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Tag: economic conditions

  • Inflation data shows US prices were still uncomfortably high last month | CNN Business

    Inflation data shows US prices were still uncomfortably high last month | CNN Business

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    Minneapolis
    CNN Business
     — 

    New inflation data shows that US prices were still uncomfortably high last month, despite aggressive action from the Federal Reserve to rein in decades-high inflation.

    The Personal Consumption Expenditures Index, which measures prices paid by consumers for goods and services, climbed by by 0.3% from August to September but remained unchanged at 6.2% for the year.

    Core PCE, which strips out volatile food and energy prices and is the Fed’s preferred measure of inflation, climbed by 5.1% on an annual basis, higher than the August rate of 4.9% but below the consensus estimate of 5.2%, per Refinitiv.

    From August to September, the core index rose by 0.5%, matching estimates. The prior month’s jump was revised down to 0.5% from 0.6%.

    The latest PCE numbers come just days before the central bank meets to discuss another rate hike — and as Americans hit the polls to vote in midterm elections.

    This story is developing and will be updated.

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  • Health insurance premiums at work didn’t rise in 2022 amid soaring inflation, but the good times won’t last | CNN Politics

    Health insurance premiums at work didn’t rise in 2022 amid soaring inflation, but the good times won’t last | CNN Politics

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    CNN
     — 

    Even though the price of gas, groceries and other essentials shot up in 2022, health care premiums for employer-sponsored coverage remained essentially flat, according to a survey released Thursday.

    Job-based policies for families cost an average of roughly $22,500 in 2022, with workers contributing an average of about $6,100, the Kaiser Family Foundation Employer Health Benefit Survey found. That is basically the same as last year.

    The average cost of single policies was just over $7,900 for this year, with employees responsible for about $1,350.

    Unlike in previous years, premium growth trailed behind the increases in inflation and workers’ wages, which came in at 8% and 6.7%, respectively. That’s because the cost of coverage is typically set months in advance – before inflation really took off.

    Also, utilization of health care services remained low in 2021, so employers that fund their own health plans didn’t spend as much as anticipated, which allowed them to keep premiums steady this year, said Matthew Rae, associate director for the Program on the Health Care Marketplace at Kaiser.

    But workers can expect to feel the sting of inflation when they enroll in coverage for next year, which is happening now at many companies.

    “Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” said Drew Altman, Kaiser’s chief executive officer.

    Other surveys show that premiums and out-of-pocket costs are expected to increase in 2023 at a faster rate than in recent years due to inflation. Hospitals, doctors and other providers are feeling the pricing pressure. Their costs for labor, particularly nurses and service staff, and supplies have increased sharply due to inflation and demand. So they are pushing insurers to raise their reimbursement rates when contracts are up for renewal.

    Nearly 159 million non-elderly people are covered by employer-sponsored health insurance, according to Kaiser.

    For this year, deductibles only inched up. The average annual deductible stands at roughly $1,760 among workers who face a deductible for single coverage. That compares with about $1,670 last year.

    Employers, particularly large ones, see a growing need for mental health services, the Kaiser survey found.

    Nearly half of big companies saw an increase in the share of workers using mental health services, and more than a quarter say that more employees are asking for family leave because of mental health issues.

    But many employers don’t feel they have enough providers in their networks to provide timely access to mental health care, Rae said.

    While 82% of firms said they have a sufficient number of primary care providers, only 44% said the same of behavioral health providers.

    Telehealth remains important, with three-quarters of firms saying telemedicine matters “somewhat” or “a great deal” in providing access to mental health services.

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  • Soaring inflation is throwing retirees’ budgets into chaos | CNN Business

    Soaring inflation is throwing retirees’ budgets into chaos | CNN Business

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    CNN
     — 

    At the Senior Friendship Center in Sarasota, Florida, talking about inflation really strikes a chord.

    At a card table there, CNN met with a group of seniors, all on fixed incomes, who spoke about feeling the squeeze from steep price hikes over the past year.

    Katherine Janes, 81, said she had to turn to her son for financial help.

    “It makes things a little easier,” Janes said. “Everything is expensive.”

    Ron Longhurst cut back on evening socializing, which has been difficult as a single 79-year-old.

    “Day-to-day, I stay home more,” he said. “You think twice about the big night out… I’m taking maybe a week or two longer between haircuts.”

    Ann Smith, 82, cut down on her favorite “simple pleasure” — drinking soda.

    “I used to enjoy a Coke or two a day,” she said. “I now do one a day, maybe one every other day instead.”

    Seniors on a fixed income have been hit particularly hard by inflation, with September prices up 8.2% from a year ago. The price hikes are even steeper in areas like Tampa, Florida, where the housing market has exploded.

    Sharon Johnson, 67, said her family’s monthly rent in Tampa jumped $350 this year, rising to roughly $3,100 per month. And with other bills surging, like her utilities, it has thrown her budget into chaos.

    “The cost of living is not working well right now for us. It’s hard,” Johnson said. “I’ve never had to feel a worry about how we were going to eat, but today, we’re only doing light foods, sandwiches.”

    Sharon Johnson, 67, said her rent jumped by $350 a month this year, throwing her budget into chaos.

    They already have some boxes packed, expecting another rent hike when their lease ends early next year.

    Johnson, a retired university counselor, and her husband, a retired engineer and teacher, moved to Florida from Michigan three years ago, bringing along her sister and nephew to live with them.

    The family would like to buy a home, but the draining price hikes and red-hot housing market are making that more difficult. Johnson says they may have to downsize as a result.

    “We are middle income, but with less to work with than when we worked full time,” Johnson said. “We have worked hard. And we’ve been honest. Then why is it going in reverse?”

    Next year, Social Security recipients will receive an annual cost-of-living adjustment of 8.7%, the largest increase since 1981.

    But for now, many seniors are feeling little relief.

    Barbara Smith, 70, is a caretaker and also volunteers at Trinity Cafe in Tampa, a restaurant that serves free meals to the less fortunate. But she said she has come to rely on the take-home meal she gets after her shift and it is often the only one she eats all day.

    “Then I don’t have to go and purchase it, because I don’t have the money to do that,” Smith said.

    As she weathers price hikes on food, gas, and personal items, she’s stopped buying puzzles, her favorite hobby. The strain of inflation can be isolating, she said.

    “If it wasn’t for volunteering, I’d probably be insane by now,” she said.

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  • Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

    Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

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    Hong Kong
    CNN Business
     — 

    Hong Kong stocks had their worst day since the 2008 global financial crisis, just a day after Chinese leader Xi Jinping secured his iron grip on power at a major political gathering.

    Foreign investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese equities and the yuan despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

    Hong Kong’s benchmark Hang Seng

    (HSI)
    Index plunged 6.4% on Monday, marking its biggest daily drop since November 2008. The index closed at its lowest level since April 2009.

    The Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%.

    The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

    A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States. Those pushed aside included Premier Li Keqiang, Vice Premier Liu He, and central bank governor Yi Gang.

    “It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” said Ken Cheung, chief Asian forex strategist at Mizuho bank.

    The GDP data marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May. But the growth rate was still below the annual official target that the government set earlier this year.

    “The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.

    “There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.

    Coupled with a further weakening in the global economy and a persistent slump in China’s real estate, all the headwinds will continue to pressure the Chinese economy, he said.

    Evans-Pritchard expected China’s official GDP to grow by only 2.5% this year and by 3.5% in 2023.

    Monday’s GDP data were initially scheduled for release on October 18 during the Chinese Communist Party’s congress, but were postponed without explanation.

    The possibility that policies such as zero-Covid, which has resulted in sweeping lockdowns to contain the virus, and “Common Prosperity” — Xi’s bid to redistribute wealth — could be escalated was causing concern, Cheung said.

    “With the Politburo Standing Committee composed of President Xi’s close allies, market participants read the implications as President Xi’s power consolidation and the policy continuation,” he added.

    Mitul Kotecha, head of emerging markets strategy at TD Securities, also pointed out that the disappearance of pro-reform officials from the new leadership bodes ill for the future of China’s private sector.

    “The departure of perceived pro-stimulus officials and reformers from the Politburo Standing Committee and replacement with allies of Xi, suggests that ‘Common Prosperity’ will be the overriding push of officials,” Kotecha said.

    Under the banner of the “Common Prosperity” campaign, Beijing launched a sweeping crackdown on the country’s private enterprise, which shook almost every industry to its core.

    “The [market] reaction in our view is consistent with the reduced prospects of significant stimulus or changes to zero-Covid policy. Overall, prospects of a re-acceleration of growth are limited,” Kotecha said.

    On the tightly controlled domestic market in China, the benchmark Shanghai Composite Index dropped 2%. The tech-heavy Shenzhen Component Index lost 2.1%.

