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Americans Growing Worried About Losing Their Jobs, Labor Survey Shows

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The New York Fed’s labor market survey showed cracks just as Jerome H. Powell, the Fed chair, prepares for a closely watched Friday speech.Americans are increasingly worried about losing their jobs, a new survey from the Federal Reserve Bank of New York released on Monday showed, a worrying sign at a moment when economists and central bankers are warily monitoring for cracks in the job market.The New York Fed’s July survey of labor market expectations showed that the expected likelihood of becoming unemployed rose to 4.4 percent on average, up from 3.9 percent a year earlier and the highest in data going back to 2014.In fact, the new data showed signs of the labor market cracking across a range of metrics. People reported leaving or losing jobs, marked down their salary expectations and increasingly thought that they would need to work past traditional retirement ages. The share of workers who reported searching for a job in the past four weeks jumped to 28.4 percent — the highest level since the data started — up from 19.4 percent in July 2023.The survey, which quizzes a nationally representative sample of people on their recent economic experience, suggested that meaningful fissures may be forming in the labor market. While it is just one report, it comes at a tense moment, as economists and central bankers watch nervously for signs that the job market is taking a turn for the worse.The unemployment rate has moved up notably over the past year, climbing to 4.3 percent in July. That has put many economy watchers on edge. The jobless rate rarely moves up as sharply as it has recently outside of an economic recession.But the slowdown in the labor market has not been widely backed up by other data. Jobless claims have moved up but remain relatively low. Consumer spending remains robust, with both overall retail sales data and company earnings reports suggesting that shoppers continue to open their wallets.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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    Alzheimer’s Takes a Financial Toll Long Before Diagnosis, Study Finds

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    New research shows that people who develop dementia often begin falling behind on bills years earlier.Long before people develop dementia, they often begin falling behind on mortgage payments, credit card bills and other financial obligations, new research shows.A team of economists and medical experts at the Federal Reserve Bank of New York and Georgetown University combined Medicare records with data from Equifax, the credit bureau, to study how people’s borrowing behavior changed in the years before and after a diagnosis of Alzheimer’s or a similar disorder.What they found was striking: Credit scores among people who later develop dementia begin falling sharply long before their disease is formally identified. A year before diagnosis, these people were 17.2 percent more likely to be delinquent on their mortgage payments than before the onset of the disease, and 34.3 percent more likely to be delinquent on their credit card bills. The issues start even earlier: The study finds evidence of people falling behind on their debts five years before diagnosis.“The results are striking in both their clarity and their consistency,” said Carole Roan Gresenz, a Georgetown University economist who was one of the study’s authors. Credit scores and delinquencies, she said, “consistently worsen over time as diagnosis approaches, and so it literally mirrors the changes in cognitive decline that we’re observing.”The research adds to a growing body of work documenting what many Alzheimer’s patients and their families already know: Decision-making, including on financial matters, can begin to deteriorate long before a diagnosis is made or even suspected. People who are starting to experience cognitive decline may miss payments, make impulsive purchases or put money into risky investments they would not have considered before the disease.“There’s not just getting forgetful, but our risk tolerance changes,” said Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine who has studied dementia’s impact on people’s finances. “It might seem suddenly like a good move to move a diversified financial portfolio into some stock that someone recommended.”Tell us about your family’s challenges with money management and Alzheimer’s. More

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    How Long Will Interest Rates Stay High?

