans.We may reach out to you individually to chat some more about these questions, so please let us know if you’d be willing to share additional details with us.We will not publish any part of your submission without contacting you first.

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    Fed Closes Out Wild Year as All Eyes Focus on Bond-Buying Program

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyFed Closes Out Wild Year as All Eyes Focus on Bond-Buying ProgramThe central bank’s meeting will wrap up Wednesday, as the Fed stares down a bifurcated economic outlook.Jerome H. Powell, the Federal Reserve chair, will likely need to walk a narrow line as he tries to explain how the Fed will proceed.Credit…Al Drago for The New York TimesDec. 16, 2020, 5:00 a.m. ETWASHINGTON — The Federal Reserve is wrapping up what might be the most activist year in its history with a final scheduled policy meeting this week, one at which it is expected to leave interest rates at rock bottom and to signal continued willingness to help the economy through the challenging pandemic era.Any policy changes out of this week’s gathering are expected to concentrate on the Fed’s large-scale bond-buying program, which it began in March. For a time, it pledged to buy as much government-backed debt as needed to help keep markets functioning before it settled into a steady pace of purchases. But the fate of that program is just one of several momentous questions that lie ahead.In the coming months, the policy-setting Federal Open Market Committee — a mix of governors in Washington and regional Fed presidents — will have to decide whether to ramp up or dial back bond purchases from the current pace of $120 billion per month, what specifically to buy, and how to communicate when they will stop.Fed governors, who oversee bank regulation, will have to consider in 2021 whether to extend tweaks put in place because of the pandemic. And Jerome H. Powell, the Fed chair, and his new, Democratic counterpart at the Treasury Department will have to decide whether to restart emergency loan programs that outgoing Treasury Secretary Steven Mnuchin is ending on his way out the door. Democrats have urged their renewal, and Republicans have warned against it.All of those decisions will be set against a fragmented economic backdrop: The recovery is sputtering in the near-term as the coronavirus spreads and keeps holiday travelers and shoppers at home, but the economy is expected to rebound sharply as a vaccine becomes widely available. The Fed’s monetary policies work with a lag, and the stark divide across time will make calibrating next steps all the more challenging.Mr. Powell will give his assessment of the economic outlook and answer reporter questions at a news conference following the 2 p.m. release of the Fed’s December policy statement. Officials will also release their quarterly economic estimates, which will offer a sense of what path they expect the unemployment rate, inflation and interest rates to follow over the coming years.Mr. Powell will likely need to walk a narrow line as he tries to explain how the Fed will proceed. Many investors are looking for more economic help in the near-term, and anything perceived as complacency could rattle them. Yet his colleagues, in recent speeches, have been divided over how much more the Fed needs to do now, which could make it difficult for the chair — who speaks, in part, as a representative for the Federal Open Market Committee — to present a conclusive message.The Fed has enacted a sweeping series of responses to cushion American workers and businesses against the pandemic’s economic fallout. It slashed interest rates to near-zero in March, rolled out its bond-buying campaign to soothe troubled markets, and unveiled a spate of programs to keep credit flowing to states and cities, small and medium-sized businesses and corporations.Those measures have largely achieved their goals. The central bank averted a financial system meltdown, borrowing costs have held at low levels across many credit markets, and interest rate-sensitive sectors like housing roared back after lockdowns. Yet the next stage could be harder: Millions of people remain out of work nine months into the crisis, many businesses are teetering on the brink, and while a vaccine is in sight, widespread immunity might still be months away.The Fed is also low on new tricks, but not entirely out of them. Officials could, as early as this week’s meeting, change the way they are buying bonds in order to have more of an economic impact.Policymakers are mulling whether to shift toward longer-term debt and away from short-term notes. That wonky maneuver may seem technical, but it could have the effect of holding down borrowing costs on things like mortgages and business loans and, in doing so, set the stage for stronger growth.“The economy is far more sensitive to longer-term rates,” said Priya Misra, global head of rates strategy at TD Securities. She pointed out that without Fed action, longer-term rates will rise as a deluge of Treasury securities enter the market to fund the government’s pandemic spending.But it is not a slam-dunk that such a change will happen at this meeting. Regional Fed presidents have expressed lukewarm appetite for changing the so-called quantitative easing, or Q.E., programs now.