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  • Fact check: The first Republican presidential debate of the 2024 election | CNN Politics

    Fact check: The first Republican presidential debate of the 2024 election | CNN Politics



    CNN
     — 

    Republican presidential candidates delivered a smattering of false and misleading claims at the first debate of the 2024 election – though none of the eight candidates on stage in Milwaukee delivered anything close to the bombardment of false statements that typically characterized the debate performances of former President Donald Trump, the Republican front-runner who skipped the Wednesday event.

    Sen. Tim Scott of South Carolina inaccurately described the state of the economy in early 2021 and repeated a long-ago-debunked false claim about the Biden-era Justice Department. Former New Jersey Gov. Chris Christie misstated the sentence attached to a gun law relevant to the investigation into the president’s son Hunter Biden. Florida Gov. Ron DeSantis misled about his handling of the Covid-19 pandemic, omitting mention of his early pandemic restrictions.

    Below is a fact check of those claims and various others from the debate, some of which left out key context. In addition, below is a brief fact check of some of Trump’s claims from a pre-taped interview he did with Tucker Carlson, which was posted online shortly before the debate aired. Trump made a variety of statements that were not true.

    DeSantis and the pandemic

    DeSantis criticized the federal government for its handling of the Covid-19 pandemic, claiming it had locked down the economy, and then said: “In Florida, we led the country out of lockdown, and we kept our state free and open.”

    Facts First: DeSantis’s claim is misleading at best. Before he became a vocal opponent of pandemic restrictions, DeSantis imposed significant restrictions on individuals, businesses and other entities in Florida in March 2020 and April 2020; some of them extended months later into 2020. He did then open up the state, with a gradual phased approach, but he did not keep it open from the start.

    DeSantis received criticism in March 2020 for what some critics perceived as a lax approach to the pandemic, which intensified as Florida beaches were packed during Spring Break. But that month and the month following, DeSantis issued a series of major restrictions. For example, DeSantis:

    • Closed Florida’s schools, first with a short-term closure in March 2020 and then, in April 2020, with a shutdown through the end of the school year. (In June 2020, he announced a plan for schools to reopen for the next school year that began in August. By October 2020, he was publicly denouncing school closures, calling them a major mistake and saying all the information hadn’t been available that March.)
    • On March 14, 2020, announced a ban on most visits to nursing homes. (He lifted the ban in September 2020.)
    • On March 17, 2020, ordered bars and nightclubs to close for 30 days and restaurants to operate at half-capacity. (He later approved a phased reopening plan that took effect in May 2020, then issued an order in September 2020 allowing these establishments to operate at full capacity.)
    • On March 17, 2020, ordered gatherings on public beaches to be limited to a maximum of 10 people staying at least six feet apart, then, three days later, ordered a shutdown of public beaches in two populous counties, Broward and Palm Beach. (He permitted those counties’ beaches to reopen by the last half of May.)
    • On March 20, 2020, prohibited “any medically unnecessary, non-urgent or non-emergency” medical procedures. (The prohibition was lifted in early May 2020.)
    • On March 23, 2020, ordered that anyone flying to Florida from an area with “substantial community spread” of the virus, “to include the New York Tri-State Area (Connecticut, New Jersey and New York),” isolate or quarantine for 14 days or the duration of their stay in Florida, whichever was shorter, or face possible jail time or a fine. Later that week, he added Louisiana to the list. (He lifted the Louisiana restriction in June 2020 and the rest in August 2020.)
    • On April 3, 2020, imposed a statewide stay-home order that temporarily required people in Florida to “limit their movements and personal interactions outside of their home to only those necessary to obtain or provide essential services or conduct essential activities.” (Beginning in May 2020, the state switched to a phased reopening plan that, for months, included major restrictions on the operations of businesses and other entities; DeSantis described it at the time as a “very slow and methodical approach” to reopening.)

    -From CNN’s Daniel Dale

    Nikki Haley, the former South Carolina governor and US ambassador to the United Nations, said: “Donald Trump added $8 trillion to our debt, and our kids are never going to forgive us for this.”

    Facts First: Haley’s figure is accurate. The total public debt stood at about $19.9 trillion on the day Trump took office in 2017 and then increased by about $7.8 trillion over Trump’s four years, to about $27.8 trillion on the day he left office in 2021.

    It’s worth noting, however, that the increase in the debt during any president’s tenure is not the fault of that president alone. A significant amount of spending under any president is the result of decisions made by their predecessors – such as the creation of Social Security, Medicare and Medicaid decades ago – and by circumstances out of a president’s control, notably including the global Covid-19 pandemic under Trump; the debt spiked in 2020 after Trump approved trillions in emergency pandemic relief spending that Congress had passed with overwhelming bipartisan support.