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    It’s pricey to borrow to buy a business, car or home these days. Interest rates are expected to fall in coming years — how much is up for debate.Dr. Alice Mills was thinking of selling her veterinary practice in Lexington, Ky., this year, but she decided to put the move off because she worried that it would be difficult to sell in an era of rising interest rates.“In a year, I think that there’s going to be less anxiety about the interest rates, and I’m hoping that they’re going to go down,” Dr. Mills, 69, said. “I have to put my faith in the fact that the practice will sell.”Dr. Mills is one of many Americans anxiously wondering what comes next for borrowing costs — and the answer is hard to guess.It is expensive to take out a loan to buy a business or a car in 2023. Or a house: Mortgage rates are around 7 percent, up sharply from 2.7 percent at the end of 2020. That is the result of the Federal Reserve’s campaign to cool the economy.The central bank has lifted its policy interest rate to a range of 5.25 to 5.5 percent — the highest level in 22 years — which has trickled out to increase borrowing costs across the economy. The goal is to deter demand and force sellers to stop raising prices so much, slowing inflation.But nearly a year and a half into the effort, the Fed is at or near the end of its rate increases. Officials have projected just one more in 2023, by a quarter of a point, and the president of the Federal Reserve Bank of New York, John C. Williams, said in an interview that he didn’t see a need for more than that.“We’re pretty close to what a peak rate would be, and the question will really be — once we have a good understanding of that — how long will we need to keep policy in a restrictive stance, and what does that mean?” Mr. Williams said on Aug. 2.The economy is approaching a pivot point, one that has many consumers wondering when rates will come back down, how quickly and how much.“Eventually monetary policy will need over the next few years to get back to a more normal — whatever that normal is — a more normal setting of policy,” Mr. Williams said.So far, the jury is out on what normal means. Fed officials do expect to cut interest rates next year, but only slightly — they think it could be several years before rates return to a level between 2 and 3 percent, like their peak in the years before the pandemic. Officials do not forecast a return to near zero, like the setting that allowed mortgage rates to sink so low in 2020.That’s a sign of optimism: Rock-bottom rates are seen as necessary only when the economy is in bad shape and needs to be resuscitated.In fact, some economists outside the Fed think that borrowing costs might remain higher than they were in the 2010s. The reason is that what has long been known as the neutral rate — the point at which the economy is not being stimulated or depressed — may have risen. That means today’s economy may be capable of chugging along with a higher interest rate than it could previously handle.A few big changes could have caused such a shift by increasing the demand for borrowed money, which props up borrowing costs. Among them, the government has piled on more debt in recent years, businesses are shifting toward more domestic manufacturing — potentially increasing demand for factories and other infrastructure — and climate change is spurring a need for green investments.Whether that proves to be the case will have big implications for American companies, consumers, aspirational homeowners and policymakers alike.John C. Williams, president of the Federal Reserve Bank of New York.Jeenah Moon for The New York TimesKristin Forbes, an economist at the Massachusetts Institute of Technology, said it was important not to be too precise about guessing the neutral rate — it moves around and is hard to recognize in real time. But she thinks it might be higher than it was in the 2010s. The economy back then had gone through a very weak economic recovery from the Great Recession and struggled to regain its vigor.“Now, the economy has learned to function with higher interest rates,” Ms. Forbes said. “It gives me hope that we’re coming back to a more normal equilibrium.”Many economists think slightly higher rates would be a good thing. Before the pandemic, years of steadily declining demand for borrowed money depressed rates, so the Fed had to cut them to rock bottom every time there was an economic crisis to try to encourage people to spend more.Even near-zero rates couldn’t always do the trick: Growth recovered only slowly after the 2008 recession despite the Fed’s extraordinary efforts to coax it back.If demand for money is slightly higher on a regular basis, that will make it easier to goose the economy in times of trouble. If the Fed cuts rates, it will pull more home buyers, entrepreneurs and car purchasers off the sidelines. That would lower the risk of economic stagnation.To be sure, few if any prominent economists expect rates to stay at higher levels like those that prevailed in the 1980s and 1990s. Those who expect rates to stay elevated think the Fed’s main policy rate could hover around 4 percent, while those who expect them to be lower see something more in the range of 2 to 3 percent, said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics in Washington.That is because some of the factors that have pushed rates down in recent years persist — and could intensify.“Several of the explanations for the decline in long-term interest rates before the pandemic are still with us,” explained Lukasz Rachel, an economist at University College London, citing things like an aging population and low birthrates.When fewer people need houses and products, there is less demand for money to borrow to construct buildings and factories, and interest rates naturally fall.Such factors are enough for Mr. Williams, the New York Fed president, to expect neutral rates to stick close to their prepandemic level. He also pointed to the shift toward internet services: Streaming a movie on Netflix does not require as much continuing investment as keeping video stores open and stocked.“We are moving more and more to an economy that doesn’t need factories and lots of capital investment to produce a lot of output,” Mr. Williams said, later adding that “I think the neutral rate is probably just as low as it was.”That has some big implications for monetary policy. When inflation of around 3 percent is stripped out, the Fed’s policy rate sits at about 2.25 to 2.5 percent in what economists call “real” terms. That is well above the setting of 1 percent or less that Mr. Williams sees as necessary to start weighing on the economy.If price increases continue to fall, the Fed will inadvertently be clamping down on the economy harder in that “real” sense if it holds its policy interest rate steady, Mr. Williams said. That means officials will need to cut rates to avoid overdoing it, he said — perhaps even as soon as early next year.“I think it will depend on the data, and depend on what’s happening with inflation,” Mr. Williams said when asked if the Fed might lower interest rates in the first half of 2024. “If inflation is coming down, it will be natural to bring” the federal funds rate “down next year, consistent with that, to keep the stance of monetary policy appropriate.”For Dr. Mills, the Kentucky veterinarian, that could be good news, bringing partial retirement that much closer.“I would love to get back into zoo work,” she said, explaining that she had worked with big cats early in her career and would love to do so again once she sold her practice — which is itself cats only. “That’s something for retirement.” More

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    A Fed Official Wonders: ‘Do We Need to Do Another Rate Increase?’

