Federal Reserve says Economy is Not in Recession

admin July 28, 2022

0 6 minutes read

Powell stays sunny

The Federal Reserve continues its aggressive campaign to contain inflation even as the economy begins to slow. The US Central Bank yesterday raised interest rates for the fourth time this year. This time he is 3 out of 4 percentage points. Investors welcomed the move and the S&P 500 saw him up nearly 3% by the end of his day. The futures market suggests the stock market will open slightly lower today. The Fed’s benchmark short-term interest rate has risen from near zero in March to 2.5% now.

But the big question for many is whether the economy will slow down too much. At yesterday’s press conference, Fed Chairman Jerome Powell was asked in every way whether he thought the economy was in or headed for recession. Not at all.

The Fed is more optimistic about a soft landing than Wall Street. Powell said a recession was not in his outlook, according to Gianna Smirek of The Times. said to show He added that the Fed plans to keep raising rates until the end of 2023.

In part, the mixed data on the economy allows the Fed to remain optimistic. Consumer confidence has plummeted, but corporate earnings continue to rise and unemployment remains low. The Times, his opinion colleague Peter, who writes a newsletter on business and the economy, said that while GDP and gross domestic income (another measure of economic activity) should go relatively closely together, recently pointed out that there is a divergence. The difference between the two measurements is his largest since 1947.

However, the Fed is probably not a credible recession messenger. The central bank says it can cut inflation without slowing the economy. Many question it. State Street Global Advisors strategist Michael Arone told DealBook: “I’ve always taken what the Federal Reserve said with a little salt, but when it comes to a recession, as I told my team this morning, it’s a lot of salt.”

The recession issue becomes clearer this morning when the Bureau of Economic Analysis releases its first estimates of the economy’s second-quarter performance. Follow The Times’ live coverage of reactions to GDP figures.

What’s happening here

Spirit Airlines and JetBlue agree to merge. Their deal was announced a day after Spirit and Frontier terminated the proposed deal after months of negotiations. JetBlue said he will pay $33.50 in cash for Spirit shares, which closed at $24.30 yesterday. But antitrust regulators could derail a merger or demand tough concessions.

Senator Joe Manchin reverses and agrees to action on climate and tax. Less than two weeks after overturning hopes for such a deal, Democrats in West Virginia said they would support including hundreds of billions of dollars for climate and energy programs and tax increases. changed his mind is not clear.

Senate passes CHIPS Act to boost American chip manufacturing. The bill provides $280 billion to expand U.S. manufacturing and technology capabilities, including $52 billion in subsidies and additional tax credits for companies that manufacture silicon chips domestically.

The lending arm, owned by Berkshire Hathaway, will pay $20 million to settle the redlining lawsuit. State and federal prosecutors have accused Trident Mortgage of discouraging people in non-white areas of Philadelphia from applying for mortgages. The Justice Department said the settlement was the second largest in history.

Stellantis, maker of the Jeep, Peugeot and Fiat brands, reports record profits. The carmaker announced this morning that its profits rose by a third to 8 million euros. Supported by higher margins in North AmericaAutomakers such as Ford and General Motors have also benefited from higher new-car prices, but inflation drives up the cost of materials and parts.

EXCLUSIVE: Using the FTC to Track Firearm Manufacturers

A new bill introduced in Congress today seeks to use the authority of the Federal Trade Commission to limit the proliferation of guns. This bill would allow the FTC to investigate firearm manufacturers for false advertising practices. That’s something the agency has a responsibility to do for other industries, but it’s forbidden to do with gun manufacturers that have long enjoyed special protection from Washington.

This is the latest front in Washington’s battle over gun control after the Uvalde shooting. The bill is sponsored by Rep. Tom Malinowski, a Democrat from New Jersey, and Rep. Robin Kelly, a Democrat from Illinois, and Vice Chair of Congress’ Gun Violence Prevention Task Force. Have the FTC submit a report to Congress within one year to identify ads that appeal to users under the age of 18, feature semi-automatic weapons, or that imply or promote the illegal use of firearms. I am asking you to submit

Gun control advocates have been calling for the FTC to investigate gun makers for years, without success. The bill has a pretty good chance of passing in the House, but is likely to be challenged in the Senate, so even if it doesn’t become law, it could influence the FTC to sue gun makers. there is. “This bill would ultimately subject the gun industry and its advertising practices to oversight and scrutiny that would apply to other industries, hold corporations accountable for marketing to children, and provide impressive consumers with the weapons of war.” We make it clear that false marketing has consequences,” Malinowski said in a statement.

Meta faces new realities around acquisitions

The FTC yesterday sued social media giant Meta, formerly known as Facebook, to block its acquisition of virtual reality startup Within. It’s the first antitrust lawsuit against the tech giant since Rina Khan took the commission, and it’s also the first company to test one of Khan’s new branded antitrust enforcement tenets. . In other words, the tech giants should not only consolidate their markets further, but also stop focusing on new ones.

The lawsuit puts Khan on a collision course with Mark Zuckerberg, Meta CEO Zuckerberg, is betting the company’s future on the growth of virtual and augmented reality, and sluggish ad sales make the transition look more urgent. The lawsuit could undermine his Metaverse ambitions, write David McCabe and Mike Isaac of The Times.

Mehta said the case was “based on ideology and speculation.” It’s also a risk for Khan. Regulators have traditionally focused on cracking down on deals that combine two big companies that are already in competition. Courts have also been reluctant to block mergers based solely on the idea that the two companies would be competitors without a deal. But the FTC said in its complaint that Facebook would be forced to acquire customers on its own rather than use its profits and dominant position in social networking to buy out competition in new markets. argue that it should.

For Khan, just filing a lawsuit could be considered a win. By suing Facebook, she begins laying the groundwork for restructuring the competition laws she’s promoting. Former FTC Chairman William Kovacic said, “This is a riskier lawsuit, but they think it’s worth bringing because if successful, it will help broaden the front lines of law enforcement.” says.

“We are piling up a tsunami of grain, producing more than we can export.

— Georg von Nolcken, CEO of Continental Farmers Group, Ukraine. Farmers in the country are skeptical An agreement will be reached with Russia to resume grain exports. 20 million tons of grain are trapped in Ukraine, exacerbating the global hunger crisis.

Cryptocurrency Scammers Infiltrate App Stores

Apple and Google are not cryptocurrency companies. But their app store is the gateway to cryptocurrencies, and they came under renewed scrutiny after authorities warned of a spike in fraud that cost investors more than $40 million. I’m here. Senate Banking Committee Chairman Sherrod Brown yesterday sent a letter to Google’s Sundar Pichai and Apple’s Tim Cook, shared exclusively with Dealbook, telling the chief executives how their companies are doing. I asked them to explain how they screened out fraudsters.

Cybercriminals use legitimate company names and logos to create apps To lure investors, the FBI warned Recommendation Last week we cited such apps on Google Play and Apple App Store. Brown believes companies should play an active role in cracking down on these scams, writing, “It’s imperative that app stores have the right safeguards in place.” By May 10th, you should explain your approval process, security measures, reporting options for users, and engagement with law enforcement.

The scrutiny against Apple and Google is in the crypto industry’s calculus. The digital asset crash has bankrupted companies, hurt retail investors, and plagued lawmakers rush to draft legislationA blockchain executive visiting Washington told DealBook that everyone she spoke to on Capitol Hill was concerned by the crash and focused more than ever on action. Brown, crypto critic Even before the recession, We will be holding a public hearing on crypto scams and risks today.