    The Hang Seng Tech Index, which tracks the 30 largest technology firms listed in Hong Kong, plunged 9.7%.

    Shares of Alibaba

    (BABA)
    and Tencent

    (TCEHY)
    — the crown jewels of China’s technology sector — both plummeted more than 11%, wiping a combined $54 billion off their stock market value.

    The sell-off spilled over into the United States as well. Shares of Alibaba and several other leading Chinese stocks trading in New York, such as EV companies Nio

    (NIO)
    and Xpeng, Alibaba rivals JD.com

    (JD)
    and Pinduoduo

    (PDD)
    and search engine Baidu

    (BIDU)
    , were all down sharply Thursday afternoon.

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  • 3 things that will help reduce the sting of high inflation | CNN Business

    3 things that will help reduce the sting of high inflation | CNN Business

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    There’s really nothing nice to say about inflation when it comes to your bottom line.

    It’s hard on your wallet. It’s hard on your savings because it reduces the buying power of the dollars you socked away. And it’s hard on your paycheck, because chances are your last raise did not keep pace with headline inflation, which the latest reading puts at 8.2%.

    But that same high inflation has led to a couple of changes that might offer you a little relief. And every little bit helps.

    Starting next year, your paycheck could be a little bigger thanks to inflation adjustments that the Internal Revenue Service will make to 2023 federal income tax brackets and other provisions.

    The net effect of those adjustments is this: More of your 2023 wages will be subject to lower tax rates than they were this year. And you may be able to deduct higher amounts of income.

    Here’s the skinny on that.

    When you save money in a tax-deferred workplace retirement plan like a 401(k) or 403(b), you can reduce your taxable income because you get a deduction for your contribution the year you make it. The more you save, the more you cut your tax bill.

    Starting next year, you will be allowed to contribute up to $22,500 into your 401(k), 403(b), most 457 plans or the Thrift Savings Plan for federal employees.

    That’s $2,000 – or roughly 9.8% – more than the current $20,500 federal contribution limit, a direct result of higher inflation. Those are the biggest adjustments made to the contribution limit in decades.

    More about those changes and changes to IRA contribution limits can be found here.

    Social Security recipients will receive an annual cost-of-living adjustment of 8.7% next year, the largest increase since 1981.

    The spike will boost retirees’ monthly payments by $146 to an estimated average of $1,827 for 2023.

    No one will be living large on that amount, but the extra cash will offset some of the higher prices for everyday expenses that seniors incur.

    Here’s more on the coming boost to Social Security checks, along with welcome news that there will be a drop in Medicare Part B premiums next year.

    CNN’s Tami Luhby contributed to this report

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  • What Is a Housing Bubble? And Which Cities Are at the Highest Risk?

    What Is a Housing Bubble? And Which Cities Are at the Highest Risk?

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    The housing market is shifting, but not everywhere. As across the globe continue to adjust after the pandemic, certain metropolitan areas are more at risk of a than others, according to a new report by UBS.


    Alexander Spatari | Getty Images

    A housing bubble refers to an increased rise in home prices at a rapid pace, driven by increased demand and limited supply. When the bubble inevitably “bursts,” usually driven by increased interest rates, demand decreases.

    The UBS Global Bubble Index examined 25 cities across the globe, tracking current values and risk-based classifications (depressed, undervalued, fair valued, overvalued, and bubble risk) to determine which areas are most at risk of a housing bubble.

    Across the globe, was the city with the highest risk of a housing bubble — prices are 17% higher than they were a year ago, marking the biggest increase in five years.

    In the U.S., Miami was the city with the highest risk of a housing bubble and reported the highest house prices and rental growth of all the cities in the study.

    For the rest of the country, the Magic City was followed by , , Boston, and .

    Overall, the cities analyzed saw nominal price growth of 10% from mid-2021 to mid-2022, marking the highest increase since 2007. With the exception of Tokyo, every city analyzed demonstrated rent prices higher than they were before the pandemic.

    Additionally, mortgage rates have nearly doubled across all of the cities, and with increased prices, affordable city housing is far more scarce than before the pandemic, the report found.

    While New York saw the lowest price growth since mid-2021. Price growth was especially low in Manhattan and the luxury segment. Still, the Big Apple remains one of the least affordable cities in the country due to increased demand and limited supply following the mass exodus during the pandemic.

    Related: NYC Rent On a Minimum Wage Salary? That’ll Be Over 100 Hours a Week

    Credit: UBS

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    Madeline Garfinkle

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  • The Fed isn’t about to back down from its inflation fight | CNN Business

    The Fed isn’t about to back down from its inflation fight | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    London
    CNN Business
     — 

    Twelve days from now, the Federal Reserve will meet again, and expectations for the central bank’s next moves are firming up. The consensus among investors: Persistently hot inflation means the Fed will need to continue with its string of aggressive interest rate hikes, which is unprecedented in the modern era.

    What’s happening: Markets see a 99% probability that rates will rise by another three-quarters of a percentage point, reaching a range of 3.75% to 4%.

    A hike of that magnitude is now “a given,” Quincy Krosby, chief global strategist for LPL Financial, told clients on Wednesday. “Concern is now focused on December, and whether the Fed is prepared to transition to smaller rate hikes.”

    That’s up from a 60% probability one month ago. So what changed?

    Inflation, mainly. The US Consumer Price Index rose 8.2% in the year to September after rising 8.3% annually in August. While CPI peaked at 9.1% in June, that reading was still uncomfortably elevated and higher than economists had expected.

    The 6.6% annual uptick in shelter costs was of particular concern. It takes longer for housing expenses to come back down than some other categories, since renters tend to sign leases for 12-month periods. The monthly rise in core services costs (excluding energy) was the largest gain in three decades.

    The data underscored the need for the Federal Reserve to stay tough — while a strong jobs report for September will deliver confidence the central bank can do so without causing undue harm to the US economy.

    Fed officials have said as much. In an interview with Reuters on Friday, St. Louis Fed President James Bullard said inflation had become “pernicious,” which means that “frontloading” larger rate hikes is logical.

    The market impact: The S&P 500 kicked off the week with a 3.8% rally before dropping 0.7% on Wednesday. It’s still plodding along in a bear market, about 23% below its January peak. So long as the Fed signals its intention to keep the pressure on, boosting the odds of a US recession, volatility is expected to persist.

    Even relatively solid corporate earnings may not be sufficient to change the direction.

    “So far, the results are decent, but they’re being compared to consensus estimates that have been persistently lowered since early summer,” noted strategists at Charles Schwab.

    Tesla

    (TSLA)
    posted a solid quarter of earnings and record revenue, but now says it will likely fall short of its target for a 50% growth in the number of cars it sells this year.

    Quick rewind: As recently as July, the company said it was still aiming for a target of 50% growth from the 936,000 cars it delivered in 2021.

    But with two quarters of disappointing deliveries caused by supply chain issues and Covid-related shutdowns in China, that goal has looked increasingly out of reach, my CNN Business colleague Chris Isidore reports.

    CEO Elon Musk said that the electric carmaker is not struggling with demand.

    “We expect to sell every car that we make, for as far in the future as we can see,” he said on a call with analysts on Wednesday.

    Instead, the company said it would “just” miss its target due to complications with delivery of cars from its factories to customers at the end of the year.

    Shares are down 5% in premarket trading on Thursday. They’ve dropped 37% year-to-date, compared to a 22.5% fall in the S&P 500.

    “This quarter was not roses and rainbows,” said Dan Ives, tech analyst for Wedbush Securities. “Competition is increasing. There are some logistical challenges.”

    America’s business leaders are becoming more pessimistic. The Conference Board recently reported a slide in its CEO confidence index, which it said had hit levels not seen “since the depths of the Great Recession.”

    Of the 136 CEOs who were surveyed, 98% said they were preparing for a US recession over the next 12 to 18 months — and 99% said they were bracing for a recession in Europe.

    Notably, the business community is not being quiet about its concerns.

    Amazon founder Jeff Bezos tweeted Tuesday that “the probabilities in this economy tell you to batten down the hatches.”

    He was responding to a clip of an interview with Goldman Sachs CEO David Solomon, who told CNBC that “it’s a time to be cautious.”

    “You have to expect that there’s more volatility on the horizon now,” Solomon said. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

    American Airlines

    (AAL)
    , AT&T

    (T)
    , Dow, Nucor

    (NUE)
    and Quest Diagnostics

    (DGX)
    report results before US markets open. CSX

    (CSX)
    , Snap

    (SNAP)
    and Whirlpool

    (WHR)
    follow after the close.

    Also today:

    • Initial US jobless claims for last week post at 8:30 a.m. ET.
    • Existing home sales for September follow at 10 a.m. ET.