“If we need to offer more support or we need to prop up the support that we’ve offered, we can use Q.E. for that, including changing the duration,” Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said in a recent question-and-answer session. “But if you look at financial markets right now, I see no indication that they are misunderstanding where we’re headed and that we need to somehow do something different to get financial markets where we need them to be.”Business & EconomyLatest UpdatesUpdated Dec. 16, 2020, 6:52 a.m. ETStocks are rising as pandemic relief talks and vaccine developments advance.Advocacy groups are rushing to get aid to renters before a federal cutoff date.Companies crucial to vaccine distribution are seeing a flurry of investments.Conditions are evolving quickly. Since the Fed entered its premeeting quiet period, during which officials do not give speeches, virus cases have continued to climb, several real-time data points have pointed to economic weakening, and rates on the closely-watched 10-year Treasury bond have crept higher, making many types of credit a bit more expensive. At the same time, vaccines have been approved and early disbursement has begun.Even if the Fed leaves the contours of its bond-purchase program unchanged for now, economists think the central bank might update the way it talks about its plans for the future. The central bank has indicated that it might offer guidance on how long it plans to buy assets to keep markets performing smoothly and bolster the economy “fairly soon.” That is likely to entail tying its bond-buying plans to qualitative — rather than numbers-based — economic goals.J.P. Morgan analysts think officials might link the buying to the course of the virus by saying that they will “continue purchases for as long as the public health crisis weighs on economic activity,” Michael Feroli, the bank’s chief U.S. economist, wrote in a research note.Economists at Goldman Sachs expect the Fed to pledge that purchases will continue “until the labor market is on track to reach maximum employment and inflation is on track to reach 2 percent.”That wide gap in expectations, even among top Fed-watching firms, underlines why this could be a fraught meeting for Mr. Powell. Disappointing investor expectations could roil markets, but it is not entirely clear what market participants expect.The Fed’s November meeting minutes also raised the possibility that the Fed might take a look at the types of bonds it is buying. The Fed is currently buying about $80 billion worth of Treasury debt and $40 billion in mortgage-backed securities — or M.B.S. — per month. But the minutes show that a few officials worried that “maintaining the current pace of agency M.B.S. purchases could contribute to potential valuation pressures in housing markets.”Whatever tweaks do come are likely to cut in the direction of more overall support for the economy. There are still about 10 million fewer jobs than in February, real-time indicators of consumer spending are coming in soft as virus cases surge, and jobless claims are rocketing higher once again, dimming the near-term outlook.“As economic momentum slows and Covid cases surge, we look for monetary policymakers to fortify the bridge that supports the economy until vaccinations become widely available,” Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, wrote in a note previewing the meeting.The Fed will release a new set of quarterly economic projections at this meeting, and they are expected to reflect a more dire outlook in the near-term but also a stronger bounceback later on. But even with the vaccines coming, wild cards remain — including how much congressional support the economy will get in the near-term.Lawmakers are trying to hash out a compromise deal that would send households money and offer companies support, but Democrats and Republicans have remained divided over issues including liability protection and aid for state and local governments.The lack of a deal so far is one reason that Goldman Sachs economists expect the shift toward buying longer-dated debt at this meeting.“Although no one is under any illusions that a maturity extension is an adequate substitute for a fiscal package in offsetting the impact of the virus resurgence on businesses and workers, it might do some good,” they wrote in a research note. “At the very least, Fed officials might be weary of disappointing market expectations for an easing action in difficult times.”AdvertisementContinue reading the main story More

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    Fed Joins Climate Network, to Applause From the Left

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyFed Joins Climate Network, to Applause From the LeftThe central bank joined a network of global financial regulators focused on climate risk. The response to the move underlined its tricky politics.“The public will expect that we do figure out what are the implications of climate change for financial stability, and that we do put policies in place,” Jerome H. Powell, the Fed chair, said this month at a Senate hearing.Credit…Al Drago for The New York TimesDec. 15, 2020, 4:34 p.m. ETWASHINGTON — The Federal Reserve is joining a network of central banks and other financial regulators focused on conducting research and shaping policies to help prepare the financial system for the effects of climate change.The Fed’s board in Washington voted unanimously to become a member of the Network of Central Banks and Supervisors for Greening the Financial System, it said in a statement on Tuesday. The central bank began participating in the group more than a year ago, but its formal membership is something that Democratic lawmakers have been pushing for and that Republicans have eyed warily.The Fed’s halting approach to joining underlines how politically fraught climate-related issues remain in the United States.The network exists to help central banks and other regulators exchange ideas, research and best practices as they figure out how to account for environment and climate risk in the financial sector. While the Fed had participated informally, its decision to join as a member is the latest sign of its recognition that the central bank must begin to take extreme weather events into account as they occur with increasing frequency and pose a growing risk to the financial system — whether doing so is politically palatable or not.