    Still, Trump did choose to approve that spending. And his 2017 tax cuts, unanimously opposed by congressional Democrats, were another major contributor to the debt spike.

    -From CNN’s Daniel Dale and Katie Lobosco

    North Dakota Gov. Doug Burgum claimed that Biden’s signature climate bill costs $1.2 trillion dollars and is “just subsidizing China.”

    Facts First: This claim needs context. The clean energy pieces of the Inflation Reduction Act – Democrats’ climate bill – passed with an initial price tag of nearly $370 billion. However, since that bill is made up of tax incentives, that price tag could go up depending on how many consumers take advantage of tax credits to buy electric vehicles and put solar panels on their homes, and how many businesses use the subsidies to install new utility scale wind and solar in the United States.

    Burgum’s figure comes from a Goldman Sachs report, which estimated the IRA could provide $1.2 trillion in clean energy tax incentives by 2032 – about a decade from now.

    On Burgum’s claim that Biden’s clean energy agenda will be a boon to China, the IRA was specifically written to move the manufacturing supply chain for clean energy technology like solar panels and EV batteries away from China and to the United States.

    In the year since it was passed, the IRA has spurred 83 new or expanded manufacturing facilities in the US, and close to 30,000 new clean energy manufacturing jobs, according to a tally from trade group American Clean Power.

    -From CNN’s Ella Nilsen

    With the economy as one of the main topics on the forefront of voters’ minds, Scott aimed to make a case for Republican policies, misleadingly suggesting they left the US economy in record shape before Biden took office.

    “There is no doubt that during the Trump administration, when we were dealing with the COVID virus, we spent more money,” Scott said. “But here’s what happened at the end of our time in the majority: we had low unemployment, record low unemployment, 3.5% for the majority of the population, and a 70-year low for women. African Americans, Hispanics, and Asians had an all-time low.”

    Facts First: This is false. Scott’s claims don’t accurately reflect the state of the US economy at the end of the Republican majority in the Senate. And in some cases, his exaggerations echo what Trump himself frequently touted about the economy under his leadership.

    By the time Trump left office and the Republicans lost the Senate majority in January 2021, US unemployment was not at a record low. The US unemployment rate dropped to a seasonally adjusted rate of 3.5% in September 2019, the country’s lowest in 50 years. While it hovered around that level for five months, Scott’s assertion ignores the coronavirus pandemic-induced economic destruction that followed. In April 2020, the unemployment rate spiked to 14.7% — the highest level since monthly records began in 1948. As of December 2020, the unemployment rate was at 6.7%.

    Nor was the unemployment rate for women at a 70-year low by the end of Trump’s time in office. It reached a 66-year low during certain months of 2019, at 3.4% in April and 3.6% in August, but by December 2020, unemployment for women was at 6.7%.

    The unemployment rates for African Americans, Hispanics, and Asians were also not at all-time lows at the end of 2020, but they did reach record lows during Trump’s tenure as president.

    -From CNN’s Tara Subramaniam

    Scott said that the Justice Department under President Joe Biden is targeting “parents that show up at school board meetings. They are called, under this DOJ, they’re called domestic terrorists.”

    Facts First: It is false that the Justice Department referred to parents as domestic terrorists. The claim has been debunked several times – during the uproar at school boards over Covid-19 restrictions and anti-racism curriculums; after Kevin McCarthy claimed Republicans would investigate Merrick Garland with a majority in the House; and even by a federal judge. The Justice Department never called parents terrorists for attending or wanting to attend school board meetings.

    The claim stems from a 2021 letter from The National School Boards Associations asking the Justice Department to “deal with” the uptick in threats against education officials and saying that “acts of malice, violence, and threats against public school officials” could be classified as “the equivalent to a form of domestic terrorism and hate crimes.” In response, Garland released a memo encouraging federal and local authorities to work together against the harassment campaigns levied at schools, but never endorsed the “domestic terrorism” notion.

    A federal judge even threw out a lawsuit over the accusation, ruling that Garland’s memo did little more than announce a “series of measures” that directed federal authorities to address increasing threats targeting school board members, teachers and other school employees.

    -From CNN’s Hannah Rabinowitz

    Haley, the former ambassador to the United Nations and governor of South Carolina, said the US is spending “less than three and a half percent of our defense budget” on Ukraine aid, and that in terms of financial aid relative to GDP, “11 of the European countries have given more than the US.”

