Tag Archives: U.S. Economy

Feds marching Interests Rates higher in a risk rewards market as Dow drops 100 points

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Dow drops 100 points after the Fed dashes hopes for a pivot to softer tightening stance
  • Markets will likely continue to seesaw until it is clear inflation has cooled off and that the Fed has stopped marching rates higher, but traders split over where interest rates are headed. Any data that shows the U.S. economy isn’t slowing as the central bank tightens policy will likely weigh on stocks.
  • “In our view, the risk-reward for markets over the next three to six months is unfavorable, and today’s Fed statement supports that view”

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Cyber threats top agenda at White House meeting with Big Tech, finance executives

WASHINGTON (Reuters) – The White House will ask Big Tech, the finance industry and key infrastructure companies to do more to tackle the growing cybersecurity threat to the U.S. economy in a meeting with the President Joe Biden and members of his cabinet on Wednesday.

“Cybersecurity is a matter of national security. The public and private sectors must meet this moment together, and the American people are counting on us,” a senior administration official told reporters.

Cybersecurity has risen to the top of the agenda for the Biden administration after a series of high-profile attacks on network management company SolarWinds Corp, the Colonial Pipeline company, meat processing company JBS and software firm Kaseya. The attacks hurt the United States far beyond just the companies hacked, affecting fuel and food supplies.

The guest list includes Amazon.com Inc CEO Andy Jassy, Apple Inc CEO Tim Cook, Microsoft Corp CEO Satya Nadella, Google’s parent Alphabet Inc CEO Sundar Pichai and IBM Chief Executive Arvind Krishna, according to two people familiar with the event.

One official said private sector executives were expected to announce commitments across key areas, including technology and staffing.

The meeting comes as Congress weighs legislation concerning data breach notification laws and cybersecurity insurance industry regulation, historically viewed as two of the most consequential policy areas within the field.

Executives for energy utility firm Southern Co and financial giant JPMorgan Chase & Co are also expected to attend the event.

The event will feature top cybersecurity officials from the Biden administration, including recently confirmed National Cybersecurity Director Chris Inglis, as well as Secretary of Homeland Security Alejandro Mayorkas, to lead different conversations with industry representatives.

(Reporting by Andrea Shalal and Christopher Bing; Editing by Lisa Shumaker)

White House sees ‘summer of joy and freedom’ as COVID-19 shots surpass 300 million

By Andrea Shalal

WASHINGTON (Reuters) -The United States has administered 300 million COVID-19 vaccinations in 150 days, a White House official said on Friday ahead of President Joe Biden’s scheduled update on his administration’s vaccination program.

Biden’s government-wide push to accelerate vaccinations was paying off, with COVID-19 cases, hospitalizations and deaths down to their lowest levels since the start of the pandemic, the officials said.

While Biden would “make clear that there is more work to be done” to ensure an equitable response to the pandemic, the U.S. economy was experiencing its strongest rebound in decades, the White House said.

“The results are clear: America is starting to look like America again, and entering a summer of joy and freedom,” the White House said in a fact sheet.

The news comes days after the United States marked a grim milestone, surpassing 600,000 COVID-19 deaths.

The U.S. death toll remains the highest in the world, although other countries, including Brazil, Britain and Russia, have higher death rates as a measure of their populations.

A White House fact sheet said the number of COVID-19 deaths has decreased by 90% since Biden took office in January, when more than 3,300 Americans were dying each day, and highlighted big gains in the economy as people return to work.

It said more than 175 million Americans had now received at least one COVID-19 vaccine shot, and 55% of adults were fully vaccinated.

Addressing racial imbalances in vaccination rates remained a huge and continuing concern, the White House said, but pointed to gains there as well. In the past month, it said, people of color had accounted for 54% of nationwide vaccinations, while making up 40% of the U.S. population.

Vice President Kamala Harris visited a vaccination site at the Ebenezer Baptist Church in Atlanta on Friday, underscoring the importance of faith groups and community-based organizations in accelerating vaccinations and overcoming vaccine hesitancy.

“Church is always a healing place. It’s so appropriate that we’re doing this here,” she said in remarks at the historic church where Martin Luther King Jr. and his father once preached.

“We just need to get the word out. One of the most important ways is friend to friend, neighbor to neighbor … please help us get the word out,” Harris said, according to a pool press report on the visit.

