Tag: economy

  • Uncharted territory: The Biden-Jeffries relationship comes into focus with the global economy on the line

    Uncharted territory: The Biden-Jeffries relationship comes into focus with the global economy on the line

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    But with talks set to pick up steam, the New York Democrat could soon be playing a more pivotal role. Should a compromise bill be reached between the White House and congressional GOP leadership, it would almost assuredly require some — if not many — House Democratic votes to get through that chamber.

    Two years ago, the solution for Biden would have been easy: Let then-Speaker Nancy Pelosi — the premier vote wrangler of her generation — do the work. Now it’s on Jeffries, someone the White House is still getting to know. The two only had their first known substantive meeting this past January, when Biden huddled with the top Democratic leaders at the start of the new Congress.

    In short, the first pivotal test of his and Biden’s ability to work together could take place with the global economy on the line. And how that goes will provide an early glimpse of what Democrats hope will be the dominant partnership in Washington in 2024 if Biden wins a second term and Democrats win back the House. Not everyone in the party is sure of what to expect.

    “All of this is going to need a level of coordination we haven’t yet seen,” said a senior Democratic House aide. “This will be the first time things are tested.”

    Jeffries, the first Black lawmaker to ever lead a party in Congress, is nearly 30 years Biden’s junior — he was all of 2 years old when Biden arrived in Washington for his first Senate term.

    Their lack of shared history is evident in how little the two have talked about each other in public. For a man who loves to riff on the political leaders he knows well, the only anecdote Biden has shared publicly about Jeffries is that, as vice president, he campaigned for him in 2012. Jeffries returned the favor during Biden’s presidential race in 2020.

    Two days before the election as they campaigned together outside Philadelphia, the two men engaged in small talk that quickly turned serious, as reported in “This Will Not Pass: Trump, Biden, and the Battle for America’s Future.” Biden warned that if they don’t win, “I’m not sure we’re going to have a country.”

    Neither party would say how frequently Jeffries and Biden communicate directly. But they have held at least two calls — one of which has not been previously reported — in late April that included Schumer as the debt limit debate ramped up, according to a person familiar with the conversations.

    In interviews with a dozen lawmakers, senior aides and administration officials, a picture is painted of a relationship that’s been largely positive (with some brief missteps) but still very much developing. Those close to Jeffries and Biden say that communication is frequent between both camps from principals to senior staff. They point to their similar messaging and strategy on debt limit — so far. Jeffries is also in regular contact with White House chief of staff Jeff Zients through meetings and calls. The two had a long working lunch two weeks ago to discuss the debt limit, according to a senior administration official granted anonymity to speak freely.

    The president “has a strong relationship with Leader Jeffries and a great deal of respect for the masterful job he’s doing as head of the House Democrats and holding Republicans accountable for their extreme MAGA agenda, like forcing the most draconian cuts to veterans in American history in order to cut taxes for the rich,” said White House spokesperson Andrew Bates.

    In a statement to POLITICO, Jeffries praised Biden.

    “He’s a good man, visionary leader and transformational president who has been there for me since I arrived in Congress,” he said. “House Democrats look forward to our continued work together to make life better for everyday Americans.”

    Overshadowing the Biden-Jeffries relationship is the absence of Pelosi. For years — decades even — Biden world and its Democratic predecessor were able to rely on Pelosi’s political acumen to help shepherd tough bills and must pass legislation through that chamber. The trust built over time was so profound that it altered White House whip operations. In Nancy we trust, the saying went.

    Jeffries, in some ways, is just now building a working relationship with the Biden White House, though Louisa Terrell, director of the White House Office of Legislative Affairs, said Biden’s relationship with Pelosi helped lay the foundation for what’s being built now.

    “We felt like we had built a scaffolding around how we work together and the ease in which the president could pick up the phone, the ease in which we all did our work together, and we went right into the 118th with that,” Terrell said in an interview. “We have a proof point” that it can be productive, she said, pointing to the legislative accomplishments of the last Congress, such as the Inflation Reduction Act, bipartisan infrastructure law and semiconductor policy.