    Coming tomorrow: Earnings from American Express and Verizon.

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  • Four takeaways from the Georgia governor’s debate | CNN Politics

    Four takeaways from the Georgia governor’s debate | CNN Politics

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    CNN
     — 

    Republican Gov. Brian Kemp and Democrat Stacey Abrams sparred over health care, crime and punishment, and voting rights in a Monday debate as they made their closing arguments to voters in a reprise of their fiercely contested 2018 race for the same job.

    The stakes for this night were arguably higher for Abrams, who has trailed in most recent polling of the race. Kemp, one of the few prominent Republicans to resist former President Donald Trump’s lies about a stolen election in 2020, has positioned himself as a more traditional, pro-business conservative – a tack that his gentle resistance to Trump reinforced with swing voters. Abrams has argued that Kemp shouldn’t get any special credit for doing his job and not breaking the law.

    Kemp and Abrams were joined by Libertarian nominee Shane Hazel, who took shots at both his opponents and plainly stated his desire to send the election to a run-off. (If no one receives a clear majority on Election Day, the top two finishers advance to a one-on-one contest.) But it was the two major party candidates, who ran tight campaigns four years ago with Kemp emerging the narrow victor, who dominated the debate stage. Their disagreements were pointed, as they were in 2018, their attacks and rebuttals well-rehearsed and, to a large degree, predictable.

    Here are the four main takeaways from the Georgia governor’s debate:

    Like Republican Senate candidate Herschel Walker did in his debate with Democratic Sen. Raphael Warnock last week, Kemp took every opportunity – and when they weren’t there, tried anyway – to connect Abrams to Biden, who, despite winning the state in 2020, is a deeply unpopular figure there now.

    “I would remind you that Stacey Abrams campaigned to be Joe Biden’s running mate,” Kemp said, referring to the chatter around Abrams potentially being chosen as his running mate two years ago.

    During an exchange with the moderators about abortion, Kemp pivoted to the economy – and again, invoked Biden and Democrats on Capitol Hill.

    “Georgians should know that my desire is to continue to help them fight through 40-year high inflation and high gas prices and other things that our Georgia families are facing right now, quite honestly, because of bad policies in Washington, DC, from President Biden and the Democrats that have complete control,” he said.

    Abrams, unlike so many other Democrats running this year, has not sought to distance herself from the President and recently said publicly that she would welcome him in Georgia. First lady Jill Biden visited last week for an Abrams fundraiser, where she criticized Kemp over his position on abortion as well as his refusal to expand Medicaid and voting rights.

    Early on in the night, Kemp was questioned about remarks he made – taped without his knowledge – at a tailgate with University of Georgia College Republicans in which he expressed some openness to a push to ban contraceptive drugs like “Plan B.”

    Asked if he would pursue such legislation if reelected, Kemp said, “No, I would not” and that “it’s not my desire to” push further abortion restrictions, before pivoting to an attack on Biden, national Democrats and more talk about his economic record.

    Pressed on the remarks, Kemp suggested he was just humoring a group of people he didn’t know.

    On the tape, Kemp, though he didn’t seem enthusiastic, said, “You could take up pretty much everything, but you’ve got to be in legislative session to do that.”

    When asked if it was something he could do, Kemp said, “It just depends on where the legislators are,” and that he’d “have to check and see because there are a lot of legalities.”

    Georgia in 2019 passed and Kemp signed a so-called “heartbeat” bill, which bans abortions at around six weeks, and went into effect soon after the Supreme Court overturned Roe. v. Wade. Before the ruling, abortion was legal in the state until 20 weeks into pregnancy.

    Abrams has promised to work to “reverse” the law, though she would face significant headwinds in the GOP-controlled state legislature, and called the state law “cruel.”

    One of the first questions posed to Abrams centered on her speech effectively – but not with the precise language – conceding the 2018 election to Kemp.

    In those remarks, Abrams made a symbolic point in arguing that she was not conceding the contest, because Kemp, as the state’s top elections official, and his allies had unfairly worked to suppress the vote. Instead, Abrams said then, she would only “acknowledge” him as the winner.

    Some Republicans have tried to make hay over the speech, in a measure of whataboutism usually attached to Trump’s refusal to accept the 2020 results. Abrams, apart from a court challenge, never tried to overturn the outcome of her race.

    Still, she was asked on Monday night whether she would accept the results of the coming election – and said yes – before again accusing Kemp of, through the state’s new restrictive voting law, SB 202, seeking to make it more difficult for people to cast ballots.

    “Brian Kemp was the secretary of state,” Abrams said, recalling her opponent’s old job. “He has assiduously denied access to the right to vote.”

    Kemp countered by pointing to high turnout numbers over the past few elections and, as he’s said before, insisted the law made it “easy to vote and hard to cheat.”

    When the candidates were given the chance to question one another, Kemp asked Abrams to name all the sheriffs who had endorsed her campaign.

    The answer, of course, was that most law enforcement groups in the state are behind the Republican – a point he returned to throughout the debate.

    “Mr. Kemp, what you are trying to do is continue the lie that you’ve told so many times I think you believe it’s true. I support law enforcement and did so for 11 years (in state government),” Abrams said. “I worked closely with the sheriff’s association.”

    Abrams also accused Kemp of cynically trying to weaponize criminal justice and public safety issues by pitting her against police. The reality, she said, was less cut-and-dry.

    “Like most Georgians, I lead a complicated life where we need access to help but we also need to know we are safe from racial violence,” she said, before turning to Kemp. “While you might not have had that experience, too many people I know, have.”

    Kemp, though, kept the message simple. “I support safety and justice,” he said, often pointing to his anti-gang initiatives – especially when he was pressed on the effect of his loosening gun laws on crime.

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  • China delays the release of GDP and other economic data without explanation amid Party Congress | CNN Business

    China delays the release of GDP and other economic data without explanation amid Party Congress | CNN Business

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    Hong Kong
    CNN Business
     — 

    China has abruptly delayed the publication of key economic data, one day before its scheduled release, as the ruling Communist Party gathers at a major political meeting against the backdrop of a faltering economy.

    The country’s National Bureau of Statistics updated its schedule on Monday, with the dates for a series of economic indicators – including the closely-watched GDP growth – marked as “delayed.” The indicators, which had been scheduled for release on Tuesday, also include quarterly retail sales, industrial production and monthly unemployment rates.

    The bureau did not give a reason for the delay or set a new publication date.

    Separately, the country’s customs authority also postponed the release of monthly trade data, which were initially scheduled to come out on Friday.

    The delay of the highly anticipated data coincides with the week-long 20th Communist Party National Congress in Beijing, where Chinese leader Xi Jinping is expected to secure a norm-breaking third term in power. Priorities presented at the gathering will also set China’s trajectory for at least the next five years.

    “The delay suggests that the government believes that the 20th Party Congress is the most important thing happening in China right now and would like to avoid other information flows that could create mixed messages,” said Iris Pang, chief economist for Greater China at ING Group, in a research note on Tuesday.

    Other analysts believe it could be because the data sets are not pretty.

    “My forecast is for a further decline of 1.2% [on a quarterly basis for China’s GDP]. This would mean China had joined the US in a technical recession,” said Clifford Bennett, Chief Economist at ACY Securities.

    The delay would make sense “from an image management perspective,” he said. Some economists call two consecutive quarters of contraction a technical recession.

    China’s GDP declined 2.6% in the second quarter from the previous one, reversing a 1.4% growth in the January-to-March period. On a year-on-year basis, the economy expanded 0.4% in the second quarter.

    Analysts have widely expected third-quarter growth to remain weak, as strict Covid curbs, an intensifying crisis in real estate, and slowing global demand continue to pressure the economy.

    Economists polled by Reuters have expected China’s GDP to expand by 3.4% in the third quarter from a year earlier. That would fall far short of the government’s full-year growth target of around 5.5%.

    Many international organizations, including the IMF and World Bank, have recently downgraded China’s GDP growth forecasts for this year.

    Bennett expected the third-quarter GDP data to be released after the Party Congress.

    “Whenever the release occurs, we should all be prepared for some global financial market reaction if the world’s two largest economies are both in recession this year, ” he said.

    China’s economy is facing mounting challenges. Growth has stalled, youth unemployment is at a record high, and the housing market is in shambles. Constant Covid lockdowns have not only wreaked havoc on the economy, but also sparked rising social discontent.

    In the 20th Party Congress report released on Sunday, Xi renewed his pledge to grow China into a “medium developed country” by 2035.

    That would mean China needs to grow at an average growth rate of around 4.7% a year from 2021 to 2035, according to Larry Hu, chief China economist for Macquarie Group.

    Hu added that the target might be hard to meet, as the economy faces several structural headwinds, such as the property downturn, an aging population, and rising US-China tensions.