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    The head of the powerful New York Fed said that it was an “open question,” and that rates could fall next year.John C. Williams, the president of the Federal Reserve Bank of New York, thinks that the central bank’s push to cool the economy is near its peak and that he expects that interest rates could begin to come down next year.In an interview on Aug. 2, Mr. Williams said that inflation was coming down as hoped, and that while he expected unemployment to rise slightly as the economy cooled, by how much was unclear.The upshot is that interest rates are unlikely to rise much further than the current range of 5.25 to 5.5 percent. Fed officials could also consider cutting them soon: Mr. Williams did not rule out the possibility of lowering rates in early 2024, depending on economic data. His comments are a sign that moderating inflation could pave the way for a shift in policy approach. After months of focusing single-mindedly on bringing inflation under control, officials are increasingly focused on not overdoing it as they try to ease the economy through a gentle cooling.Below are edited highlights of the interview. (Read the full transcript here.)I wonder if there is anything that is on your mind that you want to talk about?We’re seeing continued strength in the economy. At the same time, a lot of the indicators are moving in the right direction. We’ve seen the job openings and other indicators are telling us that supply and demand are moving closer together.On the inflation front I definitely think that the data are moving similarly in the right direction, but I think that similarly, the only way we’re really going to achieve the 2 percent inflation on a sustained basis is really to bring that balance back to the economy.Clearly we’re not in a recession, or anything like that — but we need to see that process of getting supply and demand, from both sides, coming back into balance.Do you think additional rate increases are necessary to achieve that?I think that’s an open question, honestly.I think we’ve got monetary policy in a good place, it is definitely restrictive, but we have to watch the data. Are we seeing the supply-demand imbalances continue to shrink, move in the right direction? Are we seeing the inflation data move in the right direction, in order to decide that?Of course, there is another question, which is: How long do we have to keep the restrictive stance of policy? And that I think it’s going to be driven by the data.Are we talking about one more rate increase or more?Given what I see today, from the perspective of the data that we have, I think — it’s not about having to tighten monetary policy a lot. To me, the debate is really about: Do we need to do another rate increase? Or not?I think we’re pretty close to what a peak rate would be, and the question will really be — once we have a good understanding of that, how long will we need to keep policy in a restrictive stance, and what does that mean.When you say “what does that mean,” what do you mean by that?I think of monetary policy primarily in terms of real interest rates, and we set nominal rates.[Note: Real interest rates subtract out inflation, while nominal rates include it. Estimates of the so-called “neutral” rate setting that neither heats nor cools the economy are usually expressed in inflation-adjusted, real terms.]Assuming inflation continues to come down, it comes down next year, as many forecast, including the economic projections, if we don’t cut interest rates at some point next year then real interest rates will go up, and up, and up. And that won’t be consistent with our goals. So I do think that from my perspective, to keep maintaining a restrictive stance may very well involved cutting the federal funds rate next year, or year after, but really it’s about how are we affecting real interest rates — not nominal rates.My outlook is really one where inflation comes back to 2 percent over the next two years, and the economy comes into better balance, and eventually monetary policy will need over the next few years to get back to a more normal — whatever that normal is — a more normal setting of policy.Could you see a rate cut in the first half next year?I think it will depend on the data, and depend on what’s happening with inflation. The first half of next year is still a ways off.I don’t think the issue is exactly the timing, or things. It’s really more that if inflation is coming down, it will be natural to bring nominal interest rates down next year, consistent with that, to keep the stance of monetary policy appropriate for an economy that’s growing, and for inflation moving to the 2 percent level.Is inflation falling faster than expected?I do think that overall P.C.E. inflation for the year will probably come in at 3 percent, that depends on a lot of different things, and I expect core inflation to be above that, based on all the information we’re seeing.I do think that we are moving to an environment already where the underlying inflation rate has come down quite a bit. Mainly because — or not mainly, but in large part because the shelter inflation has come down so much. That’s been such