    Still, there is evidence of growing pains. Back-to-back episodes of mixed messages on Biden’s position on high profile legislation earlier this year rankled House Democrats who felt the White House blindsided them — one on a GOP-backed bid to repeal changes to the D.C. criminal code and the other on efforts related to Covid restrictions.

    Privately, rank-and-file House members and senior aides blamed the White House for misreading the potency of the issues. They call the incidents frustrating but have largely moved on. Since then, the White House has provided clear and early Statements of Administration Policy on hot-button Republican bills, including legislation to prohibit transgender girls from participating in women’s sports.

    Jeffries refused to criticize the White House in either instance. When pressed by CNN shortly after the two bills moved, he described Democrats as “incredibly unified.”

    Terrell also pointed to unified messaging on more recent policies, such as the Texas ruling on abortion medication, as proof of that positive relationship.

    “What I really care about is: Are we all talking to each other? Are they getting the information they need? Are we hearing from them and what they’re hearing from their constituents? How do we fight in these really hard fights and frankly, how do we take back the House?” she said.

    To that end, the White House legislative staff participates in at least seven regular “check-ins” with House leadership staff and seven weekly meetings with various groups, including House staff directors and caucuses.

    Biden has told leadership and rank-and-file members to use an older means of technology to communicate with the White House.

    “We’ve heard the president say: you literally have the bat phone, please call anytime,” Terrell said. “My door’s always open to you. My phone is always open to you. I know how meaningful it is to [have a] back and forth.”

    Jeffries’ first true test as minority leader will be ensuring House Democrats stay aligned in backing Biden’s position against bargaining on raising the debt limit. The more significant obstacle will come much closer to the so-called X-date — when the government runs out of money and can’t pay its bills.

    Before Tuesday’s meeting was arranged, a handful of moderate Democrats, including Sen. Joe Manchin of West Virginia, broke ranks publicly and said Biden needs to get to the negotiating table. Ahead of the meeting, Democrats are largely aligned in arguing that Republicans should lift the debt ceiling without conditions and then hold a separate negotiation on the budget.

    Only three weeks out from default, Jeffries refused to commit House Democrats to supporting any deal struck between Biden and McCarthy but he insisted they’re in line with the president.

    “We’re in lockstep right now in terms of the path forward that President Biden laid out,” he said Sunday on “Meet the Press.” “Ultimately, everyone evaluates on the merits, on any particular piece of legislation, that is presented to us.”

    If a deal is hatched, Biden will almost certainly need at least some votes from House Democrats, as House Republicans are likely to balk at a compromise that moves substantially off of the bill that they passed.

    At that juncture, Jeffries brings some attributes to the table. He has a working relationship with McCarthy, including texting and coordinating on some joint statements, such as a recent statement calling on Russia to release political prisoners Evan Gershkovich and Paul Whelan.

    He also has strong support among his rank-and-file.

    “Hakeem’s got a good relationship with everyone in the caucus,” said Rep. Scott Peters (D-Calif.). Comparing the Senate minority party with the House minority, “McConnell’s sort of backed away, and Hakeem’s been engaged. … I think Hakeem’s the right guy.”

    While allies acknowledge that Jeffries — and his relationship with Biden — has yet to be tested and he will likely face difficult comparisons to Pelosi as he moves forward, there is a willingness within the caucus to give him space and trust.

    “Jeffries has done a great job so far,” said Rep. Jamaal Bowman, a fellow New York Democrat. “We’re going to have to find common ground and collaboration; he is clear eyed about that. He’s not going to bet and risk destroying our economy or cutting things to the most vulnerable people among us.”

    Bowman said he’s confident Jeffries and Biden are on the same page. And he pushed back on the idea that the new leadership role or the high-stakes fiscal standoff have put any new amount of pressure on him.

    “He’s been a Black man in America his entire life. He’s had to operate in white patriarchal spaces,” he said. “It’s not always easy for people of color and women to operate in those spaces and thrive — he has done so. I’m sure his approach is: I gotta always bring my A game.”

