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CPI Rose in December, a Sign the Fed’s Inflation Fight Has Stalled

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The Consumer Price Index rose 2.9 percent from a year earlier, but a measure of underlying inflation was more encouraging.Consumer prices rose more quickly in December, the latest sign that the Federal Reserve’s fight against inflation may have stalled.The Consumer Price Index rose 0.4 percent from November, and was up 2.9 percent from a year earlier, the Labor Department said on Wednesday. It was the fastest one-month increase in overall prices since February, driven in part by another sharp rise in the price of eggs and other groceries.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, was more encouraging: The index rose 3.2 percent from a year earlier after three straight months of 3.3 percent gains. Forecasters had not expected core inflation to slow.Inflation has cooled substantially since the middle of 2022, when it hit a four-decade high of more than 9 percent. More recently, however, progress has slowed, or even stopped outright: By some measures, inflation hardly improved in 2024.“When you step back and look at the overall state of inflation, we’re not really going anywhere,” said Sarah House, senior economist at Wells Fargo. “While there has been progress, the pace has been really disappointing.”Prices continued to rise in some of the categories that matter most to consumers. Grocery prices, which were relatively flat in late 2023 and early 2024, are rising again, led by the price of eggs, which is up by more than a third over the past year. Gas prices jumped 4.4 percent in December, although they were lower than a year ago.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. Employers Add 256,000 Jobs in December

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    A December gain of 256,000 blew past forecasts, and unemployment fell to 4.2 percent. But markets recoiled as interest rate cuts seemed more distant.Employers stuck the landing in 2024, finishing the year with a bounce of hiring after a summer slowdown and an autumn marred by disruption.The economy added 256,000 jobs in December, seasonally adjusted, the Labor Department reported on Friday. The number handily beat expectations after two years of cooling in the labor market, and the unemployment rate edged down to 4.1 percent, which is very healthy by historical standards.The strong result — unclouded by the labor strikes and destructive storms of previous months — may signal renewed vigor after months of reserve among both workers and businesses. Average hourly earnings rose 0.3 percent from November, or 3.9 percent over the previous year, running well above inflation.“This employment report really crushes all expectations,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “It kind of wipes out the summer slump in payrolls we saw from June to August before the big Fed rate cut in September.”The apparent turnaround in employment growth, however, dampens chances of further interest rate cuts in the coming months. Investors already expect Federal Reserve officials to hold steady at their meeting in late January. For monetary policymakers, the robust growth means that additional easing could reignite prices and stymie progress on inflation.“The Fed is like, ‘We think this is a good labor market, we want to keep it that way, we don’t want it cooling further,’” said Guy Berger, director of economic research at the Burning Glass Institute. “What they haven’t said is, ‘We want to heat the labor market back up.’”Unemployment rate More

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    Banks Are Racking Up Wins Even Before Trump Is Back in White House

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    Banks are on a winning streak, one that’s poised to intensify as President-elect Donald J. Trump takes office.Biden-appointed regulators at the Federal Reserve and other agencies presided over a relatively fruitless era of bank oversight. They tried to enact stricter rules for the nation’s biggest banks, hoping to create a stronger safety net for the financial system even if it cut into bank profits.But the rules were considered so onerous — including by some top Fed officials — that they died of their own ambitions.As proposals stalled, the foundation for existing bank oversight became increasingly shaky thanks to bank-friendly courts. During his first term, Mr. Trump appointed a slate of conservative judges who then slowly but significantly shifted the legal environment against strict federal oversight.The result? Big banks have been notching major victories that could allow them to avoid regulatory checks that were drawn up after the 2008 financial crisis, when weaknesses at the world’s largest lenders nearly toppled the global economy.And with Mr. Trump once again poised to run the White House, analysts predict that the regulations and supervisory practices that are supposed to prevent America’s biggest and most interconnected financial institutions from making risky bets could be further chipped away in the months ahead.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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    Michael Barr to Leave His Role as Fed Vice Chair for Supervision

