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‘Too early for victory laps’: Fed inflation fight looms over Biden on December 12, 2023 at 9:04 pm Business News | The Hill
The next chapter of the Federal Reserve’s fight against inflation will stretch through the 2024 election, putting President Biden in a pinch as he campaigns on a yet-to-be-seen soft landing.
The central bank has walked a tightrope to cool the economy and bring down inflation without triggering a recession. The Fed began its battle with an aggressive series of rate hikes, then paused in September as inflation fell steadily over the past 18 months.
After its final meeting of the year concludes Wednesday, the Fed’s rate-setting committee will announce its next step in the fight against inflation after a year of remarkable progress.
While experts don’t expect the Fed to declare victory, they believe the bank is well on its way toward delivering a “soft landing” — a return to low inflation without a recession.
“The odds of a soft landing have certainly increased dramatically in recent months. There’s probably a better than 50-50 chance that we do get that very rare soft economic landing, but it’s too early for victory laps,” Greg McBride, chief financial analyst for Bankrate.com, told The Hill.
The U.S. economy is in a much better place than it was a year and a half ago, economists told The Hill, with inflation falling, strong economic growth and low unemployment.
The economy’s success came in the face of headwinds, including the spectacular collapse of Silicon Valley Bank and Signature Bank this spring, the resumption of student loan payments, the ongoing conflict in Ukraine and the war between Israel and Hamas.
“The U.S. economy is quite resilient. It has been the big story of this year,” Niladri Mukherjee, chief investment officer at TIAA Wealth Management, told The Hill.
Some economists argue the economy is already on track to see lower inflation without a recession, which was widely feared when the bank began hiking rates.
“In my opinion, the soft landing is in the bag,” Claudia Sahm, a former Fed economist and the founder of Sahm Consulting, told The Hill. She is best known as the creator of the “Sahm Rule,” an early warning recession indicator based on the three-month average national unemployment rate.
“We could sustain this labor market. The COVID disruptions, Ukraine disruption and inflation continue to work themselves out. That’s the path we’re on,” Sahm added. “That was not clear last year. Last year was really rough.”
Bidenomics and the 2024 presidential race
Inflation has fallen from its peak topping 9 percent in June 2022 to 3.1 percent in November, according to the latest consumer price index released Tuesday by the Labor Department. That’s still above the Fed’s 2 percent inflation target but within striking distance.
President Biden’s reelection campaign used last week’s jobs report, which showed higher-than-expected job gains, to make the case that he’s “cleaning up the economic disaster” left by his predecessor and presumed challenger in the 2024 race, former President Trump.
But it may be too soon to tell whether the economy is a winning message for Biden as the plane is still coming in for landing.
“This period of incredibly high inflation absolutely does not play well for Biden,” said Michelle Holder, an assistant economics professor at John Jay College.
While it looks like the U.S. economy is coming in for a soft landing, Americans remain concerned with high prices as they’re squeezed by higher borrowing costs. And even Democrats seem to have a hard time backing Biden’s economy.
A recent New York Times/Siena College poll of voters in six battleground states found 62 percent of Biden voters rated the economy “fair” or “poor.” Trump is leading Biden in five of those six battleground states, the poll found, though the hypothetical general election match-up is more than a year away.
While the economy is improving by many measures, many Americans are struggling. Those who enjoyed pandemic stimulus-padded safety nets are seeing those savings dwindle, and credit card, mortgage and auto payment delinquency rates have all risen as borrowing costs have ballooned.
“Sixty percent of U.S. households live paycheck to paycheck. The prices are 20 percent higher than they were pre-pandemic and for a lot of households, income hasn’t increased 20 percent,” McBride said.
“So buying power has been squeezed, budgets are tighter, savings has been eroded, credit card debt has been added, and that reality is weighing on millions of households,” he added.
Where the Fed goes from here
The Fed is widely expected to hold interest rates steady on Wednesday at a range of 5.25 percent to 5.5 percent, the range set by its most recent rate hike in July.
With rates at their highest level in more than two decades, Fed officials have been willing to sit back and watch the impact of their previous hikes before raising borrowing costs again.