    Facts First: This is partly true. Haley’s claim regarding the US aid to Ukraine compared to the total defense budget is slightly under the actual percentage, but it is accurate that 11 European countries have given more aid to Ukraine as a percentage of their total GDP than the US.

    As of August 14, the US has committed more than $43 billion in military aid to Ukraine since the beginning of the war in Ukraine, according to the Defense Department. In comparison, the Fiscal Year 2023 defense budget was $858 billion – making aid to Ukraine just over 5% of the total US defense budget.

    As of May 2023, according to a Council of Foreign Relations tracker, 11 countries were providing a higher share in aid to Ukraine relative to their GDP than the US – led by Estonia, Latvia, Lithuania, and Poland.

    -From CNN’s Haley Britzky

    Former Vice President Mike Pence said Wednesday that the Trump administration “spent funding to backfill on the military cuts of the Obama administration.”

    Facts First: This is misleading. While military spending decreased under the Obama administration, it was largely due to the 2011 Budget Control Act, which received Republican support and resulted in automatic spending cuts to the defense budget.

    Mike Pence, a senator at the time, voted in favor of the Budget Control Act.

    -From CNN’s Haley Britzky

    Christie said President Biden’s son Hunter Biden was “facing a 10-year mandatory minimum” for lying on a federal form when he purchased a gun in 2018.

    Facts First: Christie, a former federal prosecutor, clearly misstated the law. This crime can lead to a maximum prison sentence of 10 years, but it doesn’t have a 10-year mandatory minimum.

    These comments are related to the highly scrutinized Justice Department investigation into Hunter Biden, which is currently ongoing after a plea deal fell apart earlier this summer.

    As part of the now-defunct deal, Hunter Biden agreed to plead guilty to two tax misdemeanors and enter into a “diversion agreement” with prosecutors, who would drop the gun possession charge in two years if he consistently stayed out of legal trouble and passed drug tests.

    The law in question makes it a crime to purchase a firearm while using or addicted to illegal drugs. Hunter Biden has acknowledged struggling with crack cocaine addiction at the time, and admitted at a court hearing and in court papers that he violated this law by signing the form.

    The US Sentencing Commission says, “The statutory maximum penalty for the offense is ten years of imprisonment.” There isn’t a mandatory 10-year punishment, as Christie claimed.

    During his answer, Christie also criticized the Justice Department for agreeing to a deal in June where Hunter Biden could avoid prosecution on the felony gun offense. That deal was negotiated by special counsel David Weiss, who was first appointed to the Justice Department by former President Donald Trump.

    -From CNN’s Marshall Cohen

    Burgum and Scott got into a back and forth over IRS staffing with Burgum saying that the “Biden administration wanted to put 87,000 people in the IRS,” and Scott suggesting they “fire the 87,000 IRS agents.”

    Facts First: This figure needs context.

    The Inflation Reduction Act, which passed last year without any Republican votes, authorized $80 billion in new funding for the IRS to be delivered over the course of a decade.

    The 87,000 figure comes from a 2021 Treasury report that estimated the IRS could hire 86,852 full-time employees with a nearly $80 billion investment over 10 years.

    While the funding may well allow for the hiring of tens of thousands of IRS employees over time, far from all of these employees will be IRS agents conducting audits and investigations.

    Many other employees will be hired for the non-agent roles, from customer service to information technology, that make up most of the IRS workforce. And a significant number of the hires are expected to fill the vacant posts left by retirements and other attrition, not take newly created positions.

    The IRS has not said precisely how many new “agents” will be hired with the funding. But it is already clear that the total won’t approach 87,000. And it’s worth noting that the IRS may not receive all of the $80 billion after Republicans were able to claw back $20 billion of the new funding as part of a deal to address the debt ceiling made earlier this year.

    -From CNN’s Katie Lobosco

    Trump repeated a frequent claim during his interview with Carlson that streamed during the GOP debate that his retention of classified documents at Mar-a-Lago after leaving the White House was “covered” under the Presidential Records Act and that he is “allowed to do exactly that.”

    Facts First: This is false. The Presidential Records Act says the exact opposite – that the moment presidents leave office, all presidential records are to be turned over to the federal government. Keeping documents at Mar-a-Lago after his presidency concluded was in clear contravention of that law.

    According to the Presidential Records Act, “upon the conclusion of a President’s term of office, or if a President serves consecutive terms upon the conclusion of the last term, the Archivist of the United States shall assume responsibility for the custody, control, and preservation of, and access to, the Presidential records of that President.”

