Open thread Feb. 24, 2023 Dan Crawford | February 24, 2023 8:17 am Open thread Feb. 21, 2023 – Angry Bear (angrybearblog.com) Tags: open thread Comments (10) | Digg Facebook Twitter |
The Fed’s Preferred Inflation Gauge Sped Back Up
NY Times – Feb 24
Inflation remains stubbornly elevated in America and unexpectedly picked up in January, a fresh reading of the Federal Reserve’s preferred index showed, underscoring the daunting challenge facing central bankers as they try to wrestle price increases back to a normal pace.
The Personal Consumption Expenditures price measure climbed 5.4 percent in January from a year earlier, a report on Friday showed. That was more than the 5 percent economists had expected, and it is up from 5.3 percent in December, which was revised higher.
Stripping out food and fuel prices, both of which jump around a lot, the price index climbed by 4.7 percent in the year through last month, also more than expected in a Bloomberg survey of economists.
Those inflation readings are well above the Fed’s goal for 2 percent price increases. And the report’s details offered other reasons to worry: Price increases had slowed sharply on a monthly basis in recent months, but they are now showing signs of speeding back up. The overall index climbed 0.6 percent between December and January, the fastest pace of increase since last June. …
(Reuters) – U.S. consumer spending rebounded sharply in January amid strong income growth, while inflation accelerated, which could add to financial markets fears that the Federal Reserve could continue raising interest rates through summer.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1.8% last month, the Commerce Department said on Friday. Data for December was revised higher to show spending dipping 0.1% instead falling 0.2% as previously reported. Economists polled by Reuters had forecast consumer spending rebounding 1.3%.
Spending was likely driven by a 8.7% cost of living adjustment, the biggest increase since 1981, for more than 65 million Social Security beneficiaries, which boosted income. It was also probably flattered by difficulties ironing out seasonal fluctuations from the data at the start of the year. Some economists expect pay back in February.
Nevertheless, the strong performance put consumer spending on a higher growth path at the start of the first quarter. Consumer spending slowed in the fourth quarter, with most of the loss in momentum happening in the last two months of 2022.
The strength in consumer spending, combined with a resilient labor market, suggests the economy is far from recession. …
The PCE price index increased 0.6% in January
January 30, 2018
Personal consumption expenditures price index and Personal consumption
expenditures less food & energy price index, 2017-2018
Six ways the war in Ukraine changed the world.
NY Times – Feb 24
A year of war in Ukraine has reshaped the world in ways few had predicted. Far beyond the front lines, the ripple effects of Russia’s invasion have reordered lives and upended economies.
Here is a look at the war’s consequences in six key areas.
The war helped push global grain prices to record highs, given the importance of Russia and Ukraine as exporters of food crops including wheat. …
The war unleashed the worst global energy crisis since the 1970s. Energy prices soared in many parts of the world as nations reduced or cut off their purchases of Russian fossil fuels. In Europe, gas bills nearly doubled and electricity costs spiked about 70 percent in the first six months of the war. …
The global economy was just emerging from the pandemic, and the energy crisis and slower growth contributed to higher inflation. Soaring prices ate away at people’s savings and paychecks, causing real wages to fall in many countries and slashing purchasing power. …
President Biden said this week in Warsaw that “NATO is stronger than it’s ever been.” Mr. Putin may have hoped his invasion would exacerbate divisions in NATO, but the alliance has been galvanized. Finland, which shares a border with Russia, abandoned its policy of neutrality and applied to join the alliance, as did Sweden. …
More than eight million Ukrainians fled as refugees to other parts of Europe, particularly in the early stages of the war, according to the United Nations refugee agency. Another five million are estimated to be displaced inside Ukraine. The highest number of refugees, more than 1.5 million, are registered in Poland. At the same time, the war has enhanced the influence on the continent of Poland and the Baltic States, which have embraced stout defense of Ukraine and pushed for greater and faster supplies of military aid. …
China has walked a fine line during the war, calling for peace while refraining from criticizing Russia, an increasingly important partner. China’s top diplomat, Wang Yi, on a tour of Europe this week, told his Ukrainian counterpart that he did not want to see the war “prolonged and escalated.” At the same time, China is holding joint military drills with Russia and South Africa, and China’s leader, Xi Jinping, is expected to pay a state visit to Moscow in the spring. …
Hmmm. The special military operation in Ukraine is a proxy war, between NATO and Russia.
This is no proxy war – Russia really invaded Ukraine
Oxford Uni News & Events – Feb 23
Ukraine is not a proxy war – New Statesman
(Well, arguably it IS, of a new form perhaps, with the West pouring armaments & support into Ukraine to battle Russia, but only within the boundaries of Ukraine.)
November 7, 2022
Overreach: How China Derailed Its Peaceful Rise
Susan Shirk, who serves as chair of the University of California’s 21st Century China Center, discussed China’s ascension to power and its approach to foreign policy. The Commonwealth Club in San Francisco hosted this event.
[About a one hour video at link in which Jane Perlez interviews Susan Shirk on the topic of her book. These ladies lived the history that they cover up close.]