(Reporting by Andrea Shalal; Editing by Chizu Nomiyama and Bill Berkrot)

U.S. manufacturing sector slows in April amid supply challenges

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. manufacturing activity grew at a slower pace in April, likely constrained by shortages of inputs amid pent-up demand unleashed by rising vaccinations and massive fiscal stimulus.

The Institute for Supply Management (ISM) said on Monday its index of national factory activity fell to a reading of 60.7 last month after surging to 64.7 in March, which was the highest level since December 1983.

A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index edging up to 65 in April.

The White House’s massive $1.9 trillion pandemic relief package and the expansion of the COVID-19 vaccination program to all adult Americans has led to a boom in demand. But the pent-up demand is pushing against supply constraints as the pandemic, now in its second year, has disrupted labor supply, leading to shortages that are boosting prices of inputs.

That has been most evident in the automobile industry, where a global semiconductor chip shortage has forced cuts in production. Ford Motor Co said last week the scarcity of chips slashed production in half in its second quarter.

Technology companies are also feeling the heat. Apple warned last week that the chip shortage could dent iPads and Mac sales by several billion dollars.

Demand for goods like motor vehicles and electronics has surged during the pandemic as Americans shunned public transportation and millions worked from home and took classes remotely. Robust consumer spending helped to lift gross domestic product growth at a 6.4% annualized rate in the first quarter.

Most economists expect double-digit GDP growth this quarter, which would position the economy to achieve growth of at least 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, its worst performance in 74 years.

The ISM survey’s measure of prices paid by manufacturers rose last month to the highest reading since July 2008.

The survey’s forward-looking new orders sub-index dropped to 64.3 after racing to 68.0 in March, which was the highest reading since January 2004.

Backlogs of uncompleted work increased last month as did export orders. Manufacturers started drawing down on inventories last month to meet demand. Business warehouses are almost bare, which should keep manufacturers busy and scrambling for resources for a while.

The survey’s manufacturing employment gauge fell to 55.1 after shooting up to 59.6 in March, which was the highest reading since February 2018. The index was well below the 61.5 forecast in a poll of economists, with the slowdown in hiring probably due to a scarcity of workers. Companies across many industries are struggling to find workers, even as employment is 8.4 million jobs below its peak in February 2020.

Federal Reserve Chair Jerome Powell last week acknowledged the worker shortage saying “one big factor would be schools aren’t open yet, so there’s still people who are at home taking care of their children, and would like to be back in the workforce, but can’t be yet.”

The worker shortage could hurt expectations for another month of blockbuster job growth in April. According to an early Reuters survey of economists, nonfarm payrolls likely increased by 950,000 jobs last month after rising by 916,000 in March.

The government is due to publish April’s employment report on Friday.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

Biden ally in U.S. Senate says Republicans have until end of May for infrastructure deal

By David Morgan

WASHINGTON (Reuters) – Republicans in Congress have until the end of May to negotiate provisions of an infrastructure bill before Democrats opt to move sweeping legislation on their own, one of U.S. President Joe Biden’s closest Senate allies predicted on Wednesday.

Democratic Senator Chris Coons of Biden’s home state of Delaware said several senior Senate Republicans had privately signaled they would support a package of up to $1 trillion that targets roads, bridges and other typical infrastructure areas and includes some tax increases to pay for legislation.

Biden has proposed a more sweeping $2 trillion infrastructure package, which invests in traditional projects but also seeks to change the course of the U.S. economy by addressing climate change and boosting human services such as elder care.

The president and his Democratic allies, who narrowly control both houses of Congress, have insisted that they want Republican support for the package but will not wait long before deciding whether to move forward on their own.

“I believe that President Biden is open to spending the next month negotiating what the possibility is,” Coons told Punchbowl News in an interview. He said he spoke to the president earlier this week.

If no clear deal exists by the May 31 Memorial Day holiday, Coons added, “I think Democrats just roll it up into a big package and move it.”

Biden is expected to meet with a bipartisan group of lawmakers on infrastructure next week, said White House spokeswoman Jen Psaki.

Coons said talks with “several fairly seasoned senior Republicans” suggest bipartisan support for a narrower bill that could be funded partially by higher gasoline taxes and a new fee for electric vehicles to be dedicated to road infrastructure.

But the president’s larger plan faces determined opposition from Republicans including Senate Minority Leader Mitch McConnell, who describes the Biden package as “a Trojan horse” for tax hikes and unnecessary spending.

“There’s broad bipartisan support for tackling the infrastructure issue. But it depends on what your definition is,” McConnell told a Wednesday news conference in his home state of Kentucky.