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    Michael Barr oversaw an attempt to rewrite financial regulations that came under attack from a wide range of groups, including banks, lawmakers and even some of his colleagues.Michael Barr will step down from his role as the Federal Reserve’s vice chair for supervision by Feb. 28, or sooner if President-elect Donald J. Trump appoints a successor, the Fed said on Monday.Mr. Barr will continue to serve on the central bank’s Board of Governors. But in an interview, Mr. Barr said the decision to leave his role as vice chair of supervision was intended to sidestep a protracted legal battle with Mr. Trump that he believed could damage the central bank.Some individuals attached to the Trump administration wanted to fire Mr. Barr before his term as vice chair expired, according to people familiar with the matter who spoke on background because of the sensitivity of the issue.That could have resulted in a lengthy — and costly — legal fight over whether an incoming president has the authority to remove someone from a Senate-confirmed position at an independent agency.Some financial regulatory experts questioned why Mr. Barr — and the Fed itself — would allow a political change to influence who served in a powerful role. Jerome H. Powell, the Fed’s chair, has made a point of saying that the Fed is independent of the White House and that its decisions are not influenced by politics. Mr. Powell has also insisted that Mr. Trump lacks the legal authority to fire him from his role as Fed chair, which is also confirmed by the Senate.“I’m surprised by Barr’s announcement, because I expected him to resist Republican calls for his ouster and make a point of defending the Fed’s independence,” Ian Katz, managing director at Capital Alpha, said in an email.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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    How a Government Shutdown Could Affect the Economy

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    A federal government shutdown probably wouldn’t be enough to derail the solid U.S. economy. But it could inject more uncertainty into an already murky economic outlook.Funding for the federal government will lapse at the end of Friday if Congress doesn’t reach a deal to extend it. It is still possible that legislators will act in time to prevent a shutdown, or will restore funding quickly enough to avoid significant disruptions and minimize any economic impact.But if the standoff lasts beyond the weekend, most federal offices will not open Monday, and hundreds of thousands of government employees will be told not to work. Others will be required to work without pay until the government reopens.For those workers and their families, the consequences could be serious, especially if the impasse drags on. Federal law guarantees that government workers will eventually receive back pay, but that may not come in time for those living paycheck to paycheck. And the back-pay provisions don’t apply to consultants or contractors. During the last government shutdown — a partial lapse in funding in late 2018 and early 2019 — federal workers lined up at food pantries after going weeks without pay.For the economy as a whole, the effects of a shutdown are likely to be more modest. Many of the most important government programs, like Social Security and Medicare, would not be affected, and government services that are deemed “essential,” such as air traffic control and aviation security, can continue at least temporarily. Federal workers who put off purchases are likely to make them once their paychecks restart.Forecasters at Goldman Sachs estimate that a shutdown would exert a small but measurable drag on the economy, reducing quarterly economic growth by about 0.15 percentage points for every week the lapse in funding continues. Most of that toll, though not all, would reverse in the next quarter. Other forecasters have released similar estimates.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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    Where Does a ‘Remarkable’ U.S. Economy Go From Here?

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    America’s economy is far outstripping its peers, but there are serious risks, including from the president-elect.The U.S. economy is pulling ahead of its global peers. Inflation is moderating, and the Federal Reserve is cutting interest rates.Add in a decrease in unlawful southern border crossings and revved-up domestic production in several critical industries and they amount to a rough list of Donald J. Trump’s campaign promises.It’s a list of economic wins that Mr. Trump is inheriting in large part because of policies that the Federal Reserve and Biden administration have pursued in recent years.The economy is doing better than most economists predicted a few years ago. Forecasters widely warned that the Fed would seriously harm the economy as it tried to control runaway inflation by sharply raising interest rates in 2022 and 2023. Instead, price increases have come down substantially without a broader implosion. The unemployment rate is low. Consumers are spending.“The U.S. economy has just been remarkable,” Jerome H. Powell, the Fed chair, said during a news conference on Wednesday, after the Fed cut rates for a third time this year.But a variety of risks — some sheer happenstance, some floated by Mr. Trump — could interfere with that rosy outcome just as the newly re-elected president takes office.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    The Economy Is Finally Stable. Is That About to Change?