    The sentence makes clear that a president has no authority to keep documents after leaving the White House.

    The National Archives even released a statement refuting the notion that Trump’s retention of documents was covered by the Presidential Records Act, writing in a June news release that “the PRA requires that all records created by Presidents (and Vice-Presidents) be turned over to the National Archives and Records Administration (NARA) at the end of their administrations.”

    -From CNN’s Hannah Rabinowitz

    While discussing electric vehicles, Trump claimed that California “is in a big brownout because their grid is a disaster,” adding that the state’s ambitious electric vehicle goals won’t work with the grid in such shape.

    Facts First: Trump’s claim that California’s grid is currently in a “big brownout” and is a “disaster” isn’t true. California’s grid suffered rolling blackouts in 2020, but it has performed quite well in the face of extreme heat this summer, owing in large part to a massive influx of renewable energy including battery storage. These big batteries keep energy from wind and solar running when the wind isn’t blowing and sun isn’t shining. (Batteries are also being deployed at a rapid rate in Texas, a red state.)

    Another reason California’s grid has stayed stable this year even during extreme temperature spikes is the fact that a deluge of snow and rain this winter and spring has refilled reservoirs that generate electricity using hydropower.

    As Trump insinuated, there are real questions about how well the state’s grid will hold up as California’s drivers shift to electric vehicles by the millions by 2035 – the same year it will phase out selling new gas-powered cars. California state officials say they are preparing by adding new capacity to the grid and urging more people to charge their vehicles overnight and during times of the day when fewer people are using energy. But independent experts say the state needs to exponentially increase its clean energy while also building out huge amounts of new EV chargers to achieve its goals.

    -From CNN’s Ella Nilsen

    Trump and the border wall

    Trump claimed to Carlson, “I had the strongest border in the history of our country, and I built almost 500 miles of wall. You know, they’d like to say, ‘Oh, was it less?’ No, I built 500 miles. In fact, if you check with the authorities on the border, we built almost 500 miles of wall.”

    Facts First: This needs context. Trump and his critics are talking about different things when they use different figures for how much border wall was built during his presidency. Trump is referring to all of the wall built on the southern border during his administration, even in areas that already had some sort of barrier before. His critics are only counting the Trump-era wall that was built in parts of the border that did not have any previous barrier.

    A total of 458 miles of southern border wall was built under Trump, according to a federal report written two days after Trump left office and obtained by CNN’s Priscilla Alvarez. That is 52 miles of “primary” wall built where no barriers previously existed, plus 33 miles of “secondary” wall that was built in spots where no barriers previously existed, plus another 373 miles of primary and secondary wall that was built to replace previous barriers the federal government says had become “dilapidated and/or outdated.”

    Some of Trump’s rival candidates, such DeSantis and Christie, have used figures around 50 miles while criticizing Trump for failing to finish the wall – counting only the primary wall built where no barriers previously existed.

    While some Trump critics have scoffed at the replacement wall, the Trump-era construction was generally much more formidable than the older barriers it replaced, which were often designed to deter vehicles rather than people on foot. Washington Post reporter Nick Miroff tweeted in 2020: “As someone who has spent a lot of time lately in the shadow of the border wall, I need to puncture this notion that ‘replacement’ sections are ‘not new.’ There is really no comparison between vehicle barriers made from old rail ties and 30-foot bollards.”

    Ideally, both Trump and his opponents would be clearer about what they are talking about: Trump that he is including replacement barriers, his opponents that they are excluding those barriers.

    -From CNN’s Daniel Dale

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  • Mortgage rates rise to just short of 7% | CNN Business

    Mortgage rates rise to just short of 7% | CNN Business


    Washington, DC
    CNN
     — 

    US mortgage rates remained elevated this week, rising for the third week in a row, but stayed just under the market’s 7% threshold.

    The 30-year fixed-rate mortgage averaged 6.96% in the week ending August 10, up from 6.90% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.22%.

    “There is no doubt continued high rates will prolong affordability challenges longer than expected,” said Sam Khater, Freddie Mac’s chief economist. “However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid.”

    The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

    The rate stayed elevated this week after the Federal Reserve highlighted its reliance on data on jobs and inflation in its July monetary policy meeting and in recent comments.

    Markets had been waiting for July’s inflation report, released Thursday morning, which showed consumer price hikes rose 3.2% annually, the first increase in 12 months. The data also showed that shelter costs contributed 90% of total inflation last month.