a big driver of core inflation over the last couple of years.Is it coming down as expected, or quicker than expected? How has this compared to what you would have forecast three months ago?The data have surprised me and everybody a lot the past couple of years, because of the pandemic, the war, Russia’s war in Ukraine, all the things that happen. Surprises in data have become more the norm. For me, personally, the inflation data have been coming in as I had expected — and also hoped.What do you see as that sustainable pace of job growth?A lot of the labor force growth we’ve seen over the past year or so has been a rebound, and a return to a strong labor market conditions after the pandemic. That can’t continue every year forever: I mean the high labor force participation can continue, but it can’t continue to grow and grow and grow forever.Like a 100,000, or 150,000, gain in monthly employment?I’m not sure exactly, but it’s more in that 100,000 range than where it is today. We can’t be really precise about what exactly that means.What about wage growth? How much do you think you need to get wage growth down in order to feel confident that inflation is going to come down?I view wage growth, in terms of your question, as more of an indicator, rather than a goal or a target. So I don’t sit there thinking: We need to see wage growth do one thing or another in the next year or two.We’re still in an economy where demand exceeds supply, it’s a strong labor market, clearly, and wage growth has been very strong and it’s higher than inflation.Now, in the longer run, when you think about — over the next five years or something — you would expect real wages, wages adjusted for inflation, to grow consistent with productivity trends. Right now, I don’t think that’s exactly what I’m focused on. I’m more focused on: what are all these indicators, all the different data telling us about the overall balance or imbalance between supply and demand and what that implies for inflation.Would you be comfortable skipping a rate increase in September?We get a lot of data between now and the September meeting, and we will have to analyze that and make the right decision. I personally don’t have any preference of what we need to do at a future meeting.From my perspective, we have gone from a place — a year, a year and a half ago, where the inflation was way too high, not moving in the right direction, and the risks were all on inflation being too high, to one where the risks are on both sides.We have the two-sided risks that we need to balance, making sure that we don’t do too much, and weaken the economy too much — more than we need to in order to achieve our goals — and at the same time make sure that we do enough to make sure that we convincingly bring inflation back to 2 percent.Do you think that unemployment needs to go up in order for inflation to come down?Right now the unemployment rate is below many people’s view of a long-run normal unemployment rate, but not by a lot. A few tenths or so. From that perspective, I would expect the unemployment rate would move back to a more normal level. Will it rise above that, in order to really get inflation back to 2 percent? I don’t know the answer to that, in my own projection, my own forecast, I expect that the unemployment rate will rise above 4 percent next year, but I can’t say with any conviction how much will that need to happen.What do you think the criteria will be for cutting interest rates next year?To me, I think the main criteria that I’m thinking about in my forecast, is that really about with inflation coming down, needing to adjust interest rates with that so that we’re not inadvertently tightening policy more and more just because inflation is down. That is my baseline forecast — obviously, if the economic outlook changes, or other factors happen, there are other reasons why you’d change interest rates.A risk that people are talking about right now is this possibility of not just no landing, but re-acceleration. It’s possible that the economy takes back off and you guys have to do more down the road. I wonder how you think about the possibility?It’s a possibility. Being data-dependent means that if we see the data moving in that direction, we’ll need to act appropriately, as we have in the past.To me I guess if that risk were to materialize, it probably would be more that, demand is a lot stronger than I had been expecting, and we probably need more restrictive policy to bring supply and demand back into balance.A question we get from our readers all the time is: Are mortgage rates ever going to go back down to where they were before the pandemic disruptions? And I wonder what you think of that, as the person who’s done all of the research on interest rates?My expectation is that over time, over years, real interest rates will actually come back down from the levels they’re at.I haven’t seen really any strong evidence that neutral rates have yet risen much beyond what they were, say before the pandemic.If there’s a risk of going back to very low neutral rates, which obviously carries this inherent risk of ending up back at zero, why not just raise the inflation target now? It seems like you could deal with two problems at once, both giving yourself more headroom and making it easier to hit the inflation target.I think the experience of the past few years has taught me that 4 percent inflation is not considered price stability — it has not felt like price stability by the general public, or quite honestly, by policymakers; 4 percent inflation seems very high in the modern world. 