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  • White House economic adviser says US is ‘better positioned than most other countries’ to mitigate inflation | CNN Politics

    White House economic adviser says US is ‘better positioned than most other countries’ to mitigate inflation | CNN Politics

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    CNN
     — 

    White House economic adviser Cecilia Rouse on Sunday defended the limited progress the Biden administration has had on tamping down inflation, responding to comments from President Joe Biden last week that tried to put a positive spin on the high rate.

    “We’re starting to see signs that the actions they are taking is having an effect,” Rouse said of the Federal Reserve, which she said is focused on bringing down inflation.

    Rouse pointed to data from last month that employers are posting fewer job openings and the housing market is tapering off during an interview with CNN’s Dana Bash on “State of the Union.”

    “So we’re starting to see signs that our red-hot economy is starting to cool. And so we know that because of that strength … we’re better positioned than most other countries for the Fed to achieve its goals,” Rouse said.

    Data from the Bureau of Labor Statistics released earlier this week showed that annual inflation rose by 8.2% in September, a slower increase than the 8.3% rise seen in August. Economists had projected that the pace of price increases would slow to 8.1% last month, CNN reported last week. On a monthly basis, overall consumer prices increased by 0.4% from August.

    Asked by Bash about the high prices of food Americans are paying, Rouse pointed to the Inflation Reduction Act’s ability to lessen costs for Americans for prescription medicine – though she acknowledged it does nothing for food prices.

    But pushed on when it would start lowering inflation, Rouse said, “Many parts of the bill will start to take effect next year.”

    Rouse spoke about the energy tax credits in the law as having one of the most immediate tangible impact in lowering costs.

    “There are tax credits for energy to help people weatherize their homes and also bring down other forms of energy costs. So, we are focused on helping to make that transition to clean energy in a way that brings down energy costs for families,” Rouse said.

    “This is tough. There’s no question about it. This is a challenge,” she added about bringing down inflation generally.

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  • With a Recession Looming and Interest Rates Rising, What’s Next for the Economy?

    With a Recession Looming and Interest Rates Rising, What’s Next for the Economy?

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    Opinions expressed by Entrepreneur contributors are their own.

    The S&P 500 is down nearly 20% year-to-date, the dollar has lost lots of buying power, and the fed has made it increasingly difficult for young buyers to purchase their first home.

    With all these factors at play, it is essential to listen to economic experts like Jerome Powell. Powell spoke on again in early September. The Fed is expected to continue raising interest rates until the inflation numbers are under control. “Restoring price stability will take some time and requires using our tools forcefully to bring supply and demand into better balance,” Mr. Powell said in those remarks. “While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”

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    Dominic Blanco

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  • Food prices are still surging — here’s what’s getting more expensive | CNN Business

    Food prices are still surging — here’s what’s getting more expensive | CNN Business

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    New York
    CNN Business
     — 

    Prices at the grocery store continued to soar last month, adding even more pressure to shoppers’ wallets.

    The food at home index, a proxy for grocery store prices, increased 0.7% in September from the month prior and a stunning 13% over the last year, according to new government data released Thursday.

    Just about everything got more expensive in September.

    Fruits and vegetables surged 1.6% for the month, while cereals and bakery products rose 0.9%. Other groceries increased 0.5% in September, following a 1.1% increase in August.

    Meats, poultry, fish and eggs rose 0.4% over the month and beverages increased 0.6%.

    Prices on many of these items are up double digits annually.

    A number of factors have contributed to the surge in prices. Producers say they’re paying more for labor and packaging materials. Extreme weather, including droughts and flooding, and disease, such as the deadly avian flu, have been hurting crops and killing egg-laying hens, squeezing supplies.

    “The environment clearly is still very inflationary with a lot of supply chain challenges across the industry,” Pepsi

    (PEP)
    CEO Ramon Laguarta said on an earnings call Wednesday. The company’s prices increased 17% annually.

    Meanwhile, demand is high. Consumers may be able to pull back on some discretionary items, but they have to eat. Many people are still working from home and consuming more of their meals there than they did before the pandemic.

    This imbalance between supply and demand means companies can pass along higher prices to shoppers without sales plunging.

    But higher prices at the grocery store are forcing customers to make some trade offs.

    Many shoppers are buying fewer products, switching to cheaper private-label brands and pulling back on discretionary items.

    More than one million new households have shopped at discount grocery chain Aldi for the first in the past year, according to the company.

    Walmart

    (WMT)
    said recently that high levels of food inflation are impacting customers’ ability to purchase discretionary goods such as clothing and furniture.

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  • Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

    Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

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    CNN
     — 

    Saudi Minister of State for Foreign Affairs Adel al-Jubeir said his country partnered with Russia to slash oil production in order to stabilize markets and denied that there were political motives behind the decision, which has enraged US leaders and sparked calls to rethink ties with Riyadh.

    “We’re trying to make sure we don’t have erratic swings in prices,” al-Jubeir, one of Saudi Arabia’s top diplomats, told CNN’s Becky Anderson on Wednesday. “Our track record has been clear – we have always worked assiduously to maintain stability in the oil markets.”

    Last week, OPEC+, the oil cartel led by Saudi Arabia and Russia, agreed to slash production by 2 million barrels per day, twice as much as analysts had predicted, in the biggest cut since the Covid-19 pandemic.

    The move came despite an intense pressure campaign from the United States, which had warned Arab allies that such a move would increase prices and help Russian President Vladimir Putin continue to fund his war in Ukraine. Experts also fear that continued high oil prices could make it more difficult for the US to tamp down inflation, which has already skyrocketed this year.

    Al-Jubeir, who is also the country’s climate minister, denied that there were any political motives to the decision and said the production cut was made to avoid major swings in the price of oil, which can affect consumers worldwide, and pointed to the fact that the price of oil has gone down since the reduction was announced last week.

    “Saudi Arabia is not siding with Russia,” he told CNN. “Saudi Arabia is taking the side of trying to ensure the stability of the oil markets.”

    “Saudi Arabia does not politicize oil. We don’t see oil as a weapon. We see oil as our commodity. Our objective is to bring stability to the oil market,” al-Jubeir said.

    US President Joe Biden told CNN on Tuesday that Washington must now “rethink” its relationship with Riyadh following the cut. The decision was a particular affront for Biden because of his efforts over the summer to repair ties with Saudi Arabia, despite the kingdom’s woeful human rights record and the role of Saudi Crown Prince Mohammed bin Salman in the murder of dissident journalist Jamal Khashoggi. Bin Salman denied involvement in the murder, which captured international headlines in part due to the lurid details of the killing.

    “I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” Biden said.

    Watch the full exclusive interview with President Joe Biden

    On Wednesday, US national security adviser Jake Sullivan said Biden would examine all aspects of US ties with Saudi Arabia, including arms sales, as administration officials begin quiet discussions with members of Congress and congressional aides about how the US could impose consequences on the kingdom following the oil output cut.

    “There is a range of interests and values that are implicated in our relationship with that country,” Sullivan told reporters. “The President will examine all of that. But one question he’s going to ask is: Is the nature of the relationship serving the interest and values of the United States and what changes would make it better serve the interests and values?”

    Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said in an interview with Saudi TV earlier Wednesday that OPEC+ needed to be proactive as central banks in the West moved to tackle inflation with higher interest rates, a move that could raise prospects of a global recession, which could in turn reduce demand for oil and drive its price down. Cutting production would ensure a smaller supply of oil, keeping its price higher. While that would protect the Saudi economy by ensuring it receives a steady flow of income from oil sales, it would force consumers across the world to pay more for energy and gas, further fueling inflation.

    Saudi officials have insisted that the production cut is being done to protect the country’s economic interests. Because of its heavy dependence on oil revenues, the Saudi economy has a history of falling victim to boom and bust cycles in the oil market, where high prices bring in a flow of cash followed by downturns.

    In the United States, however, the cut could have massive political ramifications ahead of next month’s midterm elections. After reaching highs over the summer, gas prices in the United States had been steadily decreasing, providing Biden and his top aides a potent talking point in the lead-up to the elections.

    But a combination of factors, including rising demand and maintenance at some US refineries, has caused prices to begin ticking back up. The OPEC+ decision is likely to aggravate those factors.

    The decision set off bipartisan fury in Washington when it was first announced last week. Saudi Arabia is now being accused of filling the Kremlin’s coffers with oil revenues just days after President Putin’s regime began carrying out large-scale missile attacks on civilian targets across Ukraine

    “What Saudi Arabia did to help Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans,” tweeted Senate Majority Leader Chuck Schumer, a Democrat, on Friday.

    Democratic Sen. Richard Blumenthal of Connecticut on Wednesday called for immediate action on his bill that would stop US arm sales to Saudi Arabia.