Alone and Exploited, Migrant Children Work Brutal Jobs Across the US
NY Times – Feb 25
Arriving in record numbers, they’re ending up in dangerous jobs that violate child labor laws — including in factories that make some of the country’s best-known products.
It was almost midnight in Grand Rapids, Mich., but inside the factory everything was bright. A conveyor belt carried bags of Cheerios past a cluster of young workers. One was 15-year-old Carolina Yoc, who came to the United States on her own last year to live with a relative she had never met.
About every 10 seconds, she stuffed a sealed plastic bag of cereal into a passing yellow carton. It could be dangerous work, with fast-moving pulleys and gears that had torn off fingers and ripped open a woman’s scalp.
The factory was full of underage workers like Carolina, who had crossed the southern border by themselves and were now spending late hours bent over hazardous machinery, in violation of child labor laws. At nearby plants, other children were tending giant ovens to make Chewy and Nature Valley granola bars and packing bags of Lucky Charms and Cheetos — all of them working for the processing giant Hearthside Food Solutions, which would ship these products around the country.
“Sometimes I get tired and feel sick,” Carolina said after a shift in November. Her stomach often hurt, and she was unsure if that was because of the lack of sleep, the stress from the incessant roar of the machines, or the worries she had for herself and her family in Guatemala. “But I’m getting used to it.”
These workers are part of a new economy of exploitation: Migrant children, who have been coming into the United States without their parents in record numbers, are ending up in some of the most punishing jobs in the country, a New York Times investigation found. This shadow work force extends across industries in every state, flouting child labor laws that have been in place for nearly a century. Twelve-year-old roofers in Florida and Tennessee. Underage slaughterhouse workers in Delaware, Mississippi and North Carolina. Children sawing planks of wood on overnight shifts in South Dakota.
Largely from Central America, the children are driven by economic desperation that was worsened by the pandemic. This labor force has been slowly growing for almost a decade, but it has exploded since 2021, while the systems meant to protect children have broken down.
The Times spoke with more than 100 migrant child workers in 20 states who described jobs that were grinding them into exhaustion, and fears that they had become trapped in circumstances they never could have imagined. The Times examination also drew on court and inspection records and interviews with hundreds of lawyers, social workers, educators and law enforcement officials.
In town after town, children scrub dishes late at night. They run milking machines in Vermont and deliver meals in New York City. They harvest coffee and build lava rock walls around vacation homes in Hawaii. Girls as young as 13 wash hotel sheets in Virginia. …
How the Fed Opened Pandora’s Box
NY Times – Feb 25
Jerome H. Powell’s no-holds-barred response to the pandemic was made possible by history. It raises questions about the future.
It was July 2019 when Representative Rashida Tlaib, a Michigan Democrat, asked Jerome H. Powell, the chair of the Federal Reserve, whether he would use the central bank’s powers to help state and local governments during the next recession.
“We don’t have authority, I don’t believe, to lend to state and local governments,” Mr. Powell replied. “I don’t think we want that authority.”
Yet nine months later, at the start of April 2020, the central bank announced that it would do effectively what Ms. Tlaib had asked. Fed officials set up a program to make sure that state and local governments could continue to borrow as credit markets dried up.
What had changed was the onset of the coronavirus pandemic. Roughly 15 of every 100 adults who wanted to work found themselves jobless that month, many of them suddenly. Stocks had plunged in value so precipitously that the nation’s households would lose 5.5 percent of their wealth in just the first three months of the year. Amid government-imposed shutdowns, with millions of people at home, there were real worries that Wall Street and small businesses alike would implode.
What hadn’t changed was the Fed’s enormous power. Whether central bankers were ready to embrace it in 2019 or not, the institution has long had sweeping authority to use its ability to create money out of thin air to save the financial system and economy in times of trouble.
And it could exercise that power expediently — and with considerable independence from the rest of the government — in no small part because a man named Marriner Eccles reluctantly took on the job of leading America’s central bank in 1934. That history is particularly useful for understanding what happened in 2020 — and what that might set in motion for the future. ,,,
The Fed staged a no-holds-barred intervention during the pandemic to stabilize Wall Street and insulate the economy, slashing interest rates to rock bottom, buying trillions of dollars’ worth of government-backed bonds to keep critical markets functioning and promising trillions more in emergency programs that would keep loans flowing to municipal and corporate borrowers and midsize businesses.
It worked. The rescue was so successful that by the end of 2020 the Fed’s response effort was shutting down, rapidly fading from headline-grabbing news to mere historical artifact.
But the Fed’s actions quietly opened the monetary and financial policy equivalent of Pandora’s box: They made it clear to Fed officials themselves, to Congress and to financial market players exactly what the central bank is capable of doing and whom it is capable of saving. That makes it much more likely that the central bank will be called on to use its tools expansively again. …
Jeanna Smialek writes about the Federal Reserve and the economy for The New York Times and is the author of the book “Limitless: The Federal Reserve Takes on a New Age of Crisis,” from which this article is adapted.