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    #Uncharted #territory #BidenJeffries #relationship #focus #global #economy #line
    ( With inputs from : www.politico.com )

  • Chinese invasion of Taiwan could cost world economy USD 1 trillion: US intelligence

    Chinese invasion of Taiwan could cost world economy USD 1 trillion: US intelligence

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    Washington: US intelligence officials predicted that a Chinese invasion of Taiwan or an attack as early as 2025 on the island nation could cost the world economy USD 1 trillion, reported Taipei Times.

    US Director of National Intelligence Avril Haines presented what she called a “general estimate” during testimony before the US Senate Armed Services Committee on Thursday.

    “A Chinese invasion of Taiwan could halt production by the world’s largest advanced chipmaker, wiping out up to USD 1 trillion per year from the global economy in the first few years,” said the top US intelligence official.

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    The advanced semiconductors produced by Taiwan Semiconductor Manufacturing Co (TSMC) are used in 90 per cent of “almost every category of electronic device around the world,” said Haines.

    Haines said that Chinese President Xi Jinping is leaning toward unifying with Taiwan in a “peaceful” manner, but is also preparing possible military action to achieve that goal, reported Taipei Times.

    “I think we continue to assess that he [Xi] would prefer to achieve unification of Taiwan through peaceful means,” she said.

    If a Chinese invasion stopped TSMC from producing those chips, “it will have an enormous global financial impact that I think runs somewhere between USD 600 billion to USD 1 trillion on an annual basis for the first few years,” she said.

    “It will also have an impact on [US] GDP if there was such an invasion of Taiwan and that [TSMC’s production] was blocked,” Haines said.

    However, Haines said it would also have a large impact on China’s economy, reported Taipei Times.

    To deal with that risk, TSMC is investing USD 40 million to build two sophisticated wafer fabs in Arizona at Washington’s urging.

    A fab using the 4-nanometer process is scheduled to begin mass production next year, and the other, using the more advanced 3-nanometer process, is slated to mass-produce chips starting in 2026, reported Taipei Times.

    Haines’ comments came after US Senator Rick Scott raised concerns about the possibility of China invading Taiwan, citing Xi’s remarks in the past year suggesting that he was preparing the Chinese population for a war against Taiwan.

    Xi has directed the Chinese military to “provide him with a military option, essentially, to be able to take it without concern of [US] intervention,” which is expected to “have a meaningful impact on his capacity to do so,” Haines said.

    Also at the hearing, US Defense Intelligence Agency Director Scott Berrier appeared to have greater concern than Haines about a possible invasion of Taiwan, saying that Xi’s rhetoric has been “picking up” after he assumed his third term as president, reported Taipei Times.

    Berrier provided a list of possible invasion dates ranging from 2025 to 2049. “I think the bottom line is he’s told his military to be ready,” Berrier said.

    Haines said the relationship between the US and China has become “more challenging,” citing a speech made by Xi in March in which he blamed Washington for suppressing Beijing, reflecting his distrust of the US and his belief that Washington is seeking to contain his country, reported Taipei Times.

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    ( With inputs from www.siasat.com )

  • Saudi economy grew by 3.9% in Q1 of 2023

    Saudi economy grew by 3.9% in Q1 of 2023

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    Riyadh: The Kingdom of Saudi Arabia’s economy grew by 3.9 per cent on an annual basis during the first quarter of 2023, compared to the same quarter of 2022.

    The non-oil activities led the Saudi economy to grow in the first quarter of 2023.

    According to data issued by the Saudi General Authority for Statistics (GASTAT), on Sunday, this increase was supported by the growth of non-oil activities by 5.8 per cent during the first quarter of this year compared to the same period in 2022.

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    Oil activities in the Kingdom grew by 1.3 per cent on an annual basis during the first quarter of this year.

    International Monetary Fund says the Saudi economy grew 8.7 per cent in 2022, but expects the kingdom’s GDP growth to drop to 3.1 per cent this year.

    The Kingdom, which is the largest oil exporter in the world, seeks to diversify its economy to reduce dependence on oil revenues and increase the contribution of the non-oil sector to the gross domestic product, as part of its Vision 2030.

    On April 25, Reuters predicted that the economies of the Gulf Cooperation Council (GCC) countries would grow at a much slower pace in 2023 compared to 2022. Because its resources were affected by the decline in revenues from crude oil sales and production cuts.