3 percent seems high; 2 percent was already the compromise, of saying: Why not go all the way to zero? And there’s some technical reasons that you might not want to go all the way to zero, but 2 percent was to provide a buffer.[When the Fed reviewed its approach to setting policy in 2020] I personally felt comfortable that a 2 percent target, along with a commitment to achieving 2 percent inflation on average over time, positioned us well to achieve those goals. More

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    Rules to Curb Illicit Dollar Flows Create Hardships for Iraqis

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    The regulations were meant to prevent dollar transfers to those targeted by U.S. sanctions on Iran, Syria and Russia. But they have ended up harming ordinary Iraqis who need U.S. currency for business or travel.BAGHDAD — When the United States and Iraq put tough new currency rules into effect recently, the intent was to stem the illicit flow of dollars to those targeted by U.S. sanctions on Iran, Syria and Russia, as well as to terrorist organizations and money launderers.But in a country with a primarily cash economy, the changes created unintended hardships for ordinary Iraqis who need dollars for legitimate business purposes or travel abroad. Dollars have run short, and the cost in Iraqi dinars at some local currency traders has surged.Long lines are forming early in the day outside money changers’ shops, where Iraqis planning to travel outside the country often turn up grasping plastic bags stuffed with dinars, which banks outside the country do not accept. These days, it’s not easy to find a money changer who still has dollars. And those who do run out early.“I don’t have any dollars left,” one currency trader, Abu Ali, said last week at his shop in Baghdad’s Karrada neighborhood.The new currency rules, worked out in an agreement between the United States and Iraq, require greater transparency surrounding the transfers of dollars held as foreign currency reserves for Iraq in an account at the Federal Reserve Bank of New York. They went into effect late last year.The agreement was part of a long-delayed modernization of Iraq’s financial system as it begins to conform to the rules that most countries follow and adapts to requirements for more transparency in international financial transactions.U.S. dollars being counted at an authorized currency dealer in Baghdad.Joao Silva/The New York TimesEvery day, the Central Bank of Iraq facilitates the withdrawal of a large sum of dollars from its account at the New York Fed. The transfers are critical because, in Iraq’s largely cash economy, only a few businesses accept credit cards and almost no ordinary Iraqis have one. Even bank accounts are a rarity.Some of the money is wired on behalf of Iraqi businesses to pay for goods from outside Iraq. Some of it is designated for currency exchanges and banks to distribute to Iraqis traveling abroad.But there has been little in the way of electronic footprints to help U.S. officials trace whether some of the transfers were ending up in the hands of parties targeted by U.S. sanctions.A dollar shortage affecting ordinary Iraqis is one of the unintended consequences of new and tougher rules worked out by Iraq’s central bank in concert with the U.S. Treasury and the Federal Reserve Bank of New York.Joao Silva/The New York TimesThe concerns date back to soon after the 2003 U.S. invasion of Iraq.At that time, American authorities tried unsuccessfully to document the chain of custody for billions of dollars transported to the country in cash over a period of years. In one instance, $1.2 billion from Iraq was found in a Lebanese bunker with no record of how it got there, according to a New York Times investigation in 2014.The U.S. Treasury wanted to ensure that dollars were not being sent in violation of U.S. law to fronts or agents for parties under sanctions or terrorist entities. In congressional testimony in 2016, for example, a top Treasury official noted three groups targeted by sanctions that were known to be active in Iraq: Al Qaeda, the Islamic State and the Iran-backed Lebanese militia Hezbollah.With the Islamic State’s takeover of northern Iraq in 2014, it seized of a branch of Iraq’s central bank and those worries became more urgent.The situation underscored the need for more transparency in dollar transfers to Iraq, according to a U.S. Treasury official, who asked not to be named because he is not authorized to speak with reporters.An authorized currency exchange. Joao Silva/The New York TimesAfter the Iraqis finally defeated the Islamic State in 2018, Iraqi and U.S. bankers and the Treasury began to discuss a new system for money transfers.Under the new regulations, both individuals and companies requesting wire transfers of dollars must disclose their own identity, and the identity of whoever is ultimately getting the money. That information is then reviewed by an electronic system as well as by experts at Iraq’s central bank and the New York Fed, before payment is made.The new system allows banks around the world to conduct automatic checks on transfers of money from Iraq to other countries, said Ahmed Tabaqchali, the chief strategist for Asia Frontier Capital’s Iraq fund.