    “July’s Consumer Price Index holds significant importance for the Fed’s upcoming decisions,” said Jiayi Xu, an economist at Realtor.com.

    Since inflation rose, it could support the Fed’s concern that the battle is not over, Xu said. The Fed also will consider the forthcoming August employment and inflation data prior to the next policy meeting, in September.

    In addition, the most recent jobs report offered some mixed signals about the labor market, Xu said, including a smaller number of net new jobs added and a dipping unemployment rate.

    “While July’s jobs report itself is very unlikely to have a direct impact on the Fed’s upcoming decision, the decline to a 3.5% unemployment rate may imply that more significant slowing is needed to align with the Fed’s projected year-end rate of 4.1%,” she said.

    This story is developing and will be updated.

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  • Watchdog agency increases its pandemic unemployment benefits fraud estimate to as much as $135 billion | CNN Politics

    Watchdog agency increases its pandemic unemployment benefits fraud estimate to as much as $135 billion | CNN Politics


    Washington
    CNN
     — 

    As much as $135 billion in fraudulent Covid-19 pandemic unemployment insurance claims were likely paid out, according to a report released Tuesday by the US Government Accountability Office.

    The whopping figure, which equates to as much as 15% of total unemployment benefits distributed during the pandemic, is a notable bump up from the $60 billion the watchdog agency had previously estimated in January.

    In comments on a draft of the GAO report, the Department of Labor said the office is likely overestimating the actual amount of fraud. However, the department’s Office of Inspector General in February said in testimony before a House committee that at least $191 billion in pandemic unemployment benefits payments could have been improper, with “a significant portion attributable to fraud.”

    The GAO pushed back on the department’s assertions in its report and stood by the methodology used.

    “Given that not all potential fraud will be investigated and adjudicated through judicial or other systems, the full extent of UI fraud during the pandemic will likely never be known with certainty,” the GAO report said. “Therefore, it is appropriate to rely on estimates, such as ours, to make more comprehensive conclusions about the extent of fraud in the UI programs during the pandemic.”

    The findings released on Tuesday shed light on the numerous schemes to steal money from a range of hastily implemented pandemic relief programs, which have drawn the attention of congressional lawmakers and prompted legislative action. Last year, President Joe Biden signed two bipartisan bills into law aimed at holding individuals who commit fraud under pandemic relief programs accountable.

    “My message to those cheats out there is this: You can’t hide. We’re going to find you. We’re going to make you pay back what you stole and hold you accountable under the law,” the president said at the time.

    The House of Representatives also passed a bill in May that would help recover fraudulent unemployment insurance benefits paid out during the pandemic. The bill, however, has not been brought to a vote in the Senate.

    Fraud within the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program in March 2020. State unemployment agencies were overwhelmed with record numbers of claims and relaxed some requirements in an effort to get the money out the door quickly to those who had lost their jobs.

    But the enhanced payments and lax controls quickly attracted criminals from around the world. States and Congress subsequently tightened their verification requirements in an attempt to combat the fraud, particularly in the Pandemic Unemployment Assistance program, which allowed freelancers, gig workers and others to collect benefits for the first time.

    More than $888 billion in federal and state unemployment benefits were paid from the end of March 2020 through early September 2021, when all the pandemic enhancements ended nationwide, according to the Labor Department Office of Inspector General.

    The GAO report said the “unprecedented demand for benefits and need to quickly implement the new programs increased the risk of fraud.”

    Other pandemic relief programs were also the target of criminals. The GAO in May flagged 3.7 million recipients of Small Business Administration funds as having “warning signs consistent with potential fraud.” The SBA doled out $1 trillion to help small businesses during the pandemic through measures including the Paycheck Protection Program and Covid-19 Economic Injury Disaster Loan program. More than 10 million small businesses were assisted.

    Some of the fraudulent claims have been recouped. States identified $5.3 billion in fraudulent unemployment benefits overpayments and has recovered $1.2 billion, according to the GAO.

    A Justice Department spokesperson told CNN on Tuesday that as of August 30, the department has charged more than 3,000 people for pandemic related fraud.

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  • Fact check: Biden makes false claims about the debt and deficit in jobs speech | CNN Politics

    Fact check: Biden makes false claims about the debt and deficit in jobs speech | CNN Politics


    Washington
    CNN
     — 

    During a Friday speech about the September jobs report, President Joe Biden delivered a rapid-fire series of three false or misleading claims – falsely saying that he has cut the debt, falsely crediting a tax policy that didn’t take effect until 2023 for improving the budget situation in 2021 and 2022, and misleadingly saying that he has presided over an “actual surplus.”