    “The Saudis actions aid and abet a murderous and brutal criminal invasion by Russia,” Blumenthal said.

    When asked about growing calls in Washington to limit ties with Saudi Arabia, al-Jubeir said he hoped that such talk was motivated by domestic politics ahead of the midterms.

    Al-Jubeir said the relationship between the US and Saudi Arabia remains “robust.”

    “The Kingdom of Saudi Arabia and the US have had a very strong relationship for eight decades … and we look forward to this relationship continuing for the next eight decades,” he added.

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  • The Fed only cares about inflation. That’s bad news for you | CNN Business

    The Fed only cares about inflation. That’s bad news for you | CNN Business

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    New York
    CNN Business
     — 

    Jerome Powell and other members of the Federal Reserve are obsessed with choking off inflation once and for all, even if the Fed’s series of aggressive rate hikes slow the economy to a crawl. That could be bad news for consumers, investors and Corporate America.

    What’s more, many market experts and economists note that the rate of inflation, while still uncomfortably high, is falling and should continue to decline – but there is a noted lag effect. Fed vice chair Lael Brainard admitted as much in a speech Monday, saying that “policy actions to date will have their full effect on activity in coming quarters.”

    Still, the Fed isn’t done raising rates. Investors are pricing in the strong probability of a fourth consecutive three-quarters of a percentage point hike at the Fed’s next meeting on November 2. And the chances of a fifth straight hike of that magnitude at the Fed’s December 14 meeting are also on the rise.

    It seems that Powell wants to atone for his mistake of repeatedly calling inflation “transitory” for much of last year. So the Fed is going to keep raising rates to prove that it is taking inflation seriously, even if that leads to a bigger pullback in stocks…and tipping the economy into a recession.

    Needless to say, that’s a problem. Especially since the Fed has two mandates: price stability and maximum employment. That means the jobs market might get hit due to the Fed’s laser-like focus on inflation.

    “My concern is that the Fed is tightening so quickly and so significantly without knowing what it means for the economy,” said Brian Levitt, global market strategist with Invesco.

    Keep in mind that the Fed’s series of rate hikes are unprecedented in the “modern” era of central banking, i.e. after Alan Greenspan became Fed chair in 1987 and the Fed became far more transparent.

    The Fed was far more opaque before Greenspan, and the market didn’t pick apart every speech, policy move and economic forecast the way Wall Street does now. Inflation in the 1970s and early 1980s was also a much different animal, due largely to an oil price shock that lasted years because of a supply shortage.

    The current inflation crisis stems from more temporary (we won’t say transitory) supply chain issues tied to the pandemic as well as the rapid reopening of the global economy following a brief recession.

    But the economy is now showing cracks. Long-term bond yields have surged, and mortgage rates have popped, cooling off the housing market. The stock market has deflated as well, wringing even more excess from the economy.

    “We’re more cautious because the Fed is tightening into a weakening economy,” said Keith Lerner, co-chief investment officer and chief market strategist with Truist Advisory Services. “These supersized hikes are the most aggressive in decades. But the Fed has scar tissue from inflation.”

    As painful this current bout of inflation is for Americans, it’s nothing compared to what people lived through in the early 1980s before then Fed chair Paul Volcker squashed inflation with a series of massive rate hikes.

    Unless pricing pressures pick up again, it appears the year-over-year increase for the consumer price index (CPI) peaked at 9% in June. That’s a big move from about 2.3% in February 2020 just before the pandemic shutdown. But 9% is still a far cry from the CPI high during the Volcker years of 14.6% in early 1980.

    And with consumer and wholesale prices already edging lower, some experts worry that the continued uber-hawkish stance by the Fed will do more harm than good for the economy.

    “The speed at which the Fed is increasing rates will certainly have some unintended consequences,” said Michael Weisz, president of Yieldstreet, an investment firm that specializes in so-called alternative assets such as real estate, private equity, venture capital and art.

    Weisz said the surge in interest rates could lead to a “consumer credit crunch being more pronounced,” in which loans beyond mortgages might become more expensive and harder to get.

    Rate hikes raise the costs for companies to pay down their debt, increasing the possibility of corporate bankruptcies and defaults on commercial loans. It may even potentially lead to stagflation…the double whopper of stagnant growth and continued inflation. In other words, prices may remain high and the job market will probably be worse.

    “The Fed runs a real risk of over-tightening, as the impacts of the restrictive policy may not flow through inflation and unemployment data until it’s too late,” Weisz added.

    As long as inflation remains the bigger issue for the economy, the Fed is going to focus more on getting prices under control. After all, the unemployment rate is at 3.5%, a half-century low.

    “The Fed has made it clear their number one priority right now is price stability,” said Dustin Thackeray, chief investment officer of Crewe Advisors. “Until the Fed sees sustained evidence their monetary policy is having a material impact on…the job market, they will maintain their persistent efforts in reining in inflationary pressures.”

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  • The econ Nobel offers a timely warning about central banks’ power | CNN Business

    The econ Nobel offers a timely warning about central banks’ power | CNN Business

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    This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN Business
     — 

    The Nobel in economics is sort of the step-cousin of the Nobel family.

    It came about nearly 70 years after its literature and sciences counterparts, in 1969, and is technically called the “Sveriges Riksbank Prize in Economic Sciences.” It is awarded by the Swedish central bank, in honor of the namesake renaissance man Alfred Nobel who established the prizes.

    Some scholars really dislike the economics prize, including one of Nobel’s own descendants, who dismissed it as a “PR coup by economists.”

    But hey, it still comes with a cash prize. And it’s also pretty useful in reminding the world that economics as an academic field is, frankly, a barely understood hodge-podge of studies that is constantly evolving and so variable it’s almost useless outside of academia. (And I mean that with the utmost respect to economists, who, not unlike journalists, knew what they were doing when they chose their life of suffering.)

    Here’s the thing: Ben Bernanke, the former Federal Reserve chairman who guided the US economy through the 2008 financial crisis and subsequent recession, was awarded the Nobel in economics along with two other economists, Douglas Diamond and Philip Dybvig. (Congrats to all the winners, with apologies to Doug and Phil, who will forever be referred to in headlines about the Nobel as “and two other economists.”)

    Bernanke, who previously taught at Princeton and earned his Ph.D from MIT, received the award for his research on the Great Depression. In short, his work demonstrates that banks’ failures are often a cause, not merely a consequence, of financial crises.

    That was groundbreaking when he published it in 1983. Today, it’s conventional wisdom.

    WHY IT MATTERS

    The timing is everything here. The Nobel committee has been known to play politics (see: that time Barack Obama was awarded the Nobel Peace Prize after being in office for just eight months). And right now, it is using its spotlight to call attention to the high-stakes gamble playing out at central banks around the world, most notably the Fed.

    The rapid run-up in interest rates, led by the US central bank, is causing markets around the world to go haywire. And it’s especially bad news for emerging economies.

    Monetary tightening — especially when it is aggressive and synchronized across major economies — could inflict worse damage globally than the 2008 financial crisis and the 2020 pandemic, a United Nations agency warned earlier this month. It called the Fed’s policy “imprudent gamble” with the lives of those less fortunate.

    LESSONS FROM HISTORY

    On Monday, Diamond, one of the three newly minted Nobel laureates, acknowledged that the rate moves around the world were causing market instability.

    But he believes the system is more resilient than it used to be because of hard lessons learned from the 2008 crash, my colleague Julia Horowitz reports.

    “Recent memories of that crisis and improvements in regulatory policies around the world have left the system much, much less vulnerable,” Diamond said.

    Let’s hope he’s right.

    Oh hey, speaking of the Fed inflicting pain: We’re about to see big job losses, according to Bank of America.

    Under the rate hikes imposed by Jay Powell & Co, the US economy could see job growth cut in half during the fourth quarter of this year. Early next year, the bank expects to see losses of about 175,000 jobs a month.

    The litigation between Elon Musk and Twitter is officially on hold. The two sides now have until October 28 to work out a deal or once again gear up for a courtroom battle.

    The big question now is all about the money.

    Here’s the deal: Not even the world’s richest person has this kind of cash just lying around. Musk’s wealth is tied up in Tesla stock, which he can’t easily offload for a whole bunch of reasons. He needs to borrow the money, which means he’s got to get banks to pony up.

    By most accounts, he’ll be able to make it happen. But the Twitter deal is a harder pitch to make now than it was back in April, when Musk said he’d lined up more than $46 billion in financing, including two debt commitment letters from Morgan Stanley and other unnamed financial institutions, my colleague Clare Duffy writes.

    Musk has spent the past several months trashing Twitter as he sought to renege on his offer. Meanwhile, tech stocks have been hammered, ad revenues are declining, and the global economy has inched closer to a recession, sapping investor appetite for risk.