“The public will expect that we do figure out what are the implications of climate change for financial stability, and that we do put policies in place,” Jerome H. Powell, the Fed chair, said this month at a Senate hearing. “The broad response to climate change on the part of society really needs to be set by elected representatives — that’s you. We see implications of climate change for the job that you’ve given us, and that’s what we’re working on.”Still, the latest move could incite a backlash. The announcement comes shortly after Republican House members urged Mr. Powell and the vice chair for supervision, Randal K. Quarles, in a letter on Dec. 9 not to join the network “without first making public commitments” to accept only policies that would not put the United States at a disadvantage or have “harmful impacts” on American bank customers.Republicans have been particularly concerned that increased attention to climate risk by financial regulators could imperil credit access for fossil fuel and other energy companies. For instance, banks might be less likely to extend credit to those industries if regulators viewed such loans as risky and made them harder to provide.Mr. Powell had recently emphasized that the Fed was likely at some point to join the network alongside its peers, including the Bank of England and Bank of Japan, and the central bank first indicated last month that it would soon be joining the group. Mr. Quarles said during congressional testimony that the Fed was in the process of requesting membership and expected that it would be granted, in response to questions from Senator Brian Schatz, Democrat of Hawaii.“Now that they have joined this international effort, I will expect them to take further concrete steps towards managing climate risks,” Mr. Schatz said in a statement in response the announcement on Tuesday. “That includes setting clear supervisory expectations for how banks should manage their climate risk exposure, and using tools like stress testing to hold them accountable.”The Fed did not comment on why it decided to join now and — despite several requests since Mr. Quarles’s statement — would not say when the central bank had applied to join. Joining the network requires a formal email request from a central bank’s leader or head of supervision.The move is the latest step in an evolution in which the Fed, which once rarely spoke publicly about the issue, has paid more public attention to climate change.Business & EconomyLatest UpdatesUpdated Dec. 15, 2020, 4:17 p.m. ETEuropean Central Bank will lift ban on bank dividends, a sign of cautious optimism.Top congressional leaders met to discuss a stimulus deal and a year-end spending bill before the deadline on Friday.European truck makers say they will phase out fossil fuel vehicles by 2040.The Federal Reserve Bank of San Francisco, led by Mary C. Daly, held the system’s first conference on climate last year. Lael Brainard, a Fed governor and the lone Democrat on the central bank’s board in Washington, spoke there, and she has delivered other remarks on the topic. For the first time, the Fed’s financial stability report this year included an in-depth section on financial risks posed by climate change.Even so, the Fed has been more reticent than many of its peers when it comes to embracing a role in working to alleviate climate change and manage its fallout. The Bank of England has unveiled its plans to run banks through climate stress tests — which will test how their balance sheets will fare amid extreme weather events — though they have been postponed by the coronavirus pandemic. The president of the European Central Bank, Christine Lagarde, has indicated that her central bank is considering whether it should take climate into account when buying corporate debt.Climate change is a partisan topic in the United States, so more aggressive action to combat it could open up the Fed — which prizes its independence — to political attack. The Trump administration denied or questioned the science behind climate change, and though the incoming administration of Joseph R. Biden Jr. is poised to make it a top issue, many Republican lawmakers stand ready to police the Fed’s embrace of climate-related policy.“I’m going to be raising this issue much more vociferously — I think my colleagues will as well,” Representative Andy Barr, Republican of Kentucky and the lead signatory on the Dec. 9 letter, said in an interview on Monday. Mr. Barr said he was concerned that the Fed might move toward carrying out climate stress tests or put in place other policies that would make it harder for oil and coal companies to gain access to credit.Democrats will struggle to get policies like the so-called Green New Deal through Congress, he said, and he worries they will try to carry out their policy objectives through the “backdoor” of financial regulation. Mr. Barr said both Mr. Quarles’s statement that the Fed would be joining the Network of Central Banks and Supervisors for Greening the Financial System and Mr. Powell’s recent comments caught his attention.“The enormous power of the Fed should not be weaponized to discriminate against a wide swath of American industry,” he said.But in a demonstration of the competing pressures on the central bank, groups that applauded the Fed’s announcement on Tuesday painted joining the network as merely a first step.“Given that it is responsible for the safety and security of the world’s largest economy, we hope that it will not only catch up with central banks around the world, but, in time, lead the way in addressing systemic financial risk,” Steven M. Rothstein, the managing director of the Ceres Accelerator for Sustainable Capital Markets, said in a statement. The group works with investors and has been pushing for the Fed to join the network, including in a report and letter this year.“Our economy deserves no less,” Mr. Rothstein said.AdvertisementContinue reading the main story More