    At a separate moment of the speech, Biden used outdated figures to boast of setting record lows in the unemployment rates for African Americans, Hispanics and people with disabilities. While the rates for these three groups hit record lows earlier in his presidency, he didn’t acknowledge that they have all since increased to non-record levels – and, in fact, are now higher than they were during parts of Donald Trump’s presidency.

    Here’s a fact check.

    Biden said in the Friday speech that Republicans want to “cut taxes for the very wealthy and big corporations,” which would add to the deficit. That’s fair game.

    But then he added: “I was able to cut the federal debt by $1.7 trillion over the first two-and-a – two years. Well remember what we talked about. Those 50 corporations that made $40 billion, weren’t paying a penny in taxes? Well guess what – we made them pay 30%. Uh, 15% in taxes – 15%. Nowhere near what they should pay. And guess what? We were able to pay for everything, and we end up with an actual surplus.”

    Facts First: Biden’s claims were thoroughly inaccurate. First, he has not cut the federal debt, which has increased by more than $5.7 trillion during his presidency so far after rising about $7.8 trillion during Trump’s full four-year tenure; it is the budget deficit (the one-year difference between spending and revenues), not the national debt (the accumulation of federal borrowing plus interest owed), that fell by $1.7 trillion over his first two fiscal years in office. Second, Biden’s 15% corporate minimum tax on certain large profitable corporations did not take effect until the first day of 2023, so it could not possibly have been responsible for the deficit reduction in fiscal 2021 and 2022. Third, there is no “actual surplus”; the federal government continues to run a budget deficit well over $1 trillion.

    CNN has previously debunked Biden’s false claims about supposedly having cut the “debt” and about the new corporate minimum tax supposedly being responsible for deficit reduction in 2021 and 2022. The White House, which declined to comment on the record for this article, has corrected previous official transcripts when Biden has claimed that the debt fell by $1.7 trillion, acknowledging that he should have said deficit.

    As for Biden’s vague additional claim that “we end up with an actual surplus,” a White House official said Friday that the president was referring to how the particular law in which the new minimum tax was contained, the Inflation Reduction Act of 2022, is projected to reduce the deficit. But Biden did not explain this unusual-at-best use of “surplus” – and since he had just been talking about the overall budget picture, he certainly made it sound like he was claiming to have presided over a surplus in the overall budget. He has not done so.

    Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a liberal think tank, said in response to the White House explanation: “Well he didn’t say ‘budget surplus’ I suppose. But in federal budget conversations, the word surplus has a very specific meaning. It doesn’t mean ‘additional,’ it means revenues exceed spending.” He noted earlier Friday that there hasn’t been a federal budget surplus since 2001.

    It’s worth noting, as we have before, that Biden’s Friday comments would be missing key context even if he had not inaccurately replaced the word “deficit” with “debt.” It’s highly questionable how much credit Biden himself deserves for the decline in the deficit in 2021 and 2022. Independent analysts say it occurred largely because emergency Covid-19 relief spending from fiscal 2020 expired as scheduled – and that Biden’s own new laws and executive actions have significantly added to current and projected future deficits. In addition, the 2023 deficit is widely expected to be higher than the 2022 deficit.

    More on the corporate minimum tax

    When Biden spoke Friday about “those 50 corporations that made $40 billion, weren’t paying a penny in taxes,” he was referring, as he has in the past, to an Institute on Taxation and Economic Policy analysis published in 2021 that listed 55 companies the think tank found had paid no federal corporate income taxes in their most recent fiscal year.

    But it was imprecise, at best, for Biden to say Friday that we made “them” pay 15% in taxes. That’s because the new 15% minimum tax applies only to companies that have an average annual financial statement income of $1 billion or more – there are lots of nuances involved; you can read more details here – and only 14 of the 55 companies on the think tank’s list reported having US pre-tax income of at least $1 billion. In other words, some large and profitable companies will not be hit with the tax.

    The federal government’s nonpartisan Joint Committee on Taxation projected last year that the tax would shrink deficits by about $222 billion through 2031, with positive impacts beginning in 2023. Gardner said Friday that he fully expects the tax to play a role in reducing deficits going forward, but he said its deficit-reducing impact “might be lower than expected” in 2023 because the Treasury Department – which has been the subject of intense lobbying from corporations that could be affected – has taken so long to implement the details of the law that the Internal Revenue Service ended up waiving penalties on companies that don’t make estimated tax payments on it this year.