    Musk’s legal team said last week the banks that had committed debt financing previously were “working cooperatively to fund the close.”

    Twitter is, understandably, skeptical, given the many curve balls Musk has thrown at them since he got involved with the company earlier this year. The company raised concerns last week that a representative for one of the banks testified that Musk had not yet sent a borrowing notice and “has not otherwise communicated to them that he intends to close the transaction, let alone on any particular timeline.”

    What’s Musk’s endgame?

    No one knows, perhaps least of all Musk. But many legal experts following the case say Musk understood he’d likely lose at trial and then be forced to buy Twitter anyway. He’d rather buy the entire company than be deposed by Twitter’s lawyers and do further damage to Twitter in a trial.

    And the banks may not be able to walk away even if they want to.

    “The only way they could get out of it is to claim a material adverse effect and that Twitter has changed so much since they agreed to the deal that they no longer want to finance the deal,” said George Geis, professor of strategy at the UCLA Anderson School of Management.

    Even if the banks succeeded there, Musk may not be off the hook. The judge in the case could rule that Musk was at fault for the financing falling through — not a far-fetched notion after all the trash-talking — and order him to sue Morgan Stanley to provide the funds or close the deal without it.

    Bottom line, it seems like Musk will end up owning Twitter one way or another. And given his only vague musings about what he’d actually do with it, there are a whole host of unknowns lurking in Twitter’s future.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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  • White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

    White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.

    But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.

    White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.

    What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

    Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.

    The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.

    Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.

    What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.

    Friday’s numbers indicate that we’re beginning to see that impact in the employment data.

    What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.

    Coming up: Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup

    (C)
    , Morgan Stanley

    (MS)
    and BlackRock

    (BLK)
    reporting. Investors will be watching closely for any guidance on hiring and layoff plans.

    Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.

    A panel of top US economists just released its economic outlook for the next year, and it’s not great.

    The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.

    Most of the worries come down to the Federal Reserve’s interest rate policy.

    “More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”

    NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.

    The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

    Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.

    Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.

    Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.

    Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.

    Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.

    Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?

    In May 2020, 35.4% answered yes.

    Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.

    The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.

    Coming later this week:

    ▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase

    (JPM)
    , Wells Fargo

    (WFC)
    , Citigroup

    (C)
    , Morgan Stanley

    (MS)
    , PNC

    (PNC)
    and US Bancorp

    (USB)
    and consumer staples like Pepsi

    (PEP)
    , Walgreen

    (WBA)
    s and Domino’s

    (DMPZF)

    ▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released. 

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  • Opinion: Biden’s eye-opening warning | CNN

    Opinion: Biden’s eye-opening warning | CNN

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    Editor’s Note: Sign up to get this weekly column as a newsletter. We’re looking back at the strongest, smartest opinion takes of the week from CNN and other outlets.



    CNN
     — 

    “Can you tell me where we’re headin’?” Bob Dylan asks in his 1978 song “Señor.”

    Is it “Lincoln County Road or Armageddon? Seems like I been down this way before. Is there any truth in that, señor?”

    Yes, we’ve been here before, at least if you take President Joe Biden at his word. At a fundraiser in New York City Thursday, Biden said, “First time since the Cuban missile crisis, we have a direct threat of the use (of a) nuclear weapon if in fact things continue down the path they are going.” Referring to Russian President Vladimir Putin’s threat to go nuclear in his war with Ukraine, the President observed, “I don’t think there’s any such thing as the ability to easily (use) a tactical nuclear weapon and not end up with Armageddon.”

    As historian Julian Zelizer wrote, “Those were unsettling words for a nation to hear from the commander in chief.” Biden referred to “the Cuban missile crisis in October 1962, when the world seemed to teeter on the brink of nuclear war as the US and the Soviet Union faced off over missiles in Cuba.”

    “Some planned escape routes from major cities while others stocked up on transistor radios, bottled water and radiation kits for their families. Although nobody knew it at the time, the danger was even greater than most thought as the leaders didn’t have full control of the situation. In the end, diplomacy won out, a deal was reached and disaster was averted.”

    Nick Anderson/Tribune Content Agency

    But the prospect of annihilating humanity in a nuclear exchange is so great that such brinksmanship should never be allowed to happen again. Surely Presidents Ronald Reagan and Mikhail Gorbachev were right when they agreed in 1985 that “a nuclear war cannot be won and must never be fought.”

    US national security officials privately said there was no new intelligence to indicate that Putin is moving to carry out his threat and couldn’t explain why Biden made the extraordinary statement. But its implications were clear, Zelizer argued. “This historic moment in the war between Russia and Ukraine is an important reminder that the US has let nuclear arms control fall from the agenda, and the consequences are dangerous.”

    Putin’s back is against the wall as Ukraine continues to retake territory from the Russians. Peter Bergen wrote that Putin is “facing growing criticism from Russians on both the left and the right, who are taking considerable risks given the draconian penalties they can face for speaking out against his ‘special military operation’ in Ukraine.”

    “With even his allies expressing concern, and hundreds of thousands of citizens fleeing partial mobilization, an increasingly isolated Putin has once again taken to making rambling speeches offering his distorted view of history.”

    One lesson of history is that military defeat endangers dictatorial leaders. “Putin’s gamble may lead to a third dissolution of the Russian empire, which happened first in 1917 as the First World War wound down, and again in 1991 after the fall of the Soviet Union,” Bergen noted. “It could unfold once more as Putin’s dream of seizing Ukraine seems to be coming to an inglorious end.”

    It’s striking to recall, as Frida Ghitis did, that “seven months ago, some viewed Putin as something of a genius. That myth has turned to dust. The man who helped suppress uprisings, entered wars and tried to manipulate elections across the planet now looks cornered.”

    In Ukraine, “Russia’s trajectory looks like a trail of war crimes, with hundreds of bombed hospitals, schools, civilian convoys, and mass graves filled with Ukrainians. And still Ukraine is pushing ahead, is doing very well in fact, and very possibly winning this war,” wrote Ghitis.

    06 opinion column 1008

    Lisa Benson/GoComics.com

    Biden took heat this summer for deciding to meet Saudi Crown Prince Mohammed bin Salman and walking away with little commitment from the Saudis to expand oil production. And then last week, the Saudi regime was instrumental in OPEC+’s decision to actually cut oil production in a move that benefits it and other oil-producing states including Russia.

    “So much for cozying up to the Saudis – President Joe Biden’s much-hyped fist bump with Mohammed bin Salman during a trip to the Middle East back in July has turned into something of a slap across the face from the crown prince,” wrote David A. Andelman.

    In the US, gasoline prices have started rising after weeks of declines, adding to the burdens Democrats face in trying to hold onto control of Congress in the midterm elections a month from now.

    07 opinion column 1008

    Clay Jones

    “The OPEC production cutbacks could – indeed, should – backfire for Saudi Arabia and its complicit partners,” wrote Andelman. “There is growing sentiment in Congress to reevaluate America’s wider relationship with Saudi Arabia and especially the vast arms sales to the kingdom.”

    Higher oil prices come on top of Europe’s emerging energy crisis, with Russia sharply reducing its export of natural gas to the continent. As a result, Germany is among the nations that have instituted tough new curbs on energy use, wrote Paul Hockenos.

    “Step into my Berlin office today and you’ll find everybody is wearing sweaters – I wear two, with wool socks and occasionally a scarf. … At home, my little family has sworn off baths (swift showers please), and lights are on only in the rooms we’re occupying. We’ve invested in a wool curtain inside our apartment’s front door to keep out the draft.”

    “My friend Bill … hasn’t turned his heating on yet this year – no one I know has – and wears a sweater at home. He also has a new method of showering: one minute under warm water, turns it off, lathers up, and then rinses off.”

    “Timing is everything,” said Garrett Hedlund in the 2011 song of that name.

    “When the stars line up

    And you catch a break

    People think you’re lucky

    But you know it’s grace…”

    It works in reverse too. Just ask Linda Stewart, a New Mexico educator in her 60s who decided to retire one year into the pandemic lockdown. “Finances would be a little tight for a while, but some outside projects would supplement my income, so I felt confident I would be able to handle it,” she wrote in a new CNN Opinion series, “America’s Future Starts Now,” which explores the key issues in the midterm campaigns.

    But, Stewart added, “by the end of the second year of lockdown, inflation started taking a toll and money was getting uncomfortably tight. Soon I was in the red each month, just trying to keep up. The usual suspects were groceries and gas, which meant cutting back on some of the more expensive food items and cooking meals at home.”

    “I stopped driving for anything other than essentials. And with the continuing drought here in the Southwest, utility bills went through the ceiling. I cut back on watering my garden and turned the furnace down a few degrees in the winter and the air conditioning up a few in the summer. I switched to washing clothes mostly in cold water and only running the dishwasher once a week.”