“Infrastructure is roads, is bridges. It’s broadband. But beyond that, they’ve thrown everything but the kitchen sink into it,” he said.

Republican opposition raises the odds Democrats will use a maneuver called reconciliation to pass a package with just their own votes. Democrats control half the 100 seats in the Senate with Kamala Harris, Biden’s vice president, the tie-breaking 51st vote.

(Reporting by David Morgan; Editing by Scott Malone and Howard Goller

Yellen says more work needed to shore up weaknesses revealed by pandemic

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said a rapid recovery in the United States would boost overall global growth, but more work was needed to shore up weaknesses the COVID-19 crisis exposed in the non-bank financial sector, global supply chains and the social safety net.

Yellen on Tuesday told leaders of the International Monetary Fund and the World Bank that the Biden administration had decided to “go big” with its COVID-19 response to avert the negative “scarring” impact of long-lasting unemployment, adding that she hoped the U.S. economy would return to full employment next year.

Speaking during the IMF and World Bank spring meetings, Yellen said the crisis had dealt a huge blow worldwide, and it was the responsibility of advanced economies to ensure that years of progress in reducing poverty were not reversed by the crisis.

“We are going to be careful to learn the lessons of the (global) financial crisis, which is: ‘Don’t withdraw support too quickly,'” Yellen said, “And we would encourage all those developed countries that have the capacity… to continue to support a global recovery for the sake of the growth in the entire global economy.”

Yellen said she hoped global finance officials make progress on approving a new allocation of the IMF’s emergency reserve, or Special Drawing Rights, during the meeting, and said it was critical to tackle global debt issues exacerbated by the crisis.

She also underscored the Biden Administration’s commitment to tackling climate change at home and ensuring the needed “transfer of resources” to enable similar actions in developing countries.

“We need to make sure that we help developing countries meet their climate goals along with their development objectives. And the availability of green finance is critical to that,” she said, noting that addressing climate change would also bring opportunities for investment to the private sector.

Yellen said it was critical to ensure the world was better prepared for the next global health crisis, citing the need to improve the resilience of supply chains and social safety nets around the world.

She said the core banking sector had been strengthened after the 2008-2009 financial crisis, but some areas in the non-bank financial sector “showed tremendous stress” during the pandemic and would require attention.

(Reporting by Andrea Shalal and David Lawder; Editing by Chris Reese and Dan Grebler)

‘Every step of the way’: McConnell pledges battle over Biden infrastructure plan

WASHINGTON (Reuters) -U.S. Senate Minority Leader Mitch McConnell on Thursday said he will fight President Joe Biden’s $2 trillion infrastructure plan “every step of the way” and predicted the sweeping package would not see support from Republican lawmakers in Congress.

At a news conference in Owensboro, Kentucky, McConnell said the Biden proposal underscores deep philosophical differences between Republicans and Democrats over taxes and the national debt. He told reporters that he does not believe the White House has a public mandate to pursue the plan.

“I’m going to fight them every step of the way, because I think this is the wrong prescription for America,” he said.

Biden’s infrastructure plan, unveiled on Wednesday, charts a course for dramatic change in the direction of the U.S. economy and includes investments in traditional projects like roads and bridges along with climate change initiatives and human services like elder care.

“There’s more money in that plan that the president laid out in Pittsburgh for electric cars than for roads and bridges. Let me say that again: more money for electric cars than roads and bridges,” McConnell said.

Biden has proposed funding the package by raising the tax rate on U.S. corporations to 28% from 21% and making it harder for companies to use offshore tax shelters and other methods to reduce their tax burdens.

McConnell warned that “massive tax increases” would harm the economy and said the package’s spending level could run up the debt. The White House says the infrastructure proposal would more than pay for itself.

“My view about infrastructure is, we ought to build that which we can afford and not either whack the economy with major tax increases or run up the national debt,” he said.

(Reporting by David Morgan and Doina Chiacu, Editing by Franklin Paul and Sonya Hepinstall)

Biden targets big offshore wind energy expansion to fight climate change

By Richard Valdmanis

(Reuters) – The administration of U.S. President Joe Biden said on Monday that it has set a goal to vastly expand the nation’s offshore wind energy capacity in the coming decade by opening new areas to development, speeding environmental permitting, and boosting public financing for projects.

The plan is part of Biden’s broader effort to rapidly transition the U.S. economy to net zero greenhouse gas emissions to fight climate change, a politically controversial agenda that Republicans say could bring economic ruin but which Democrats say can create jobs while protecting the environment.