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    ( With inputs from www.siasat.com )

  • Sitharaman to review state of economy at FSDC meeting on Monday

    Sitharaman to review state of economy at FSDC meeting on Monday

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    New Delhi: Finance minister Nirmala Sitharaman will review the state of the economy amid global and domestic challenges at a meeting of the Financial Stability and Development Council (FSDC) on Monday.

    The 27th meeting of the high-level panel to be held here will be attended by all financial sector regulators, including RBI Governor Shaktikanta Das, sources said.

    This would be the first meeting of the FSDC after the passage of Rs 45 lakh crore Budget for 2023-24 with greater emphasis on capital expenditure with an outlay of Rs 10,00,961 crore.

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    The FSDC is the apex body of sectoral regulators, headed by the Union finance minister.

    The meeting will review the current global and domestic economic situation and financial stability issues, including those concerning banking and NBFCs in view of failure of Silicon Valley Bank and Signature Bank and liquidity pressure faced by Credit Suisse, according to the sources.

    The council would review the progress of measures approved earlier for further development of the financial sector and to achieve inclusive economic growth with macroeconomic stability, they said.

    RBI in its latest bi-monthly policy marginally revised upward the economic growth projection for the current fiscal to 6.5 per cent, from its earlier estimate of 6.4 per cent.

    Unveiling the first bi-monthly monetary policy of 2023-24 fiscal in April, RBI Governor had said the GDP growth in the first quarter of 2023-24 is expected at 7.8 per cent.

    The growth for second, third and fourth quarter of the current fiscal has been projected at 6.2 per cent, 6.1 per cent and 5.9 per cent, respectively.

    The last meeting of the high level panel had taken place in Septmber, 2022.

    The Council during the last meeting deliberated on the early warning indicators for the economy and preparedness to deal with them, improving the efficiency of the existing Financial/Credit Information Systems and issues of governance and management in Systemically Important Financial Institutions including Financial Market Infrastructures, and strengthening cyber security framework in financial sector.

    Besides, common KYC for all financial services and related matters, update on account aggregator and next steps, issues relating to financing of power sector, strategic role of GIFT IFSC in New Aatmanirbhar Bharat, inter-regulatory issues of GIFT-IFSC, and need for utilisation of the services of registered valuers by all government departments were also discussed.

    The FSDC meeting will also review activities undertaken by the FSDC sub-committee chaired by the RBI governor and the action taken by members on the past decisions of FSDC.

    Besides RBI governor, Securities and Exchange Board of India chairperson Madhabi Puri Buch, Insurance Regulatory and Development Authority of India (IRDAI) chairman Debasish Panda, Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital and Pension Fund Regulatory and Development Authority’s newly appointed chairman Deepak Mohanty will attend the meeting.

    The sources said the FSDC meeting will also be attended by Minister of State for Finance Bhagwat Kishanrao Karad, Finance Secretary T V Somanathan, Economic Affairs Secretary Ajay Seth, Revenue Secretary Sanjay Malhotra, Financial Services Secretary Vivek Joshi and other top officials of the finance ministry.

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    ( With inputs from www.siasat.com )

  • SF Economy Digital Black Round Dial Men’s Sport Watch-77075PP07

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  • What JPMorgan’s purchase of First Republic means for the economy

    What JPMorgan’s purchase of First Republic means for the economy

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    “The seizure and subsidized on-sale of First Republic completes the obvious unfinished business from the initial acute phase of the bank stress,” Krishna Guha, vice chairman at advisory and investment firm Evercore ISI, wrote in a note to clients. “But we think this is only the very early stages of the chronic phase.”

    Let’s break down what you need to know.

    How are First Republic’s troubles connected to what happened to the other lenders in March?

    The three regional lenders — SVB, Signature and First Republic — suffered from similar issues. Each catered to companies and wealthy individuals whose balances far exceeded the $250,000 deposit insurance limit, which meant a huge majority of those funds weren’t backed by the FDIC. That made their customers unusually panicky when questions about the banks’ solvency cropped up. And the three lenders all failed to prepare for rising interest rates, which made a large chunk of their government bonds and other assets plunge in value.