    Regardless, Gardner said, “The minimum tax did not reduce the deficit at all in fiscal years 2021 or 2022 because it didn’t exist during those years.”

    Early in the Friday speech, Biden boasted of statistics from the September jobs report that was released earlier in the day. But then he said, “We’ve achieved a 70-year low in unemployment rate for women, record lows in unemployment for African Americans and Hispanic workers, and people with disabilities – folks who’ve been left behind in previous recoveries and left behind for too long.”

    Facts First: Three of these four Biden unemployment boasts are misleading because they are out of date. Only his claim about a 70-year low for women’s unemployment remains current. While the unemployment rates for African Americans, Hispanics and people with disabilities did fall to record lows earlier in Biden’s presidency, they have since increased – to rates higher than the rates during various periods of the Trump administration.

    Women: The seasonally adjusted women’s unemployment rate was 3.4% in September. That’s a tick upward from the 3.3% rate during two previous months of 2023, but it’s still tied – with two months of the Trump administration – for the lowest for this group since 1953, 70 years ago.

    African Americans: The seasonally adjusted Black or African American unemployment rate was 5.7% in September, up from the record low of 4.7% in April. The current 5.7% rate is higher than this group’s rates during four months of 2019, under Trump.

    Hispanics: The seasonally adjusted Hispanic unemployment rate was 4.6% in September, up from the record low of 3.9% from September 2022. The current 4.6% rate is higher than this group’s rates for every month from April 2019 through February 2020 under Trump, plus a smattering of prior Trump-era months.

    People with disabilities: The unemployment rate for people with disabilities, ages 16 and up, was 7.3% in September, up from a record low of 5.0% in December 2022. (The figures only go back to 2008, so the record was for a period of less than two decades.) The current 7.3% rate is higher than this group’s rates during eight months of the Trump presidency, seven of them in 2019.

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  • Americans’ wages are finally outpacing inflation. But could it last? | CNN Business

    Americans’ wages are finally outpacing inflation. But could it last? | CNN Business


    Minneapolis
    CNN
     — 

    US wages have been on the rise, but it sure hasn’t felt like it. For more than two years, persistent and pervasive inflation has taken big bites out of Americans’ paychecks.

    That’s finally starting to change now that inflation is waning.

    In June, for the first time in 26 months, US workers’ real weekly earnings (a week’s worth of wages adjusted for inflation) grew on an annual basis, according to data released this week from the Bureau of Labor Statistics. Annual real weekly wages were up 0.6% last month, a rate that’s a tick below the 0.7% gain seen in February 2020.

    June also marked the second consecutive month of year-over-year real hourly wage growth — the first back-to-back months of gains since early 2021.

    “The big problem for most consumers is when wage increases do not keep pace with inflation, then we lose real purchasing power,” said William Ferguson, the Gertrude B. Austin professor of economics at Grinnell College in Iowa. “And that’s actually what hurts people.”

    Although long overdue, this development is landing at a sticky time in the economy and the Federal Reserve’s knock-down-drag-out fight to tame inflation. The Fed has been laser-focused on dampening demand, and central bankers have frequently noted they’re keeping close watch on how much wage growth could stoke that demand and, in turn, inflation.

    Alternatively, if a cooling labor market turns frigid, that could also make this recent growth short-lived.

    “If inflation is moderate and the labor market is very strong, it’s a reason for vigilance, but it’s not a reason on its own to continue hiking,” said Alex Pelle, Mizuho Securities US economist. “It’s one of those things that you need to watch, because there’s the argument that will add to inflationary pressures.”

    The Fed is in the midst of a wait-and-see period. After 10 consecutive rate hikes in 15 months, the Fed’s policymakers in June voted to hold the benchmark rate steady so they could evaluate the effects of the tightening to date, as well as the activity within the banking sector and broader economy.

    Although the major economic reports of the past two weeks did show key data was moving in the preferred direction — slowing job growth, a slight slackening within the labor market, cooling consumer price inflation and practically flat producer prices — markets largely expect the Fed to continue with a well-telegraphed quarter-point increase when it meets later this month.

    “The Fed does not want to repeat the mistake of the 1970s, when they stopped the tightening and inflation bounced back up,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.

    Fears of a dreaded “wage-price spiral” — when rising wages and prices feed into each other — have made a bogeyman out of wage growth. However, recent economic research from the likes of the San Francisco Fed and former Fed chair Ben Bernanke noted that wages gains have had little, and certainly not overwhelming, effects on this inflationary cycle.