Fed Chair Jerome Powell has also warned the bank could hike rates again in 2024 if inflation shows signs of reigniting.
“My firm base case throughout all of this is the Fed is going to get 2 percent [come] hell or high water,” Sahm said, noting “the Fed’s only tool is fewer customers.”
Even so, the steady decline of inflation and rising pressure on low-income households is prompting calls for the Fed to consider cutting rates.
“As the inflation rate declines, the Fed’s not going to be able to keep rates at current levels indefinitely,” McBride says. Rates that stay high for too long risk tipping the U.S. economy and labor market into a recession.
While a recent estimate by UBS Investment Bank forecasts rate cuts as soon as March, the central bank will have to balance bringing interest rates down without tipping the economy into a recession.
Interest rate hikes target the demand side of the economy, dampening it by jacking up borrowing costs. But that doesn’t tell the full story.
“The misdiagnosis here was the assumption that inflation was largely demand, rather than supply, driven,” Moody’s Analytics Deputy Chief Economist Cristian deRitis told The Hill.
“Fed policy kept inflation from accelerating further by keeping demand in check, but most of the decline in inflation is attributable to improvements in the supply side of the economy.”
Mukherjee warned that if the Fed cuts interest rates too quickly, economic growth could reaccelerate and cause the Fed to reverse course and hike rates that the market is expecting to see cut.
“Everybody’s extrapolating too far up the path of no recession,” Mukherjee said. “That’s what makes it risky for investors.”
Holder said that, “The way to go is to be slow, steady and modest in order to mitigate these feedback effects with higher shelter costs and the very real feedback effect of you raise interest rates, you slow down the labor market, unemployment increases.”
A labor economist who studies women and people of color in the labor market, Holder noted Black workers in particular are experiencing historically low levels of unemployment.
“I do hope the Fed stays the course and continues along this path that has led us to be in this vein of a soft landing because I don’t want to see the gains that Black workers have made be reversed,” Holder said.
Despite a slew of high-profile layoffs, particularly in the technology sector, the national unemployment rate has remained below 4 percent for the longest stretch in decades, edging down to 3.7 percent in November.
“The biggest dynamic that is still at play is the Federal Reserve and the labor market. It’s literally been these are the two fronts which are fighting each other and we will at some point know which direction the fight is breaking,” Mukherjee said. “And you could argue that will have a big say in who wins the next year’s election as well.”
Whether the economy will tip the election in Biden’s favor, or whether Americans will even credit him with a soft landing should it materialize, remains to be seen.
“Whether or not I believe this is going to make or break Biden, or actually break Biden, in terms of his presidential bid, I’m not ready to say that,” Holder said. “I’m not ready to say that inflation is the straw that broke the camel’s back.”
Business, Economy, 2024 presidential election, Donald Trump, federal reserve, inflation, Interest rates, Jerome Powell, Joe Biden The next chapter of the Federal Reserve’s fight against inflation will stretch through the 2024 election, putting President Biden in a pinch as he campaigns on a yet-to-be-seen soft landing. The central bank has walked a tightrope to cool the economy and bring down inflation without triggering a recession. The Fed began its battle with…
Business
The Cities Bracing for Trump’s Immigration Crackdown
In the wake of Donald Trump’s recent election victory and his promise of “the largest deportation operation in American history,” several major U.S. cities are bracing for potentially seismic shifts in their economic and social landscapes. As the nation grapples with the implications of this proposed policy, urban centers that have long been havens for immigrant communities find themselves at the epicenter of a looming storm.
Los Angeles, often dubbed the “City of Angels,” stands to lose more than its celestial nickname suggests. As a primary gateway for immigrants, the city’s vibrant tapestry of cultures and its economic engine could face significant disruption. From the bustling streets of Koreatown to the sun-drenched orchards of the Central Valley, the absence of undocumented workers could leave gaping holes in the city’s workforce and cultural identity.