    First Republic experienced a run at the same time as the other two, but it was able to limp along longer because a slew of big banks — including JPMorgan — collectively deposited $30 billion there in an effort to stem the panic. That obviously didn’t succeed at saving the bank, but it did give officials a lot more time to figure out how to handle the foundering lender, which essentially became a zombie bank — meaning it was basically insolvent but being propped up by others — until it was seized and then sold by the FDIC.

    Did the government back uninsured deposits at First Republic?

    No, deposits at First Republic will now simply become deposits at Chase Bank. This was a good outcome for the FDIC, which didn’t want a replay of March, in which they and other government officials agreed to invoke a special legal provision allowing them to back uninsured deposits at SVB and Signature. They took that step for the two banks because they worried that if they didn’t, uninsured depositors at other banks would also run, sparking needless panic across the system. In the wake of that move, there’s been some question about whether the government would be willing to do the same thing for other failed banks.

    Selling First Republic sidesteps that problem. This result is especially welcome for the government politically because by the time it failed, a large number of the uninsured deposits at First Republic were simply money that had been poured in by big banks. Backing those deposits would have been a bad look to the public. But failing to do so would’ve signaled that the government wouldn’t necessarily stand behind any deposits at failing banks — jeopardizing a convenient ambiguity that has helped stabilize the system, at least for now.

    Still, the FDIC expects to take a $13 billion loss to its deposit insurance fund, financed by fees from banks. That’s because it’s sharing some of the losses from First Republic’s portfolio of residential mortgages and commercial loans.

    Are more banks going to fail?

    It’s very possible, but there are no obvious candidates teetering the way First Republic has been. And all three of those failed banks shared clear links: lots of runnable deposits and huge unrealized losses on their books.

    Financial regulators are keeping an eye out for other risks that accompany higher borrowing costs, such as the potential for losses on commercial real estate, which has been in a period of sustained uncertainty in the wake of the pandemic as large numbers of workers no longer use office space.

    No doubt other financial firms will experience trouble as interest rates stay high and growth slows. Some might not be banks; government officials worry in particular about nonbank companies such as asset managers and insurers that are less regulated but still interconnected with the banking system.

    In the meantime, what will matter for the economy is to what extent the stress in the banking system leads lenders to pull back on extending credit, which could slow growth as much as would any further interest rate hikes.

    So wait, isn’t JPMorgan Chase already huge? Now it’s going to get bigger?

    This will definitely be a political talking point as Washington looks over the details of the sale. On the one hand, the FDIC selling an insolvent bank to another bank, and sharing in the losses, is generally how bank failures play out. But a lot of Democrats won’t love that a bank they consider “too big to fail” is now getting even bigger. Indeed, JPMorgan normally is barred from buying other banks because it controls more than 10 percent of the deposits in the country. But that cap doesn’t apply when the bank being bought is insolvent.

    To put things in perspective, First Republic had about $229 billion in assets, the second-largest bank failure in history, behind only Washington Mutual. JPMorgan has more than $3.7 trillion in assets. (One side note: Washington Mutual was also bought by JPMorgan after its collapse in 2008.)

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    #JPMorgans #purchase #Republic #means #economy
    ( With inputs from : www.politico.com )

  • Sri Lanka to introduce new laws to achieve green economy: President

    Sri Lanka to introduce new laws to achieve green economy: President

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    Colombo: Sri Lankan President Ranil Wickremesinghe has said that his government would introduce new laws to establish the country as a green economy, according to a statement from the Presidential Media Division.

    Addressing the Presidential Environment Awards 2021-2022 ceremony in Colombo on Friday, Wickremesinghe highlighted that it is not solely the responsibility of developing countries such as Sri Lanka to mitigate climate change, Xinhua news agency reported.

    The President emphasised that developed countries should also contribute to the cause.

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    The President noted that Sri Lanka will take the lead in ensuring that the developing economies receive the resources to mitigate climate change. It intends to play a role in the global campaign for climate change mitigation.

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    ( With inputs from www.siasat.com )

  • Eurozone economy avoids recession ‘by a whisker’

    Eurozone economy avoids recession ‘by a whisker’

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    The eurozone has defied predictions that the Ukraine war would plunge it into recession after a warm winter blunted the impact of higher energy prices.

