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    in Economy

    A Fed Rate Cut Would Cap a Winning Streak for Biden and Harris on Prices

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    Improved data on borrowing costs and price growth has buoyed consumers, but it might be coming too late to significantly affect the presidential raceAfter more than a year of waiting, hoping and assuring Americans that the economy could pull off a so-called “soft landing,” President Biden and Vice President Kamala Harris appear to be on the brink of seeing that happen.Inflation has cooled. Economic growth remains strong, though job gains are slowing. Mortgage costs are falling and the Federal Reserve is poised to begin cutting interest rates on Wednesday.And yet, it is unclear whether those developments will significantly alter voters’ predominantly negative perceptions of the economy ahead of the presidential election.Recent weeks have brought a run of good data on consumer prices and interest rates for the administration. The price of gasoline has fallen below $3 a gallon in much of the South and Midwest and is nearing a three-year low nationally. Spiking grocery prices have slowed to a crawl. Mortgage rates are down more than a percentage point from their recent peak. The Census Bureau reported last week that the typical household income rose faster than prices last year for the first time since the pandemic. The overall inflation rate has returned to near historically normal levels, and the Fed is poised to begin cutting interest rates from a two-decade high.The Biden administration, which has taken heat from Republicans and many economists for fueling inflation with its economic policies, has begun to celebrate those developments in bold terms. Officials are claiming vindication for their multi-trillion-dollar efforts to boost households and businesses in their recovery from the pandemic recession.Mr. Biden’s Council of Economic Advisers published a blog post on Tuesday highlighting economic and job growth under Mr. Biden that has surpassed projections. Lael Brainard, who heads Mr. Biden’s National Economic Council, told the Council on Foreign Relations in New York on Monday that the American economy has now reached a “turning point.”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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    As Federal Reserve Readies Interest Rate Cut, Risks to Job Market Still Loom

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    The Federal Reserve is poised to lower interest rates this week. Recent jobs data have been a reminder that a soft landing is not yet assured.An object in motion stays in motion. Is a labor market trend that’s well underway any different?That’s the question looming for officials at the Federal Reserve as they try to pull off a feat that has never really been accomplished before: gently cooling an economy that was experiencing rip-roaring inflation without tanking the job market in the process.So far, the Fed’s attempt at a soft landing has worked out better than just about anyone, including central bankers themselves, expected. Inflation has cooled significantly, with the Consumer Price Index down to 2.5 percent from a peak of 9.1 percent just two years ago. And even with the Fed’s policy interest rate at its highest level in more than two decades, consumer spending has held up and overall growth has continued to chug along.Fed officials are eager to keep it going. That is why all signals suggest that they will lower interest rates at the conclusion of their meeting on Wednesday — and the only real question is whether they will cut them by a typical quarter of a percentage point or by a half percentage point. They are also likely to forecast that they will lower interest rates further before the end of the year, perhaps predicting that they will cut them by a full point from their current 5.33 percent.But even as the Fed turns an important corner on its fight against inflation, real risks remain. And those center on the labor market.Unemployment has been slowly, but steadily, rising. Wage growth has been consistently slowing. Job openings have come down, and hiring rates have come down along with them. And while all of those developments are what the Fed wanted — the point of this exercise was to slow an overheated job market and prevent it from fueling future inflation — central bankers have been clear that they do not want to see it continue.“We do not seek or welcome further cooling in labor market conditions,” Jerome H. Powell, the Fed chair, said in his latest speech.Unemployment and Underemployment RiseThe jobless rate historically jumps during recessions.

    Notes: Unemployment is the share of people actively looking for work; underemployment also includes people who are no longer actively looking and those who work part time but would prefer full-time jobs. Seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesWage Growth Is Cooling SteadilyAfter spiking in 2022, wage gains for rank-and-file workers have been coming down.

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    Year-over-year change in average hourly earnings
    Note: Data is for production and nonsupervisory employees and is not seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesJob Openings Fall, Just as More People Look for ThemAfter years in which jobs were much more plentiful than available workers, that ratio is on the cusp of flipping.