“President Biden believes we have an enormous opportunity in front of us to not only address the threats of climate change, but use it as a chance to create millions of good-paying, union jobs,” National Climate Advisor Gina McCarthy said in announcing the plan. “Nowhere is the scale of that opportunity clearer than for offshore wind.”

The plan sets a target to deploy 30 gigawatts of offshore wind energy by 2030, which the administration said would be enough to power 10 million homes and cut 78 million metric tonnes of carbon dioxide per year, while creating jobs in construction, development, and steel-making.

One of the first steps will be to open a new offshore wind energy development zone in the New York Bight, an area off the densely populated coast between Long Island, New York and New Jersey, with a lease auction there later this year.

The administration said it will also aim to prioritize environmental permitting and provide billions of dollars in public financing for offshore wind projects.

The United States currently has just two small offshore wind farms, the 30 megawatt Block Island Wind Farm off Rhode Island and a two-turbine pilot project off the coast of Virginia. There are more than 20 GW of proposed projects in various stages of development.

Europe, by contrast, has more than 20 GW of capacity and plans to expand that more than ten-fold by 2050.

(Writing by Richard Valdmanis; Editing by Marguerita Choy)

U.S. factory activity near 2-1/2-year high; COVID-19 disrupting supply chains

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. factory activity accelerated to its highest level in nearly 2-1/2 years in December as the coronavirus pandemic continues to pull demand away from services towards goods, though spiraling new infections are causing bottlenecks in supply chains.

The strength in manufacturing reported by the Institute for Supply Management (ISM) on Tuesday likely helped to soften the blow on the economy in the fourth quarter from the relentless spread of COVID-19 and government delays in approving another rescue package to help businesses and the unemployed.

The ISM said the virus was “limiting manufacturing growth potential” because of absenteeism and short-term shutdowns to sanitize facilities at factories and their suppliers.

“U.S. manufacturing should fare reasonably well this winter as businesses need to restock inventories and the shift in consumer spending away from services to goods helps manufacturers,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The ISM’s index of national factory activity rebounded to a reading of 60.7 last month. That was the highest level since August 2018 and followed a reading of 57.5 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index would slip to 56.6 in December.

But some of the surprise rebound in the ISM index was due to an increase in the survey’s measure of supplier deliveries to a reading of 67.6 last month from 61.7 in November.

A lengthening in suppliers’ delivery times is normally associated with a strong economy and increased customer demand, which would be a positive contribution. But in this case slower supplier deliveries also indicate supply shortages related to the pandemic.

Nevertheless, demand for manufactured goods has been strong as the resurgence in new COVID-19 cases has led to fresh business restrictions across the United States, largely impacting the vast services sector.

A large section of the population continues to work and take classes at home, fueling a scramble for electronics, home improvement products and other goods like exercise equipment.

Computer and electronic products manufacturers said they continued to have “tailwinds from the COVID-19 pandemic research support for vaccines and treatments,” adding that “business picked up for us in the last month.”

Makers of miscellaneous products said “sales are now exceeding pre-COVID-19 levels.” Electrical equipment, appliances and components producers reported that business was stronger than expected, “with higher demand for many products.”

Despite strong demand, manufacturing output is still about 3.8% below its pre-pandemic level, according to the Federal Reserve. That could persist for a while as the new wave of infections causes disruptions to labor and the supply chain.

Food manufacturers complained the virus was “affecting us more strongly now than back in March.” Similar sentiments were echoed by transportation equipment makers who said the outbreaks were constraining suppliers. Plastics and rubber products also reported that their suppliers were having difficulty finding and retaining labor.

STRONG ORDERS GROWTH

The ISM report followed on the heels of data on Monday showing strong construction spending in November and October. Strength in the two sectors supports economists’ predictions that the economy grew at around a 5% annualized rate in the fourth quarter after a record 33.4% pace in the third quarter.

The manufacturing boost to gross domestic product would come through an accumulation of inventory by businesses.

The virus and depleted government pandemic money took a bite out of consumer spending in November. More than $3 trillion in government pandemic relief fueled growth in the July-September quarter after the economy contracted at a historic 31.4% rate in the second quarter. Nearly $900 billion in fiscal stimulus was approved in late December.

The ISM’s forward-looking new orders sub-index rose to a reading of 67.9 last month from 65.1 in November. Strong orders growth boosted manufacturing employment, which had contracted in November. The ISM’s manufacturing employment gauge rebounded to 51.5 from a reading of 48.4 in November.