    Data from Eurostat – the EU’s statistical agency – showed that growth in the 20 countries using the single currency stood at 0.1% in the first three months of 2023.

    The small overall increase disguised a wide variation across member states. The eurozone’s biggest economy, Germany, stagnated in the first quarter of 2023 after contracting by 0.5% in the final three months of 2022.

    Italy and Spain, the third and fourth-biggest eurozone economies, performed better than the markets had been expecting, each posting quarterly growth of 0.5%. France grew by 0.2%.

    However, analysts said growth prospects were likely to remain weak because of the determination of the European Central Bank (ECB) to combat strong underlying inflationary pressures with higher interest rates.

    Andrew Kenningham, the chief Europe economist at the consultancy Capital Economics, said: “The very small increase in GDP in the first quarter means a technical recession has been avoided by a whisker.

    “However, the economy has essentially stalled as domestic demand has been hit hard by the energy shock followed by monetary tightening. We think activity will remain weak in the coming quarters.”

    The small increase in growth in early 2023 followed a flat picture in the final three months of 2022 and reduced the year-on-year increase in output from 1.8% to 1.3%.

    Even though the eurozone economy has been flatlining for the past six months, its success in staving off a severe downturn has surprised economists, who this time last year were predicting a severe recession.

    Carsten Brzeski, the global head of macro at ING bank, said: “More resilient than expected is clearly one label to put on the eurozone’s economic performance. In fact, the eurozone economy has now been able to avoid what a few months ago was probably the best predicted recession ever.

    “The warmer winter weather, lower wholesale energy prices, the reopening of China and fiscal stimulus are the key drivers behind this better-than-expected performance.”

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    Neil Birrell, the chief investment officer at Premier Miton Investors, said: “The eurozone economy has been resilient in the face of energy price increases and rate hikes over the past few months, and while growth is slowing, this remained the case in the first quarter.

    “However, we are still likely to see the ECB press ahead with tighter policy measures when they meet on 4 May. There is nothing in this dataset to suggest that the economy is stalling or that inflation is beaten. In fact, the inflation data at country level suggests the opposite.”

    The annual inflation rate in the eurozone came down sharply in March from 8.5% to 6.9% but the ECB is concerned about core inflation, which excludes food and energy. This rose from 5.6% to a new record high of 5.7% last month, prompting forecasts that the ECB will raise rates by 0.25 percentage points when it meets next week.

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    ( With inputs from : www.theguardian.com )

  • For Wall Street, there’s no Morning in America for Biden’s economy

    For Wall Street, there’s no Morning in America for Biden’s economy

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    And fresh risks loom for Biden’s reelection campaign economy, including a potentially market-shaking fight over raising the debt limit and the risk of a banking industry meltdown that’s causing lenders to tighten up on credit.

    “The U.S. economy is unwell, and it’s starting to show,” Gregory Daco, chief economist at EY-Parthenon, tweeted Thursday morning.

    The government’s latest GDP report Thursday underlined those concerns. The Commerce Department reported the economy expanded by just 1.1 percent in the first three months of the year, well below expectations of 2 percent growth and down from 2.6 percent in the fourth quarter of last year.

    Biden’s bullish comments echoed President Ronald Reagan’s “Morning in America” reelection theme from 1984. Yet unlike then, the economy is clearly slowing now, presenting Biden with a potential hurdle to his securing a second term.

    Still, the GDP report included some bright spots, including continued strong consumer spending, which drives about two-thirds of economic growth. And the economy has remained remarkably resilient, adding over 300,000 jobs per month in the first quarter, something Biden noted in comments on the growth figures on Thursday.

    “Today, we learned that the American economy remains strong, as it transitions to steady and stable growth,” the president said in a prepared statement. “This past quarter, real personal disposable income increased and American consumers continued to spend, even as the overall pace of growth moderated.”

    Yet most Wall Street banks and many economists — even left-leaning allies of Biden — predict a downshift once the impact of all the Fed rate hikes works through the system along with the fallout from tighter credit standards.