“In short, the system heightens the visibility of red flags,” he said.Waiting at a currency exchange in Baghdad.Joao Silva/The New York TimesNow, many requests are being rejected, said Mudher Salih, a former deputy head of Iraq’s central bank and now a financial policy adviser to Iraq’s new prime minister, Mohammed Shia al-Sudani. Sometimes, he said, that is because of suspect identities but other times it is because many Iraqi businesses do not have the requisite licenses to import goods or are not properly registered as commercial entities and therefore are in violation of Iraqi law.The rejections have created a shortage of dollars, which has sharply increased their cost for Iraqis with legitimate needs, he added.Since 2003, there have been two Iraqi dinar rates for buying dollars; an official rate established by Iraq’s central bank and an unofficial street rate, which is higher. And when dollars are scarce, the street price goes up.The difference between the two is creating hardships for Iraqis like Janna, a mother of four. She said she had been saving up to buy a refrigerator and had her eye on a German model that cost about $250. In October, that was the equivalent of 320,000 dinars. Today, because of the scarcity of dollars, the refrigerator would cost 375,000 dinars.“It’s more than I can afford,” she said.Shoppers in Baghdad’s busy Karrada neighborhood.Joao Silva/The New York TimesAfter the new currency rules took effect, the quantity of dollars flowing daily into Iraq fell sharply — on some days down by nearly 65 percent from $180 million to $67 million — compared with the period before the rules were implemented, according to daily cash flow numbers released by Iraq’s central bank.The influx of dollars has since picked up, but it is still often less than half of what it was before the new system was put in place.It is not clear exactly how much of the drop in dollars reflects illicit recipients who have now either stopped requesting money because they do not want to make the disclosures required by the new rules or because the Iraqi central bank or the New York Fed rejected their requests.“I would not put down to fraud the almost 90 percent drop,” said Douglas Silliman, president of the Arab Gulf States Institute in Washington and a former U.S. ambassador to Iraq. “Maybe it’s 45 percent fraud and 45 percent incompetence or just not knowing how to deal with the new regulations.”Iraq’s financial system is going through a long-delayed modernization as it begins to conform to the rules followed in many other countries.Joao Silva/The New York TimesYasmine Mosimann More

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    Fed Rate Increases Have ‘A Ways to Go,’ Top Official Says

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    Christopher Waller, a Federal Reserve governor, said he favored a quarter-point move. Many of his colleagues agree — or haven’t ruled it out.Christopher Waller, a Federal Reserve governor, added his voice on Friday to a chorus of central bank officials who favor slowing rate increases at the central bank’s Feb. 1 meeting. That most likely locks in place market expectations for a return to smaller policy adjustments after a series of jumbo rate moves.Mr. Waller spoke on the eve of the central bank’s quiet period before its meeting, which means investors will not hear any more commentary from Fed officials before they make their rate decision. His comments were in line with what many of his colleagues have said: Several openly support slowing down rate increases at the meeting, and top policymakers who haven’t made up their minds have not ruled it out.Central bankers raised rates rapidly in 2022, lifting borrowing costs in three-quarter-point increments for much of the year, before slowing to a half-point move in December. But they are entering a new phase that is focused more on how high interest rates rise and less on how quickly they get there. The thinking is that rates are now high enough to meaningfully slow the economy, and that adjusting them more gradually will give policymakers time to see how their policy is working.That has nudged policymakers toward a quarter-point increase, also known as 25 basis points, an increment that was common before the pandemic.“After climbing steeply and using monetary policy to significantly raise interest rates throughout the economy, it was apparent to me that it was time to slow, but not halt, the rate of ascent,” Mr. Waller said of the December downshift. “There appears to be little turbulence ahead, so I currently favor a 25-basis-point increase” at the Fed’s next meeting, he said.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    A Fed Pivot? Not Yet, Policymakers Suggest, as Rapid Inflation Lingers.