    The economy is the issue Americans are most concerned about, and there are no quick, easy solutions to the inflation spike. The second part of CNN Opinion’s new series was a roundup of views on how to help people cope with higher costs.

    03 opinion column 1008

    Scott Stantis/Tribune Content Agency

    The Federal Reserve Bank is raising interest rates at a rapid pace to conquer inflation. The “tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched,” wrote economist Gad Levanon for CNN Business Perspectives. To curb the rise in prices, “the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.”

    05 opinion column 1008

    Dana Summers/Tribune Content Agency

    At least 131 people have died due to Hurricane Ian. Why was it so deadly?

    The storm’s course veered south as it approached Florida and rapidly intensified, Cara Cuite and Rebecca Morss noted. “Emergency managers typically need at least 48 hours to successfully evacuate areas of southwest Florida. However, voluntary evacuation orders for Lee County were issued less than 48 hours prior to landfall, and for some areas were made mandatory just 24 hours before the storm came ashore. This was less than the amount of time outlined in Lee County’s own emergency management plan.”

    “While the lack of sufficient time to evacuate was cited by some as a reason why they stayed behind, there are other factors that may also have suppressed evacuations in some of the hardest hit areas.” Few people are aware of their evacuation zone, and some websites carrying that information crashed in the leadup to the storm’s arrival, Cuite and Morss wrote.

    People need time to decide what to do, pack belongings, find a place to go and arrange how to get there, often in the midst of heavy traffic and other complications and obstacles.” Other factors: “In addition to a false sense of security from prior near-misses among some residents, others who were in the areas of Florida hardest hit by Hurricane Ian may not have had any personal experience with such powerful storms. This is likely true for the millions of people who have moved to Florida over the past few decades…”

    For more:

    Adam H. Sobel: Where the hurricane risk is growing

    Geoff Duncan, a Republican and the current lieutenant governor of Georgia, is unsure about Herschel Walker’s prospects in the upcoming election. The Republican Senate candidate has denied reports alleging he paid for a girlfriend’s abortion in 2009.

    “The October surprise,” Duncan wrote, “has upended the political landscape, throwing one of the nation’s closest midterm races into turmoil five weeks before Election Day, but it never had to be this way. Just as there should not be two Democrats representing a center-right state like Georgia in the US Senate, the Republican Party should not have found its chance of regaining a Senate majority hanging on an untested and unproven first-time candidate.”

    “Walker won his Senate primary not because of his political chops or policy proposals. He trounced his opponents because of his performance on the football field 40 years ago and his friendship with former President Donald Trump – neither of which are guaranteed tickets to victory anymore.

    02 opinion column 1008

    Drew Sheneman/Tribune Content Agency

    For more on politics:

    SE Cupp: Herschel Walker’s ‘October Surprise’ won’t matter

    Tim Kane: What the Biden administration is getting wrong on immigration

    Nicole Hemmer: The Onion is right about the future of democracy

    Dean Obeidallah: The single-minded goal of Trump-loving Republicans

    Organic chemistry is a famously difficult course and a traditional prerequisite for students who want to go on to medical school. Maitland Jones Jr., a master of the field and textbook author, taught the course at NYU – until 82 of the 350 students taking it “signed a petition because, they said, their low scores demonstrated that his class was too hard,” Jill Filipovic noted.

    Then the university fired him.

    An NYU spokesman “told the (New York) Times in defense of their decision to terminate Jones’s contract that the professor had been the target of complaints about ‘dismissiveness, unresponsiveness, condescension and opacity about grading.’ It’s worth noting that according to the Times, students expressed surprise that Jones was fired, which their petition did not call for.”

    Some of the student complaints may have been valid, noted Filipovic, but she added that the case “raises important questions, chief among them how much power students, who universities seem to increasingly think of as consumers (and some of whom think of themselves that way), should have in the hiring, retention and firing of professors…”

    “There are real consequences … to making higher education primarily palatable to those paying tuition bills – particularly when it comes to courses like organic chemistry, which are intended to be difficult. Future medical students do in fact need a rigorous science background in order to be successful doctors someday. Whether or not Jones was an effective teacher for aspiring medical students is up for debate, but in firing him, NYU is effectively dodging questions about the line between academic rigor and student well-being with potentially life-and-death matters at stake.”

    Kim Kardashian 0924

    Alessandro Garofalo/Reuters

    The Securities and Exchange Commission fined Kim Kardashian nearly $1.3 million for failing to disclose she was paid to promote a crypto asset, EthereumMax, noted Emily Parker.

    “This case reflects a much larger problem in the crypto industry: Celebrities are using their influence to promote cryptocurrencies, a notoriously complex and risky asset class, which can lead people to invest in coins or projects that they may not understand,” Parker observed.

    “New coins and projects are constantly popping up, sometimes without sufficient warnings about the risks of investing … In such a fast-changing and confusing market, how do you distinguish winners from losers? It’s easy to imagine how a confident tweet by a celebrity could have a significant impact on a new investor.”

    In agreeing to the fine, Kardashian “did a favor for the cryptocurrency industry. Such a high-profile example could cause other celebrities to think twice before shilling a token on social media.”

    04 opinion column 1008

    Bill Bramhall/Tribune Content Agency

    Alejandro Mayorkas: The security risk Congress needs to take seriously

    Danae Wolfe: Stomping alone won’t wipe out the spotted lanternfly

    Victoire Ingabire Umuhoza: Inside the prison where sunlight ceases to exist

    Jeremi Suri and William Inboden: A generation of the world’s best leaders has died

    Sara Stewart: ‘Dahmer’ debate is finally saying the quiet part about true crime out loud

    Elisa Massimino: It’s time to shut down Guantanamo

    Pete Brown: What ‘fancy a pint?’ really means

    AND…

    01 Trevor Noah file

    Rich Fury/Getty Images/FILE`

    Until recently, the late-night television formula ruled, as Bill Carter noted. “On the air after 11 p.m. with a charismatic host, some comedy, a desk, a guest or two, maybe a band and then ‘Good night, everybody!’” Late-night shows seemed to be holding their own despite the rise of cord-cutting and the move to streaming.

    But that’s changing, as Trevor Noah’s decision to give up hosting “The Daily Show” suggested. Carter wrote, “What many people watch now is not television: It’s whatever-vision, entertainment by any means on any device. What’s on late night is now often seen on subscriptions – and not late at night.”

    Noah is leaving on a high note “after a seven-year run, marked by an impressive body of comedy work and growing acclaim,” Carter observed. In succeeding Jon Stewart as the show’s host, Noah “had a different beat in his head from the start. He wanted to refashion the show with a wider comedy vision, one looking more out at the world, instead of purely in at the United States, all informed by Noah’s South African-born global perspective.”

    “It was a wise choice. Following Stewart was always going to be a potentially crippling challenge. Noah took it on and remade the show to his own specifications. One major sign of that was how strikingly diverse the show became.”

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  • How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

    How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

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    London
    CNN Business
     — 

    Pension funds are designed to be dull. Their singular goal — earning enough money to make payouts to retirees — favors cool heads over brash risk takers.

    But as markets in the United Kingdom went haywire last week, hundreds of British pension fund managers found themselves at the center of a crisis that forced the Bank of England to step in to restore stability and avert a broader financial meltdown.

    All it took was one big shock. Following finance minister Kwasi Kwarteng’s announcement on Friday, Sept. 23 of plans to ramp up borrowing to pay for tax cuts, investors dumped the pound and UK government bonds, sending yields on some of that debt soaring at the fastest rate on record.

    The scale of the tumult put enormous pressure on many pension funds by upending an investing strategy that involves the use of derivatives to hedge their bets.

    As the price of government bonds crashed, the funds were asked to pony up billions of pounds in collateral. In a scramble for cash, investment managers were forced to sell whatever they could — including, in some cases, more government bonds. That sent yields even higher, sparking another wave of collateral calls.

    “It started to feed itself,” said Ben Gold, head of investment at XPS Pensions Group, a UK pensions consultancy. “Everyone was looking to sell and there was no buyer.”

    The Bank of England went into crisis mode. After working through the night of Tuesday, Sept. 27, it stepped into the market the next day with a pledge to buy up to £65 billion ($73 billion) in bonds if needed. That stopped the bleeding and averted what the central bank later told lawmakers was its worst fear: a “self-reinforcing spiral” and “widespread financial instability.”

    In a letter to the head of the UK Parliament’s Treasury Committee this week, the Bank of England said that if it hadn’t interceded, a number of funds would have defaulted, amplifying the strain on the financial system. It said its intervention was essential to “restore core market functioning.”