    Data are seasonally adjusted.Source: The Bureau of Labor StatistticsBy The New York TimesWe 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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    For the Fed, a Sign That the Job Market Is Cooling but Not Cracking

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    Federal Reserve officials are moving toward their first rate cut since the 2020 pandemic downturn as they try to keep the economy from cooling too much. Friday’s fresh jobs data gave them reasons for both comfort and concern.Unemployment eased slightly to 4.2 percent in August, from 4.3 percent in July — a sign that joblessness has not started a relentless march upward, which is welcome news for both American workers and Fed officials. But hiring was weaker than economists had expected, with 142,000 jobs added in August.Altogether, the report suggested that the job market was slowing, but not imploding, more than two years into the Fed’s campaign to slow the economy with higher interest rates. That has kept Fed officials noncommittal and investors guessing about just how much the Fed will cut rates this month.Fed policymakers raised interest rates starting in 2022 to tap the brakes on a hot economy. At the time, hiring was rapid and wage growth robust, and officials worried that a burst of rapid inflation would not fade on its own against that backdrop. They ultimately lifted borrowing costs to a more-than-two-decade high of 5.3 percent, where they remain.But inflation has been cooling notably and wage gains have been steadily moderating, so Fed officials have become increasingly wary of overdoing it. They wanted to return the job market and economy to a sustainable pace, but they do not want to cause either to crash.That is why the Fed is poised to lower interest rates. The question has been whether policymakers will cut rates by a quarter percentage point or a half percentage point at their Sept. 17-18 gathering. That was one reason that Wall Street was intently focused on Friday’s jobs report: If it showed clear cracks in the labor market, investors expected it to prod the Fed toward a bigger rate cut.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. Job Market Shifts to Lower Gear

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    Employers added 142,000 jobs in August, fewer than economists had expected, and previous months were revised downward.The labor market appears to be treading water, with employers’ desire to hire staying just ahead of the supply of workers looking for jobs.That’s the picture that emerges from the August jobs report, released on Friday, which offered evidence that while softer than it has been in years, the landscape for employment remains healthy, with wages still growing and Americans still eager to work.“This report does not indicate that we’re taking another step toward a recession, but we’re still seeing further signs of cooling,” said Sam Kuhn, an economist with the recruitment software company Appcast. “We’re trending more closely to a 2019 labor market, than the labor market in 2010 or 2011.”Employers added 142,000 positions last month, the Labor Department reported. That was somewhat fewer than forecast, bringing the three-month average to 116,000 jobs after the two prior summer months were revised down significantly. Over the year before June, the monthly average was 220,000, although that number is expected to shrink when annual revisions are finalized next year.The unemployment rate edged down to 4.2 percent, alleviating concerns that it was on a steep upward trajectory after July’s jump to 4.3 percent, which appears to have been driven by weather-related temporary layoffs.In other signs of stability, the average workweek ticked up to 34.3 hours and wages grew 0.4 percent over the month, slightly more than economists had expected but not enough to add significant fuel to inflation.Wages Are Outpacing InflationYear-over-year percentage change in earnings vs. inflation More

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    Job Hunting Is a Challenge for Recent College Grads

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    Unemployment is still low, but job seekers are competing for fewer openings, and hiring is sluggish. That’s a big turnaround from recent years.For much of the last three years, employers were fighting one another for workers. Now the tables have turned a bit. Few employers are firing. Layoff rates remain near record lows. But fewer employers are hiring.That has left job seekers, employed or unemployed, competing for limited openings. And younger, less experienced applicants — even those with freshly obtained college degrees — have been feeling left out.A spring survey of employers by the National Association of Colleges and Employers found that hiring projections for this year’s college graduating class were below last year’s. And it showed that finance, insurance and real estate organizations were planning a 14.5 percent decrease in hiring this year, a sharp U-turn from its 16.7 percent increase last year.Separately, the latest report from the Bureau of Labor Statistics shows the overall pace of hiring in professional and business services — a go-to for many young graduates — is down to levels not seen since 2009.For recent graduates, ages 22 to 27, rates of unemployment and underemployment (defined as the share of graduates working in jobs that typically do not require a college degree) have risen slightly since 2023, according to government data.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Why This Jobs Report Could Be the Most Pivotal One in Years

