White House levy to protect US makers from cheap imports likely to inflame trade tensions
The US president, Joe Biden, has announced a 100% tariff on Chinese-made electric vehicles as part of a package of measures designed to protect US manufacturers from cheap imports.
In a move that is likely to inflame trade tensions between the world’s two biggest economies, the White House said it was imposing more stringent curbs on Chinese goods worth $18bn.
Continue reading...World’s most valuable chipmaker Taiwan Semiconductor to set up third facility in Arizona using funding from Biden policy
Taiwan Semiconductor Manufacturing Company is to build its most advanced chips in Arizona after receiving a pledge of as much as $11.6bn in US government subsidy as part of Joe Biden’s efforts to attract computer chip production.
TSMC, the world’s most valuable chipmaker, says it aims to start producing the two-nanometre chips at a new factory in Phoenix, Arizona, by 2028.
Continue reading...Live, rolling coverage of business, economics and financial markets as UK postal service says it wants to cut 1,000 jobs and cut delivery days
The question on economists’ lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?
The ECB’s rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.
While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde’s own words: “we will know a little more in April, but we will know a lot more in June”.
Christine Lagarde’s previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.
The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.
Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.
A still-low unemployment rate doesn’t necessarily mean wage growth will remain at today’s highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers’ negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it.
Continue reading...Rates to stay at 25-year high of 5.25% to 5.5% as central bank says ‘inflation has eased over the past year but remains elevated’
The Federal Reserve announced on Wednesday that it would leave US interest rates at a 25-year high as it continues to assess their impact on cooling inflation and the wider economy.
After a two-day meeting, the Fed announced rates would be unchanged at 5.25% to 5.5%, where they have been since July. But the Fed signaled it still expects to cut rates three times this year.
Continue reading...While inflation has fallen sharply since peaking above 9% in June 2022, many are still feeling the pinch of high prices
Inflation was hotter than expected across the US last month as it continues to fall back from its highest levels in a generation.
Price growth dropped to an annual rate of 3.1% in January, according to official data; above economists’ expectations of 2.9%. In December, the consumer price index stood at 3.4%.
Continue reading...Employees blindsided by news that company blew through $50m investment, will offer no severance and will cut off healthcare
The Messenger, a news startup launched last year with a $50m investment and a nonpartisan perspective, is shutting down, according to multiple news reports.
In a staff email, the publication’s founder, Jimmy Finkelstein, wrote that the company had pursued all options “over the past few weeks, literally until last night” but made the “painful” decision to shut down the site effective immediately after failing to raise “sufficient capital to reach profitability”.
Continue reading...Record highs come amid hopes a cooldown in inflation will allow Federal Reserve to cut interest rates several times this year
Wall Street scaled fresh records on Monday, as the S&P 500 and the Dow Jones industrial average each closed at an all-time high.
The S&P gained 0.2% to 4,850.43. The Dow cleared 38,000 for the first time, rising 0.4% to 38,001.81.
Associated Press contributed reporting
Continue reading...Index climbs to all-time high of 4,838, clearing record set two years ago, as US consumer confidence rises while inflation concerns ease
The S&P 500 scaled a new all-time high on Friday amid signs that the economic despondency that has gripped US consumers may be easing.
The index climbed 1.2% to 4,838 on Friday afternoon, clearing a record last set two years ago. It has rallied more than 17% since late October.
Continue reading...Consumer price index exceeds economists’ expectations as Fed weighs when to start cutting borrowing costs
Inflation ticked higher in the United States last month as the Federal Reserve weighs the latest stage of its battle against price growth.
The headline consumer price index increased at an annual pace of 3.4% in December, according to the Bureau of Labor Statistics, up from 3.1% in the previous month, and exceeding economists’ expectations of about 3.2%.
Continue reading...Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next year
The western world’s largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.
In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.
Continue reading...Fear adds to Russia-Ukraine conflict risk and increases ‘probability of European and of US recession’
A global recession could be triggered by the conflict in the Middle East as the humanitarian crisis compounds the challenges facing an already precarious world economy, two of Wall Street’s biggest names warned this weekend.
Larry Fink, chief executive of the world’s largest asset manager, BlackRock, said a combination of the Hamas atrocities of 7 October, Israel’s resultant attack on Gaza and Russia’s invasion of Ukraine last year had pushed the world “almost to a whole new future”.
