Kevin Ross on LinkedIn: Politics Makes the Fed’s Job Trickier, but Doesn’t Drive Its Decisions (2024)

New Post: Joe Biden gives a rare take on interest rates by saying the latest jobs numbers show the economy is in a ‘sweep spot’ and that rate hikes aren’t needed - President Joe Biden said Friday’s jobs report shows the labor market remains resilient as inflation continues to ease, an economic “sweet spot” that he said shouldn’t prompt the Federal Reserve to raise rates further.The comments marked a rare example of Biden weighing in on central bank policy making. They came as the president gears up for a reelection campaign that will be decided in part on his stewardship of the US economy, which voters have rated poorly, polls show.The US labor marketunexpectedly strengthenedin November, adding 199,000 jobs and showing wage growth that tempered bets the Fed would cut rates early next year. That should be considered a “solid, steady” increase, Biden said Friday.The president called the figure “a sweet spot that’s needed for stable growth and lower inflation, not encouraging the Fed to raise interest rates,” during a speech in Las Vegas, Nevada.The White House did not immediately respond to a request for comment on the president’s remarks.Recent presidents have refrained from routinely commenting on the Fed, wary of eroding the bank’s traditional independence to set monetary policy and giving the impression that decisions are driven by politics.Biden’s predecessor, Donald Trump, however, repeatedly attacked Federal Reserve Chairman Jerome Powell over the bank’s policy. Trump nominated Powell to lead the Fed in 2017, and Powell took over the next year.Get the business news that matters most to you with our customizable digest, Fortune Daily. Register to get it delivered free to your inbox. #Joe #Biden #rare #interest #rates #latest #jobs #numbers #show #economy #sweep #spot #rate #hikes #arent #neededhttps://lnkd.in/dXVf-5dV

IT’S THE SENILITY STUPID“The morning after the debate, new data showed a key inflation metric rising by the smallest amount since March 2021 — when inflation was a mere 2.6%. Wages are rising by more than prices, allowing workers to regain purchasing power lost to inflation.“The core of the economy is healthy and we anticipate growth will remain close to 2% over the rest of this year,” Oxford Economics reported on June 28. “The labor market is resilient, and with inflation pressures easing again, we expect real incomes and consumer spending growth to remain solid."A growing economy and low unemployment rate midway through an election year would normally make reelection a shoo-in for an incumbent president. Biden is likely to finish out his first term with no recession, the worst of inflation far behind, and the strongest job growth under any president in history.But polls and prediction markets now foretell a Biden defeat, for reasons having little to do with the economy. It's the senility, stupid.”

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For Biden, the die is cast. Inflation has taken off on his watch. No turning back the hands of time. Crash is coming. "I dont care to be involved in the crash-landing unless I can be in on the take-off." -- Harold StassenBiden took off right out of the gate putting Americans in a holding pattern with jacked-up gas and food prices, shrinkflation. Increased costs for everything. Hardened, financially stretched past the max voters aren't going to change their opinions about Biden. Sam Sutton POLITICO: "The economic indicators that determine a 'soft landing' matter less than how people actually experience the economy, another White House official told POLITICO. If prices climb at a level that feels normal, the public’s concerns about the state of the economy should ease, the official said.""But that’s also why inflation has been so hard for Biden to shake — even with the greater likelihood of a soft landing."#biden #bidenomics #economy #inflation

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The Next Month in the Economy Could be Crucial for the Presidential Electionhttps://ift.tt/6Mj3DRmIt didn’t take long for former President Donald J. Trump to make a political weapon out of Monday’s market sell-off. “Stock markets are crashing, jobs numbers are terrible, we are heading to World War III, and we have two of the most incompetent ‘leaders’ in history,” Mr. Trump wrote in a post on Truth Social. “This is not good.”The post underscored Mr. Trump’s longstanding fixation on stock indexes as a barometer of economic health. It also reinforced the degree to which economic messaging — and the health of the economy itself — will play a key role in the sprint finish ahead of the presidential vote in November.American voters consistently tell pollsters that the economy and consumer prices are the most important issues facing the country. The former president and his presumptive Democratic opponent, Vice President Kamala Harris, are seeking to sell voters on diametrically opposite stories about the economy’s health.Subscribe to The Times to read as many articles as you like.Business Newsvia NYT > Business https://ift.tt/rcNDEnmAugust 5, 2024 at 08:57AM

I've been working on this crazy idea that is almost certainly wrong, but I find it entertaining. What do you think?-This Summer, inflation comes down slowly, and unemployment goes up a little more quickly. Maybe 4.5%. Powell stays "Higher for Longer".-Then, in September, as it is clear that inflation is way down and unemployment is up, they cut 50 basis points as an "Apparent" attempt to help Biden. (Fake misdirection)-But it's not enough. The economy begins to weaken more rapidly. Trump wins because people blame Biden.-In December (after the election, but before Trump takes office) the Fed cuts by 100 basis points, claiming some sort of emergency.-By February, the economy is on fire, and everybody hails Trump. -Powell keeps his job by the skin of his teeth, because Trump loves low rates and a weak Dollar.-If I'm right, pundits will say nobody could even make this stuff up! LOL-Please share and re-post and comment.