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    It’s tough to overstate how much hinges on Friday’s employment update, from the path for interest rates to the economic outlook.A fresh jobs report set for release on Friday could mark a turning point for the American economy, making it one of the most important and closely watched pieces of data in years.The employment numbers will shed crucial light on whether a recent jump in the unemployment rate, which tracks the share of people who are looking for work but have not yet found it, was a blip or the start of a problematic trend.The jobless rate rose notably in July after a year of creeping higher. If that continued in August, economists are likely to increasingly worry that the United States may be in — or nearing — the early stages of a recession. But if the rate stabilized or ticked down, as economists forecast, July’s weak numbers are likely to be viewed as a false alarm.The answer is coming at a pivotal moment, as the Federal Reserve moves toward its first rate cut since the 2020 pandemic.Central bankers have been clear that they will lower interest rates at their meeting on Sept. 17-18. Whether that cut is a normal quarter-point reduction or a larger half-point move could hinge on how well the job market is holding up. It is rare for so much to ride on a single data point.“It matters a lot,” said Julia Coronado, founder of MacroPolicy Perspectives, a research firm. “It’s going to set the tone for the Fed, and that’s going to set the tone for global monetary policy and markets.”Unemployment and UnderemploymentThe jobless rate historically jumps during recessions.

    Unemployment is the share of people actively looking for work; underemployment also includes people who are no longer actively looking and those who work part time but would prefer full-time jobs.Source: Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Why Interest Rate Cuts Won’t Fix a Global Housing Affordability Crisis

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    Central bankers are lowering borrowing costs, but that won’t be a cure-all for a widespread lack of affordable housing.To Moira Gallagher, 38, buying a house in Anchorage would be a step toward financial stability for her growing family. But even with a six-figure household income and stable jobs, she and her husband have struggled to make a purchase.High mortgage rates, limited housing supply and historically poor affordability have kept buying a home stubbornly out of reach for Ms. Gallagher, an economic researcher who is expecting her third child. Three- or four-bedroom homes in good school districts are both hard to come by and prohibitively expensive.“It makes it hard to feel secure,” she said. “It affects everything.”From Anchorage to Amsterdam, many developed and even emerging economies are confronting a similar problem: Housing supply is failing to meet demand, helping to push home prices to levels that are out of reach even for middle-income families.Affordability problems have been exacerbated by high central bank interest rates, which officials across the globe have been using to tackle rapid inflation. Those policy rates trickle through financial markets to elevate mortgage rates — making it even more expensive for borrowers to buy a home and for builders to finance construction for new houses and apartments.The second part of that equation is now poised to change. Central banks in many economies are lowering interest rates or preparing to do so imminently. The European Central Bank and Bank of England are already cutting borrowing costs, and the chair of the U.S. Federal Reserve signaled last week that it would start reductions in September.But those rate cuts are unlikely to be a panacea for housing affordability.While the shift in central bank stance is already translating into somewhat lower mortgage rates in many countries, borrowing costs are not expected to fall back to the levels that prevailed during the 2010s. Several economists said 30-year mortgage rates in the United States, for instance, could end up in the 5.5 to 6 percent range, down from their 7.5 percent peak last year but still up notably from the 4 percent that was normal before the pandemic.Home Prices Jump in Developed WorldHow inflation-adjusted home prices are shaping up across advanced economies.

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    O.E.C.D. house price indexes, 2015=100
    Data reflects first quarter of each year.Source: Organisation for Economic Co-operation and DevelopmentBy The New York TimesWhat Share of Income Does a Typical Home Cost? Across metro areas in the United States, the cost of owning a typical home has been rising as a share of the local median income.

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    Share of income that would go to owning standard home
    Source: The Atlanta Fed’s Home Ownership Affordability MonitorBy The New York TimesWe 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