Across the country, New York City, with its iconic skyline and melting pot reputation, faces its own reckoning. The Big Apple’s 5.9 million immigrants, many of whom are undocumented, form the backbone of industries ranging from construction to healthcare. The potential exodus could transform neighborhoods like Jackson Heights and Flushing, altering the very essence of what makes New York a global city.In the Sunshine State, Miami’s tropical allure belies the turbulent times ahead. Home to 2.5 million immigrants, the city’s economy relies heavily on sectors like tourism and hospitality – industries where undocumented workers often fill crucial roles. The potential deportation of these workers could send shockwaves through Miami’s economic ecosystem, from South Beach’s glitzy hotels to the agricultural heartlands of South Florida.
Chicago, the “City of Big Shoulders,” may find those shoulders significantly weakened. With 1.7 million immigrants in its metropolitan area, the Windy City’s diverse neighborhoods and industries face an uncertain future. From the meatpacking plants to the tech startups, Chicago’s economic resilience could be tested like never before.
In the Lone Star State, Houston and Dallas stand as twin testaments to the complexities of immigration policy. These Texas titans, each home to large immigrant populations, could see their booming economies stumble. The construction sites that dot their ever-expanding skylines and the service industries that keep these cities humming could face unprecedented labor shortages.
Out West, the San Francisco Bay Area’s reputation as a bastion of innovation and progress could be challenged. The region’s tech industry, often reliant on immigrant talent, might find itself grappling with a new reality. From Silicon Valley’s coding campuses to the agricultural expanses of the Central Valley, California’s economic powerhouse could face a reckoning. Phoenix, rising from the Sonoran Desert, could see its growth trajectory altered. As Arizona’s urban center, it stands at the forefront of the immigration debate, potentially facing not just economic impacts but social and political upheaval as well.
These cities, along with others like San Diego and Las Vegas, are not just facing potential economic disruptions. They are staring down the barrel of profound social change. Family separations, community fragmentation, and the erosion of cultural enclaves built over generations are all possible consequences of mass deportations. Moreover, the fiscal implications are staggering. Undocumented immigrants contribute billions in taxes annually, often without receiving the full benefits of their contributions. Their sudden absence could leave gaping holes in city budgets, potentially affecting public services and infrastructure projects.
As these urban centers brace for impact, the debate rages on. Supporters of stricter immigration policies argue for the need to enforce laws and protect American jobs. Critics warn of economic devastation and the unraveling of America’s urban fabric. What’s clear is that America’s cities stand at a crossroads. The coming months and years will likely reshape urban landscapes in ways both visible and invisible. From the foods we eat to the services we rely on, from the neighborhoods we call home to the very character of our cities, the impacts of this proposed immigration crackdown could be far-reaching and long-lasting. As the nation watches and waits, these cities – vibrant, diverse, and economically vital – find themselves on the front lines of a policy that could redefine what it means to be an American city in the 21st century.
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Business
How Trump’s Deportation Plans Could Reshape Major Cities
In the wake of Donald Trump’s recent election victory, his ambitious plans for mass deportations have thrust America’s urban centers into the spotlight. As the nation grapples with the potential implications of what Trump calls “the largest deportation operation in American history,” cities across the country are bracing for significant changes that could reshape their economic, social, and cultural landscapes.
The stakes are particularly high for metropolitan areas like New York, Los Angeles, Houston, Dallas, and Miami, which host the largest populations of unauthorized immigrants. These cities, along with other major urban hubs such as Chicago, Washington D.C., and San Francisco, stand at the forefront of a looming transformation that could reverberate throughout the nation.
Economic Tremors
Economists warn that the proposed deportations could send shockwaves through urban economies. Mark Zandi, chief economist at Moody’s, cautions that businesses would face “significant challenges” if a substantial number of immigrants were removed. Industries such as construction, hospitality, and healthcare—pillars of urban economies—could face severe labor shortages.
Joe Brusuelas, chief economist at RSM, emphasizes the potential ripple effects: “The native-born workforce cannot meet current labor demands.” This labor gap could lead to increased wages, potentially rekindling inflation—a concern that looms large over city planners and policymakers alike.