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    Federal Reserve officials on Tuesday made clear that they expected to continue raising rates to try to choke off the most rapid inflation in decades, putting them at odds with investors who had become more sanguine about the outlook for interest rate moves.Stocks prices rose following the Fed’s meeting last week, as investors celebrated what some interpreted as a pivot: Jerome H. Powell, the Fed chair, said the central bank would begin making rate decisions on a meeting-by-meeting basis, which Wall Street took as a signal that its rate moves might soon slow down.But a chorus of Fed officials has since made clear that a lurch away from rate increases is not yet in the cards.Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, said in an interview on LinkedIn on Tuesday that the Fed was “nowhere near” done raising interest rates. Charles L. Evans, the president of the Federal Reserve Bank of Chicago, told reporters that he would favor a half- or even a three-quarter-point rate increase in September.Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said in an interview late last week that he did not understand why markets were dialing back their expectations for Fed rate increases.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    E. Gerald Corrigan, Who Helped Ease ’87 Stock Crash, Dies at 80

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    As president of the Federal Reserve Bank of New York, he favored flooding the financial system with cash to restore confidence among investors.E. Gerald Corrigan, who as the aggressive president of the New York Federal Reserve Bank helped cushion Wall Street’s crash in the late 1980s, died on May 17 in a memory-care center in Dedham, Mass. He was 80.The cause was complications of Alzheimer’s disease, his daughter Elizabeth Corrigan said.As president of the Federal Reserve Bank in Minneapolis from 1980 to 1984 and then of the New York Fed from 1985 to 1993, Mr. Corrigan used his prerogatives as a regulator to help resolve national and global financial crises, and to remedy some of the causes of episodic market instability.“He played a crucial role providing the psychological reassurance for a few critical days after the stock market crash,” Paul A. Volcker, the former Federal Reserve Board chairman, said when Mr. Corrigan retired from the Fed in 1993, referring to his actions after the Dow Jones industrial average dropped more than 22 percent in a single day in October 1987.In that upheaval, Mr. Corrigan urged the Fed chairman, Alan Greenspan, to reassure the markets that the Federal Reserve would pump whatever money was necessary into the financial system to reduce volatility. He also played vital roles in other crises: He helped the Fed to address the collapse of the investment bank Drexel Burnham Lambert in 1989 and of Salomon Brothers in 1991, and to deal with rising inflation, emerging market debt and the need to regulate worldwide credit risk.After Mr. Corrigan retired from the Fed, he joined Goldman Sachs, where he became managing director in 1996 and later chairman of the firm’s international advisers, co-chairman of its business standards committee and the first nonexecutive chairman of its commercial bank, now known as Goldman Sachs Bank. He retired from Goldman in 2016.Edward Gerald Corrigan, known as Jerry, was born on June 13, 1941, in Waterbury, Conn. His father, Edward, was a restaurant manager. His mother, Mary (Hardy) Corrigan, was a librarian.He earned a Bachelor of Social Science degree in economics from Fairfield University in Connecticut in 1963. At Fordham University in New York, he received a master’s degree in economics in 1965 and a doctorate in the same subject in 1971. (Years later, he donated $5 million to each university to establish professorships.)After teaching for a year at Fordham, he joined the Federal Reserve Bank of New York as a researcher in 1968 while still working on his doctorate. When Mr. Volcker, the New York Fed’s president, became chairman of the Federal Reserve Board in 1979, he recruited Mr. Corrigan as a special assistant.During his tenure at the Fed, Mr. Corrigan was named chairman of the Basel Committee on Banking Supervision by the governors of the world’s central banks, a position he held from 1991 to 1993. He also served as vice chairman of the Federal Open Market Committee from 1984 to 1993. In 1992 he was named a co-chairman of the Russian-American Bankers Forum, which helped the former Soviet Union develop a market-driven banking and financial system.In addition to his daughter Elizabeth, Mr. Corrigan is survived by another daughter, Karen Corrigan Tate, from his marriage to Linda Barlow, which ended in divorce; his wife, Cathy Minehan, who was president of the Federal Reserve Bank of Boston from 1994 to 2007; his stepchildren, Melissa Minehan Walters and Brian Minehan; a sister, Patricia Carlascio; and five grandchildren.Mr. Corrigan’s romance with Ms. Minehan raised questions of a possible conflict of interest when she was at the Fed and he was at Goldman Sachs in the mid-1990s, but he said at the time that they had consulted lawyers to prevent leaks of sensitive information that might benefit his company.During his stewardship, the Fed was criticized for failing to curb abuses by the scandal-scarred Bank of Credit and Commerce International. But Mr. Corrigan said when he retired that “if it wasn’t for the Fed, there is a pretty good chance that B.C.C.I. would still be in business.”In his remarks in 1993, Mr. Volcker said Mr. Corrigan had “a good conceptual understanding of the financial world, but most importantly he knows how to get things done.”