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    President-elect Donald J. Trump’s proposals on tariffs, immigration, taxes and deregulation may have far-reaching and contradictory effects, adding uncertainty to forecasts.After five years of uncertainty and turmoil, the U.S. economy is ending 2024 in arguably its most stable condition since the start of the coronavirus pandemic.Inflation has cooled. Unemployment is low. The Federal Reserve is cutting interest rates. The recession that many forecasters once warned was inevitable hasn’t materialized.Yet the economic outlook for 2025 is as murky as ever, for one major reason: President-elect Donald J. Trump.On the campaign trail and in the weeks since his election, Mr. Trump has proposed sweeping policy changes that could have profound — and complicated — implications for the economy.He has proposed imposing steep new tariffs and deporting potentially millions of undocumented immigrants, which could lead to higher prices, slower growth or both, according to most economic models. At the same time, he has promised policies like tax cuts for individuals and businesses that could lead to faster economic growth but also bigger deficits. And he has pledged to slash regulations, which could lift corporate profits and, possibly, overall productivity. But critics warn that such changes could increase worker injuries, cause environmental damage and make the financial system more prone to crises over the long run.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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    Jerome Powell and the Fed Head for Another Collision with Trump

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    Rates may not come down as much or as quickly as had been expected, just as Trump — a self-declared “low-rate guy” — returns to the White House.Inside the halls of the Federal Reserve’s headquarters overlooking Constitution Avenue in Washington D.C., casual mentions of the incoming Trump administration are cautious and infrequent. That’s by design.Donald J. Trump had a fraught relationship with the politically independent Fed during his first term. The president wanted central bankers to lower interest rates more aggressively and faster than they thought was economically appropriate. When officials refused to comply, he blasted them as “boneheads” and an “enemy.” He flirted with trying to fire Jerome H. Powell, the Fed chair. He tried (and failed) to appoint loyalists to central bank leadership roles.As the Fed enters a new Trump era with interest rates higher than they were at any point in his first term, tensions seem poised to escalate once again — and America’s central bank is on high alert.Fed analysts try to avoid casually discussing tariffs in email or Microsoft Teams meetings, wary that the information could become public and make the Fed look anti-Trump, according to one staff economist who spoke on the condition of anonymity to discuss the sensitive matter. Hallway chatter has taken a negative tone but is often studiously generic and apolitical, according to people familiar with the mood inside the building who also requested anonymity. And while Fed officials and economists have had to begin to consider what Mr. Trump’s promised policies might do to growth and inflation, they have avoided publicly speculating.Central bankers are, in effect, keeping their heads down to stay out of the limelight. But try as they might, they appear destined for another crash course with Mr. Trump.The president-elect promised “interest rates cuts the likes of which you have never seen before” while campaigning. Fed officials have been cutting rates since September and are on course to lower them further as inflation cools, but they are unlikely to reduce them as much as Mr. Trump is hoping.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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    November Jobs Report Shows Gain of 227,000; Unemployment Rises

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    Hiring bounced back after disruptions from storms and a major strike.Job creation bounced back in November after disruptions from storms and a major strike, reinforcing a picture of modest employment expansion over the past several months.The U.S. economy added 227,000 jobs, seasonally adjusted, the Labor Department reported on Friday. With upward revisions to September and October figures, the three-month average gain is 173,000, slightly higher than the average over the six months before that.The unemployment rate ticked up to 4.2 percent, from 4.1 percent in October, as fewer people were able to find work. But for those who had jobs, wages jumped more than expected and were 4 percent higher than they were a year earlier.Unemployment rate More