But the supply chain gridlock is driving up costs for manufacturers. The survey’s prices paid index jumped to a reading of 77.6 last month, the highest since May 2018, from 65.4 in November. That raises the risk of higher inflation this year, though high unemployment could limit price pressures.

The labor market has lost steam in tandem with the economy since job growth peaked at a record 4.781 million in June.

According to an early Reuters survey of economists, nonfarm payrolls probably increased by 100,000 jobs last month after rising by 245,000 in November. That would mean the economy recouped about 12.5 million of the 22.2 million jobs lost in March and April. The government is scheduled to publish December’s employment report on Friday.

(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Paul Simao)

U.S. states enlist medical, nursing students to give out COVID-19 vaccine

By Tina Bellon and Melissa Fares

NEW YORK (Reuters) – U.S. states, facing a backlog in administering coronavirus vaccines, are asking medical and nursing students, and even firefighters, to help give the shots and free up healthcare workers battling a raging pandemic at overcrowded hospitals.

At least seven state health departments are seeking volunteers for their vaccination sites, some partnering with local universities or nursing schools to offer incentives such as tuition discounts and hands-on training. Others are teaching first responders to administer shots.

The national rollout of COVID-19 vaccines are the best hope to end a pandemic that has cost the lives of more than 320,000 Americans and crippled the U.S. economy.

This month, U.S. regulators authorized the first two COVID-19 vaccines, one from drugmakers Pfizer Inc and BioNTech SE and another from Moderna Inc.

As of Wednesday, nearly 10 million doses have been delivered across the country, but only about 1 million administered due to staffing shortages at hospitals and the special requirements for preparing the shots. The slow pace of the vaccination campaign threatens the federal government’s goal of inoculating nearly 20 million people by year’s end.

While inoculation is currently focused on frontline healthcare workers, the vaccination drive is expected to expand to tens of millions of essential industry workers beginning in January or February.

From New York to Tennessee, states are hoping medical and nursing students will free up medical staff focused on tending to the record numbers of new COVID-19 patients.

“Being able to staff vaccination clinics with volunteers from our reserve workforce means that staff at the vaccination sites can continue to perform their normal duties, which is crucial as our hospitalization rate has increased,” said a spokeswoman for Indiana University’s School of Medicine.

‘STRIKE BACK AGAINST COVID’

As the first vaccines arrived, Indiana health officials called on the state university because of its far-reaching campuses. More than 630 of Indiana University’s medical and nursing students have signed up as volunteers and receive 90 minutes of online and hands-on training.

Fourth-year medical student Nicholas Clough began administering COVID-19 vaccines to frontline healthcare workers last Wednesday. He has lost several family members during the pandemic.

“It finally felt like it was a real, tangible strike back against COVID,” said Clough, 26.

The University of Wisconsin is offering a $500 tuition credit to students with medical credentials working at understaffed hospitals during the winter break, including administering vaccines.

The university is also talking to government officials to turn universities into vaccine distribution hubs, a spokesman said.

In California, fire department paramedics have been trained to administer the vaccine, initially to fellow employees.

“They have already received online training and will have another one-hour live training session,” said Peter Sanders, a spokesman for the Los Angeles Fire Department, which expected its first shipment of the Moderna COVID-19 vaccine on Wednesday.

Michigan has set up a volunteer registry allowing officials and hospitals to recruit help for upcoming vaccine clinics.

“We encourage all medical and nursing students to register now so they will be ready when their assistance is needed!” a health department spokeswoman said.

Other states are not actively recruiting nursing students. A spokeswoman for Georgia’s health department said the state might do so later, as the vaccine becomes more widely available to the public.

Depending on state licensing laws, medical and nursing students are allowed to administer vaccines, often under supervision of a fully-licensed professional.

Facing a shortage of vaccinators, the Association of Immunization Managers, a nonprofit representing state and local health officials, recommends relaxing regulation or adjusting licensing requirements.

At least two states, Massachusetts and New York, have changed their laws in recent weeks to expand those who are eligible to give shots.

New York Governor Andrew Cuomo on Dec. 13 allowed medical, nursing, pharmacy, dentistry, podiatric and midwifery students to administer flu and COVID-19 shots under supervision.

(Reporting by Tina Bellon and Melissa Fares in New York; Additional reporting by Deena Beasley in Los Angeles; Editing by Michele Gershberg and Aurora Ellis)