“That’s a rare quality in the bureaucratic world in which he has grown up,” Mr. Volcker added.When the market crashed in 1987, for example, Fed officials planned to deliver a turgid technical response.“I said that’s the last damn thing we need,” Mr. Corrigan was quoted as saying in Sebastian Mallaby’s “The Man Who Knew: The Life and Times of Alan Greenspan” (2016). “What we need is a statement that has about 10 words in it.”Mr. Greenspan took Mr. Corrigan’s advice, saying (in 30 words) that the Fed would make available whatever money was needed while Mr. Corrigan importuned major banks to continue lending to undergird the markets.When Mr. Corrigan retired from the Fed, he said he would take a job in private industry where “I’ll try to limit myself to working six days a week, instead of seven.” The aftermath of the market crash in 1987, he said, had been his most memorable moment.“In terms of my pulse rate,” he said, “that one takes the prize.”Mr. Corrigan at a meeting of a European Union committee in Brussels in 2010 to discuss the Greek economy. 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    Jerome Powell Confirmed for a Second Term as Fed Chair

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    Jerome Powell, whom the Senate confirmed to a second term on Thursday, said allowing rapid inflation to persist would be more painful.Jerome H. Powell, the Federal Reserve chair, said in an interview on Thursday that lowering inflation is likely to be painful but that allowing price gains to persist would be the bigger problem — squaring off with the major challenge facing his central bank as he officially starts his second term at its helm.Mr. Powell, whom Senators confirmed to a second four-year term at the head of the central bank in an 80-19 vote on Thursday, holds one of most consequential jobs in the United States and the world economy at a moment of rapid inflation and deep uncertainty.Consumer prices climbed 8.3 percent in April from the previous year, according to data reported on Wednesday. And while inflation eased slightly on an annual basis, it remained near the fastest pace in 40 years, and the details of the release suggested that price pressures continue to run hot.The Fed has already begun raising interest rates to try and cool the economy, making its largest increase since 2000 when it lifted borrowing costs by half a percentage point this month. Mr. Powell and his colleagues have signaled that they will continue to push rates higher as they try to restrain spending and hiring, hoping to bring demand and supply into balance and drive inflation lower.Mr. Powell suggested Thursday in an interview with Marketplace that an even bigger 0.75 percentage point interest rate increase, though not under consideration at the moment, could be appropriate if economic data come in worse than officials expect.“The process of getting inflation down to 2 percent will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels,” Mr. Powell also said. “That’s just people losing the value of their paycheck to high inflation and, ultimately, we’d have to go through a much deeper downturn.”Mr. Powell, who was chosen as a Fed governor by former President Barack Obama and then elevated to chair by former President Donald J. Trump, was renominated by President Biden late last year.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Interest Rates: As it seeks to curb inflation, the Federal Reserve began raising interest rates for the first time since 2018. Here is what the increases mean for consumers.State Intervention: As inflation stays high, lawmakers across the country are turning to tax cuts to ease the pain, but the measures could make things worse. How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Though he has been popular among lawmakers for much of his tenure, several Republicans and Democrats voted against the nomination. Senator Robert Menendez, Democrat from New Jersey, cited the central bank’s failure to promote Latino leaders. Senator Richard Shelby, Republican of Alabama, cited high inflation in opposing Mr. Powell, posting on Twitter that “we should not reward failure.”Inflation is likely to be the defining challenge of Mr. Powell’s second term. As Mr. Shelby’s comments suggest, the Fed has been criticized for responding too slowly to rapid price gains last year. Mr. Powell has emphasized that policymakers did the best they could with the data in hand.“If you had perfect hindsight, you’d go back and it probably would have been better for us to have raised rates a little sooner,” Mr. Powell said in his interview with Marketplace. “I’m not sure how much difference it would have made, but we have to make decisions in real time, based on what we know then, and we did the best we could.”With Mr. Powell’s confirmation, Mr. Biden has now appointed four of the Fed’s seven governors in Washington, putting his imprimatur on the central bank at a crucial moment.The Senate last month confirmed Lael Brainard, formerly a Fed governor, as Mr. Biden’s choice for the Fed’s vice chair, an influential position within the central bank.This week, the Senate confirmed two other new Fed governors — Lisa D. Cook and Philip N. Jefferson. Mr. Biden has also nominated Michael S. Barr as the new vice chair for supervision, and his confirmation hearing before the Senate Banking Committee is scheduled for next week.Ms. Brainard and Mr. Powell have long been aligned on policy, and the Fed’s newest governors — Ms. Cook and Mr. Jefferson — indicated during their confirmation hearings that they, too, are focused on fighting inflation. Fed officials view stable prices as a crucial building block for sustainable economic growth.Inflation F.A.Q.Card 1 of 5What is inflation? More