Community Fabric Under Strain
Beyond economic considerations, the social fabric of cities hangs in the balance. Elena, a Nicaraguan immigrant in Houston, voices a fear echoed in immigrant communities across the nation: “I’m scared… This is my home.” The threat of family separations, particularly in mixed-status households, casts a long shadow over urban neighborhoods.
Immigrant advocacy groups like FIEL are mobilizing, advising clients to prepare for “anything that can happen.” This atmosphere of uncertainty could lead to decreased community engagement and cooperation with local authorities, potentially impacting public safety and community cohesion.
Cities at a Crossroads
As the debate intensifies, cities find themselves at a crossroads. Some, like New York and Los Angeles, have historically positioned themselves as “sanctuary cities,” often at odds with federal immigration enforcement. The impending clash between federal policy and local governance promises to be a defining feature of this new political landscape.
Meanwhile, the logistical challenges of implementing such a massive deportation operation remain daunting. Questions abound regarding detention facilities, transportation networks, and the sheer manpower required to carry out Trump’s vision.
Looking Ahead
As America’s urban centers brace for potential change, the full impact of Trump’s deportation plans remains to be seen. Legal challenges are all but certain, and the resilience of America’s cities will be put to the test.
What is clear is that the coming months and years will be pivotal for urban America. As Jason Miller, a senior Trump adviser, puts it, the plan is to “immediately reinstate” immigration policies from Trump’s first term. For America’s cities, this could mean a period of unprecedented change, challenge, and, potentially, transformation.
As the nation watches and waits, the story of America’s cities in the face of this ambitious deportation plan is just beginning to unfold. The outcome will undoubtedly shape the future of urban life in America for years to come.
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Business
Donald Trump Wins 2024 USA Election
Based on the election results, Donald Trump has indeed won the 2024 U.S. presidential election, defeating Vice President Kamala Harris. Here’s an analysis of the key statistics and implications:
Electoral College Victory
Donald Trump has secured the presidency by winning crucial battleground states and flipping some key states that were previously held by Democrats. The final Electoral College tally is still being determined, but Trump has surpassed the 270 electoral votes needed to win.
Battleground State Performance
Trump’s victory was largely secured by winning several critical swing states:
- Wisconsin: Trump’s win here was pivotal in securing his path to victory.
- Pennsylvania: This state flipped back to Republican control.
- Georgia: Another key state that Trump managed to win back.
- Michigan: Trump successfully flipped this traditionally Democratic stronghold.
Popular Vote and Voter Priorities
While the final popular vote tally is still being calculated, exit polls provide insight into voter priorities:
- Economy and democracy were top concerns for voters.
- Abortion and immigration also played significant roles in voter decision-making.
Congressional Control
The election results extend beyond the presidency:
- Republicans are set to take back the Senate majority, securing at least 51 seats.
- Control of the House of Representatives remains undetermined.
Media Implications
The outcome of this election could be seen as a challenge to mainstream media narratives for several reasons:
- Polling Discrepancies: Many pre-election polls suggested a tight race or even a slight Harris advantage in key states. Trump’s victory, particularly in battleground states, may indicate that polls underestimated his support.
- Narrative Shifts: Throughout the campaign, much of the mainstream media focused on Trump’s legal challenges and controversies. His victory suggests that these issues may not have resonated with voters as much as economic and policy concerns.
- Voter Priorities: The emphasis on issues like the economy and immigration in voter decision-making may indicate a disconnect between media focus and voter concerns.
- Electoral Predictions: Many mainstream outlets were cautious about predicting a Trump victory, even as results began to favor him. This hesitancy could be seen as a reflection of broader media skepticism about Trump’s chances.
- Underestimation of Trump’s Base: The results suggest that Trump’s core support remained strong and potentially grew, despite negative coverage in much of the mainstream media.
It’s important to note that while the election outcome may challenge some media narratives, it doesn’t necessarily invalidate all mainstream reporting. The complex factors influencing voter behavior and the challenges of accurate political forecasting remain subjects of ongoing analysis and debate.
As the dust settles on this historic election, both the media and political analysts will likely engage in extensive reflection on the factors that led to Trump’s victory and the implications for future political coverage and analysis.
Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!
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