    “We continue to expect economic growth to slow, and we are preparing for a range of scenarios,” Wells Fargo CEO Charlie Scharf said on the bank’s recent first-quarter earnings call.

    Bank of America CEO Brian Moynihan said on a call last week: “We see and our experts see a mild recession coming.”

    Similar comments are peppering earnings calls across the finance industry. Few executives are predicting a major decline in the economy, but many believe the long run of modest or better growth will finally come to a close with the jobless rate starting to rise again from record lows.

    And even some Biden allies like former Treasury Secretary Larry Summers are warning that the economy will have to decline significantly to finally break the back of inflation.

    “I think we’re going to have difficulty getting near a 2 percent inflation target until and unless the economy slows down substantially,” Summers said at an investment conference this week.

    The latest reading on the economy was driven by a declining housing industry slammed by higher interest rates. Consumer spending remained resilient but is also likely to come under more pressure as Covid-era savings run out and inflation continues to pinch wallets. And the report showed inflation rising, not falling as the Fed expects, meaning another rate hike is likely when central bank policymakers meet next week.

    “This morning’s data was the worst of both worlds, with growth down and inflation up,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a client note.

    And even Biden, in his reelection announcement, acknowledged that while he envisions greater prosperity ahead, he is aware of the risks, including prices that remain too high.

    “We’ve got a lot more work to do, though,” he told union workers. “I know folks are struggling with inflation,” he said, but added that “it’s a global problem.”

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    #Wall #Street #Morning #America #Bidens #economy
    ( With inputs from : www.politico.com )

  • US economy grew at weak 1.1% rate in Q1 in sign of slowdown

    US economy grew at weak 1.1% rate in Q1 in sign of slowdown

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    The housing market, which is especially vulnerable to higher loan rates, has been battered. Consumer spending, which fuels roughly 70% of the entire economy, has softened. And many banks have tightened their lending standards since the failure last month of two major U.S. banks, making it even harder to borrow to buy a house or a car or to expand a business.

    Many economists say the cumulative impact of the Fed’s rate hikes has yet to be fully felt. Yet the central bank’s policymakers are aiming for a so-called soft landing: Cooling growth enough to curb inflation yet not so much as to send the world’s largest economy tumbling into a recession.

    There is widespread skepticism that the Fed will succeed. An economic model used by the Conference Board, a business research group, puts the probability of a U.S. recession over the next year at 99%.

    The Conference Board’s recession-probability gauge had hung around zero from September 2020, as the economy rebounded explosively from the COVID-19 recession, until March 2022, when the Fed started raising rates to fight inflation.

    Consumers, whose spending accounts for roughly 70% of U.S. economic output, seem to be starting to feel the chill. Retail sales had enjoyed a strong start in January, aided by warmer-than-expected weather and bigger Social Security checks. But in February and again in March, retail sales tumbled.

    The worst fears of a 2008-style financial crisis have eased over the past month. But lingering credit cutbacks, which were mentioned in the Fed’s survey this month of regional economies, is likely to hobble growth.

    Political risks are growing, too. Congressional Republicans are threatening to let the federal government default on its debts, by refusing to raise the statutory limit on what it can borrow, if Democrats and President Joe Biden fail to agree to spending restrictions and cuts. A first-ever default on the federal debt would shatter the market for U.S. Treasurys — the world’s biggest — and possibly cause a global financial crisis.

    The global backdrop is also looking bleaker. The International Monetary Fund this month downgraded its forecast for worldwide economic growth, citing rising interest rates around the world, financial uncertainty and chronic inflation. American exporters could suffer as a consequence.

    Still, the U.S. economy has surprised before. Recession fears rose early last year after GDP had shrunk for two straight quarters. But the economy roared back in the second half of 2022, powered by surprisingly sturdy consumer spending.

    A strong job market has given Americans the confidence and financial wherewithal to keep shopping: 2021 and 2022 were the two best years for job creation on record. And hiring has remained strong so far this year, though it has decelerated from January to February and then to March.

    The jobs report for April, which the government will issue on May 5, is expected to show that employers added a decent but still-lower total of 185,000 jobs this month, according to a survey of forecasters by FactSet.

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    ( With inputs from : www.politico.com )