    Pension funds are now racing to raise money to refill their coffers. Yet there are questions about whether they can find their footing before the Bank of England’s emergency bond-buying is due to end on Oct. 14. And for a wider range of investors, the near-miss is a wake-up call.

    For the first time in decades, interest rates are rising quickly around the world. In that climate, markets are prone to accidents.

    “What the previous two weeks have told you is there can be a lot more volatility in markets,” said Barry Kenneth, chief investment officer at the Pension Protection Fund, which manages pensions for employees of UK companies that become insolvent. “It’s easy to invest when everything’s going up. It’s a lot more difficult to invest when you’re trying to catch a falling knife, or you’ve got to readjust to a new environment.”

    The first signs of trouble appeared among fund managers who focus on so-called “liability-driven investment,” or LDI, for pensions. Gold said he started to receive messages from worried clients over the weekend of Sept. 24-25.

    LDI is built on a straightforward premise: Pensions need enough money to pay what they owe retirees well into the future. To plan for payouts in 30 or 50 years, they buy long-dated bonds, while purchasing derivatives to hedge these bets. In the process, they have to put up collateral. If bond yields rise sharply, they are asked to put up even more collateral in what’s known as a “margin call.” This obscure corner of the market has grown rapidly in recent years, reaching a valuation of more £1 trillion ($1.1 trillion), according to the Bank of England.

    When bond yields rise slowly over time, it’s not a problem for pensions deploying LDI strategies, and actually helps their finances. But if bond yields shoot up very quickly, it’s a recipe for trouble. According to the Bank of England, the move in bond yields before it intervened was “unprecedented.” The four-day move in 30-year UK government bonds was more than twice what was seen during the highest-stress period of the pandemic.

    “The sharpness and the viciousness of the move is what really caught people out,” Kenneth said.

    The margin calls came in — and kept coming. The Pension Protection Fund said it faced a £1.6 billion call for cash. It was able to pay without dumping assets, but others were caught off guard, and were forced into a fire sale of government bonds, corporate debt and stocks to raise money. Gold estimated that at least half of the 400 pension programs that XPS advises faced collateral calls, and that across the industry, funds are now looking to fill a hole of between £100 billion and £150 billion.

    “When you push such large moves through the financial system, it makes sense that something would break,” said Rohan Khanna, a strategist at UBS.

    When market dysfunction sparks a chain reaction, it’s not just scary for investors. The Bank of England made clear in its letter that the bond market rout “may have led to an excessive and sudden tightening of financing conditions for the real economy” as borrowing costs skyrocketed. For many businesses and mortgage holders, they already have.

    So far, the Bank of England has only bought £3.8 billion in bonds, far less than it could have purchased. Still, the effort has sent a strong signal. Yields on longer-term bonds have dropped sharply, giving pension funds time to recoup — though they’ve recently started to rise again.

    “What the Bank of England has done is bought time for some of my peers out there,” Kenneth said.

    Still, Kenneth is concerned that if the program ends next week as scheduled, the task won’t be complete given the complexity of many pension funds. Daniela Russell, head of UK rates strategy at HSBC, warned in a recent note to clients that there’s a risk of a “cliff-edge,” especially since the Bank of England is moving ahead with previous plans to start selling bonds it bought during the pandemic at the end of the month.

    “It might be hoped that the precedent of BoE intervention continues to provide a backstop beyond this date, but this may not be sufficient to prevent a renewed vigorous sell-off in long-dated gilts,” she wrote.

    As central banks jack up interest rates at the fastest clip in decades, investors are nervous about the implications for their portfolios and for the economy. They’re holding more cash, which makes it harder to execute trades and can exacerbate jarring price moves.

    That makes a surprise event more likely to cause massive disruption, and the specter of the next shocker looms. Will it be a rough batch of economic data? Trouble at a global bank? Another political misstep in the United Kingdom?

    Gold said the pension industry as a whole is better prepared now, though he concedes it would be “naive” to think there couldn’t be another bout of instability.

    “You would need to see yields rise more quickly than we saw this time,” he said, noting the larger buffers funds are now amassing. “It would require something of absolutely historic proportions for that not to be enough, but you never know.”

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  • US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

    US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

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    CNN
     — 

    The US Postal Service on Friday proposed increased prices “to offset the rise in inflation,” according to a statement from the agency.

    The price hikes, which have been approved by the Governors of the U.S. Postal Service, include a three-cent increase to purchase a stamp and a four-cent increase to mail a postcard. The changes amount to a 4.2% price increase for first class mail, according to USPS.

    The proposal must now be reviewed by the Postal Regulatory Commission.

    The announcement from the US Postal Service comes as consumers around the nation continue to grapple with rising prices for groceries, gas and other necessities. The US Postal Service has publicly struggled financially in recent years, and President Joe Biden signed a law earlier this year to overhaul the USPS’ finances and allow the agency to modernize its service.

    “As operating expenses continue to rise, these price adjustments provide the Postal Service with much needed revenue to achieve the financial stability sought by its Delivering for America 10-year plan,” US Postal Service said on Friday. “The prices of the U.S. Postal Service remain among the most affordable in the world.”

    Unlike other government agencies, the USPS generally does not receive taxpayer funding, and instead must rely on revenue from stamps and package deliveries to support itself.

    The Postal Service is also looking to increase fees for P.O. Box rentals, money orders and the cost to purchase insurance when mailing an item.

    If approved by the Postal Regulatory Commission the changes would take effect January 22, 2023, after midnight.

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  • Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

    Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

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    Editor’s Note: Gad Levanon is the chief economist at the Burning Glass Institute. He’s the former head of The Conference Board’s Labor Market Institute. The opinions expressed in this commentary are his own.

    To many economists and analysts, the US economy has represented a paradox this year. On the one hand, GDP growth has slowed significantly, and some argue, even entered a recession. On the other hand, overall employment growth has been much stronger than normal.

    While GDP declined at an annualized rate of 1.1% in the first half of 2022, the US economy added 2.3 million jobs in the last six months, far more than in any other six-month period in the 20 years prior to the pandemic.

    This tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched. The Consumer Price Index, which measures a basket of goods and services, was 8.3% year-over-year in August. That’s lower than the 40-year high of 9.1% in June, but still painfully high. To address it, the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.

    Why has employment growth remained so strong? First, the US economy is holding on better than many expected. The Atlanta Fed’s GDPNow estimate for real GDP growth in the third quarter of 2022 is 2.3%, suggesting that while the economy is now growing much more slowly than it did last year, we are still not in a recession. When the demand for goods and services strengthens, so does the demand for workers producing these goods and services.

    Second, despite the slowing of the economy and the growing fears of recession, layoffs are still historically low. Initial claims for unemployment insurance, an indicator highly correlated with layoffs, were 219,000 for the week ended October 1 – higher than the week prior, but still one of the lowest readings in recent decades. After years of increasingly traumatic labor shortages, many employers are reluctant to significantly reduce the number of workers even as their businesses are slowing. That’s because companies are worried that they will have trouble recruiting new workers when they start expanding again.

    Third, many industries are growing faster than normal because they are still recovering from the pandemic. Convention and trade show organizers, car rental companies, nursing homes and child day care services, among others, are all growing fast because they are still well below pre-pandemic employment levels.

    Fourth, just as some industries are growing because they are still catching up, others are experiencing high growth as they adjust to a new normal of higher demand. Demand for data processing and hosting services, semiconductor manufacturing, mental health services, testing laboratories, medical equipment and pharmaceutical manufacturing is higher than before the pandemic. And it’s likely that these represent structural changes to buying patterns that will keep demand high.

    Fifth, during the pandemic, corporate investments in software and R&D reached unprecedented levels, which drove a rapid increase in new STEM jobs. Because these workers are especially well paid, they have had plenty of disposable income to spend on goods and services, which has supported job growth throughout the economy.

    These factors are spurring positive momentum that will not disappear overnight. Employment growth is likely to slow down from its historically high rates, but it will still remain solid in the coming months. ManpowerGroup’s Employment Outlook Survey shows that the hiring intentions for the fourth quarter are still very high, despite dropping from the previous quarter.

    Next year, however, will look very different. Many of the industries that are still recovering from the pandemic will have reached pre-pandemic employment levels. With demand saturated, those industries may revert to slower hiring. But this alone is unlikely to push job growth into negative territory. What will do that is monetary policy.

    There are two ways to rein in the labor market: Either reduce demand for workers or increase the labor supply. But it’s hard to engineer a boost in labor supply. That takes the kind of legislative action needed to increase immigration, drive people into the labor force or grow investment in workforce training. This is likely to prove elusive in today’s polarized political environment.

    The only option that leaves the Fed is to engineer a recession by continuing to raise interest rates. Expect to see that happen in 2023.

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