Continue reading...On Thursday protesters chanted: ‘Off fossil finance!’ and held a banner reading: ‘Fed Is Burning: Money, Futures, Planet’
The Federal Reserve chair, Jerome Powell, was escorted out of an event Thursday afternoon after a group of climate protesters briefly took the stage before he was due to give a speech. He took the stage after a 15-minute delay.
At the Economic Club of New York, protesters stormed the stage holding a banner that read “Fed Is Burning: Money, Futures, Planet” and chanting “Off fossil finance!” Powell, who was on stage, briefly left the event before returning to deliver his speech as planned. Security officials cleared protesters from the room.
Continue reading...Rate tops level last seen after Liz Truss mini-budget as fears of global inflation and US political instability spook markets
Britain’s long-term cost of borrowing has hit its highest level since 1998, as political instability in the US and fears of sustained high levels of inflation triggered a sell-off in global bond markets.
The yield, or interest rate, on 30-year UK government bonds hit 5.115% early on Wednesday, according to the financial data provider Refinitiv.
Continue reading...Conference fails to approve procedural motion to take up defense spending bill as government shutdown looms
The House Republican speaker, Kevin McCarthy, was dealt his second humiliating defeat of the week on Thursday, when his conference again failed to approve a procedural motion as members continued to clash over government spending levels with just days left to avert a federal shutdown.
With no clear path forward in Republicans’ negotiations, the House concluded its work on Thursday without any stated plan to reconvene on Friday.
Continue reading...Growth in prices still remains far below the decades-high inflation rates that were seen last summer, when rate peaked at 9.1% in June
US inflation in August rose for the first time since June 2022, rising to 3.7% as a sharp increase in energy prices pushed prices up toward the end of the summer.
Growth in prices still remains far below the decades-high inflation rates that were seen last summer, when the rate peaked at 9.1% in June. Still, an increase in inflation means the US economy is further from the Federal Reserve’s target rate of 2% and will likely make officials consider pushing interest rates up later this year.
Continue reading...Number of new jobs matches July’s total, reflecting resilience of labor market even with high interest rates
The US jobs market is holding steady as interest rates sit at a 22-year high, with US employers adding 187,000 jobs in August, according to the Bureau of Labor Statistics (BLS).
The number of new jobs added in August is the same as the number of new jobs in July, showing that the labor market, down to levels seen before the pandemic, is resilient even with high interest rates.
Continue reading...Jay Powell tells symposium in Wyoming that inflation is still too high but that US central bank will ‘keep at it until the job is done’
Federal Reserve chair Jerome Powell used a closely watched speech on Friday to warn that the fight against inflation in the US is not over.
Speaking at the Federal Reserve Bank of Kansas City’s annual gathering of central bankers in Jackson Hole, Wyoming, Powell said inflation was still too high and that interest rates may have to rise further to tamp it down.
Continue reading...Fitch changed the country’s rating from AAA to AA+, citing fiscal deterioration and down-to-the wire debt ceiling negotiations
Rating agency Fitch downgraded the US government’s top credit rating on Tuesday, a move that drew an angry response from the White House and surprised investors.
Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills. It is the second major rating agency after Standard & Poor’s to strip the US of its triple-A rating.
Continue reading...Economy is being anchored by labor market and businesses are boosting investment, potentially holding off a recession
The US economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending, while businesses boosted investment in equipment, potentially keeping a much-feared recession at bay.
Gross domestic product (GDP) – a broad measure of economic growth – increased at a 2.4% annualized rate last quarter, the commerce department announced in its advance estimate of second-quarter GDP on Thursday. The economy grew at a 2.0% pace in the January-March quarter. Economists polled by Reuters had forecast GDP rising at a 1.8% rate.
Continue reading...US Fed will also have to raise rates more aggressively than forecast, says Washington-based body
Interest rates in the UK will need to stay higher for longer than previously forecast in order to tackle stubbornly high inflation, the International Monetary Fund has warned.
The IMF’s regular update on the state of the global economy singled out the US Federal Reserve and the Bank of England as two central banks that will need to raise official borrowing costs more aggressively than it assumed only three months ago.
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