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US Labor Market Cooling and Potential Rate CutsTreasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell have acknowledged a notable cooling in the U.S. labor market, indicating reduced inflationary pressures. Both highlighted the stabilization of the job market, with unemployment rising above 4% in May, attributing this to an increase in labor supply. Powell suggested that the Federal Reserve might consider reducing interest rates due to the subdued labor market conditions but emphasized the need for more favorable data to ensure inflation aligns with the Fed's 2% target. Despite the Fed's preferred inflation measure dropping to 2.6% in May, Powell remains cautious about prematurely lowering the rates from their current 23-year high.Yellen criticized the 2017 tax cuts by former President Trump as "expensive" and "regressive," linking them to the rising national debt. Trump's pledge for additional tax cuts if re-elected adds political uncertainty to the economic outlook. Powell warned against the dangers of both prematurely lowering and maintaining high interest rates for too long, highlighting the need for a delicate balance to manage inflation without increasing unemployment. This cautious stance reflects the Fed's commitment to maintaining economic stability while addressing inflationary challenges.#Thank you Elena Silva for your submission!

Hello everyone! Here is my latest blog written with Louis-Philippe Rochon and David Fields on the The Monetary Policy Institute blog. Check this out! Communication Creg

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Happy Fed Day!Not a shocker by any means, but the US Federal Reserve is choosing to hold rates steady, while prognosticating a median federal funds rate at 4.6% by year's end. Ten policymakers of the Federal Open Markets Committee expect three or more rate cuts later this year, while the remaining nineteen, only two or fewer.My take: the FOMC is wrong to hold, and needs to have begun cutting yesterday.📉 No doubt that the Biden administration was internally hoping for a sooner cut, even if pleased with the longer term trajectory of gradual reductions. Economists within the administration are correct to be wary about sustained high rates, as the enormous gains in job creation, sustained low unemployment, and strategic investments from expansionary fiscal policy are threatened by a high interest rate environment in which banks are unwilling to lend, and businesses are wont to gut workforce and lay off employees. See Zachary Carter's piece in Slate Magazine: https://lnkd.in/dwg4sCUf💡 As Skanda Armanath and Preston Mui at Employ America write, it was critical that the Fed start out the year with a fifty basis point drop in an interest rate "normalization," so as to minimize the risk of curtailing our labor market gains. While job gains among blue-collar positions have been historically great, many of us in white-collar work are experiencing greater difficulties than before in job hunting in the tech and finance sectors, and insofar as the greatest expansionary fiscal policy of our time has done much to spur job creation, job matching will continue to be hampered if cheaper money isn't readily accessible. See more: https://lnkd.in/d7rvP9uQ#fed #labormarket #inflation #monetarypolicy #fiscalpolicy

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After spending the past two years trying to get inflation under control by raising interest rates, the Fed is inching toward cutting rates soon.This policy shift has ignited claims that the Fed is "being political" because in standard economic theory, cutting interest rates would stimulate the economy, making it easier for businesses to get loans, invest, and hire.It's best to cut rates to boost the economy, improving voters' opinion of Biden heading into the 2024 elections, the thinking goes.Right now, most of the commentary saying the Fed is trying to boost Biden is coming from former Trump administration officials or other Republican-leaning commentators, but that doesn't mean Democrats are immune from trying to politicise the Fed.Read more on Business Insider:https://lnkd.in/eTEHuzj3(Credit: Getty/ Business Insider)#Economy #Politics #TheFed

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The current fragility of the economy has raised my concerns, with many families' disposable wealth possibly falling below levels seen at the outbreak of the pandemic. If significant economic disruptions arise, the risk of a recession could spike dramatically.#EconomicConcerns #DisposableWealth #RecessionRiskThe U.S. government's temporary funding is set to expire at the end of September. While the Senate has already approved the government funding proposal, the House is set to vote on October 1st. If the new round of funding is not approved, it might lead to a temporary government shutdown, severely impacting market confidence and the economy, and adding uncertainty to the Fed's decision-making process.#USGovernmentFunding #HouseVote #MarketConfidenceRecently, the main challenge for the Federal Reserve has been the persistent pressure of high inflation. Although there are expectations of a rate cut in 2023, the Fed might maintain its hawkish stance until there's clear evidence of a decline in inflation. A government shutdown or labor strikes could further amplify inflationary pressures. As such, high inflation and potential rate hikes remain pivotal issues. Political events and labor market fluctuations could further drive inflation, limiting the Fed's policy maneuverability. As many major bank analysts predict, expectations of rate cuts might be postponed.#FederalReserve #InflationConcerns #RateCutPredictions