    Wage gains “will fuel spending, and I do think it will be something that keeps a floor on inflation that’s above [the Fed’s target of] 2%, but let’s see how it evolves over time,” Pelle said. “I don’t want to jump the gun and say absolutely that this is something that the Fed needs crushed.”

    If a data point from the June jobs report proves to be a trend and not a one-month blip, the wage gains seen now could be short-lived.

    In June, the number of people employed part-time for economic reasons grew by 452,000 to 4.2 million, an increase that was partially reflective of people “whose hours were cut due to slack work for business conditions,” the BLS noted.

    Still, the broader labor market trends, including hiring activity, labor movements and businesses’ budgets are favorable to workers maintaining these real wage gains, said Julia Pollak, chief economist with ZipRecruiter.

    Job growth is slowing somewhat, but the gains are still above pre-pandemic averages as companies continue to backfill shortfalls left by the pandemic and respond to continued demand. Also, some workers who have felt they’ve been given short shrift or are discouraged about two years of negative real wages are responding with labor strikes, she noted.

    And finally, supply-side inflation has drastically cooled to the point where annual inflation is practically flat — which, ideally, gives firms more wiggle room to pay workers, she said.

    “For the most part, this is still a tight labor market, still very low unemployment, still healthy business activity in lots and lots of industries where businesses have little choice but to staff up or at least maintain the staff they have,” she said.

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  • Could the June CPI report change the Fed’s rate trajectory? | CNN Business

    Could the June CPI report change the Fed’s rate trajectory? | CNN Business

    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.



    CNN
     — 

    After the June jobs report showed a cooling but still-hot picture of the labor market, investors are looking to a key inflation report due Wednesday for more clues on the economy’s health. But some investors say the results will likely do little to sway the Federal Reserve’s interest rate trajectory.

    What happened: The labor market added just 209,000 jobs in June, below economists’ expectations for a net gain of 225,000 jobs. That’s the smallest monthly gain since a decline in December 2020.

    But beneath the surface, the jobs market remains hot. Average hourly earnings growth remained steady at 0.4% from May and also unchanged at 4.4% year-over-year, suggesting that wage inflation remains sticky. The unemployment rate also fell to 3.6% from 3.7%, though jobless rates for Black and Hispanic workers rose sharply.

    There is “nothing in the release that would change our expectation that the Fed has more work to do,” said Joseph Davis, global chief economist at Vanguard.

    Accordingly, traders continued to overwhelmingly expect a quarter-point rate hike at the Fed’s July meeting. Traders saw a roughly 92% chance of such a decision as of the market close on Friday, according to the CME FedWatch Tool.

    What’s next: The June Consumer Price Index report, a key inflation reading, is due on Wednesday.

    Economists expect a 3.1% increase in consumer prices for the year ended in June, which would be a cooldown from a 4% annual increase in May, according to Refinitiv.

    Recent data has suggested that inflation is coming down, though it remains above the Fed’s 2% target. The Personal Consumption Expenditures price index, the Fed’s favorite inflation gauge, rose 3.8% for the 12 months ended in May. That’s down from the revised 4.3% annual rise seen in April.

    But it’s unlikely that the June CPI report will change the Fed’s interest rate trajectory, barring a huge upside or downside surprise, especially considering that Fed officials in recent weeks have been vocal that more rate hikes are likely coming, said James Ragan, director of wealth management research at DA Davidson.

    Still, that doesn’t mean investors should expect infinite rate hikes from the Fed.

    “We continue to expect that [the] Fed will soon reach its terminal rate, bringing it closer toward the end of its most aggressive tightening campaign in generations,” said Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management.

    The Producer Price Index report for June is due on Thursday.

    UPS and the Teamsters union are in contract negotiations. Without a deal, 340,000 Teamsters could go on strike on August 1.

    Such an event could be damaging to the US economy, reports my colleague Chris Isidore.

    UPS carries 6% of the country’s gross domestic product in its trucks. The company carried an average of 20.8 million US packages a day through last year, and that number is down only slightly this year.

    In other words, the company’s services are critical to keeping the gears moving seamlessly in supply chains that saw massive snarls during the height of the Covid pandemic. A strike could potentially bring back the problems that were so prominent just a couple years ago, including shipping delays and higher prices.

    The Biden administration is keeping an eye on negotiations between both parties in “recognition of the role UPS plays in our economy and of the important work that UPS workers did through the pandemic and continue to do today,” acting labor secretary Julie Su told CNN on Friday.

    But the company and union broke off last week, with both sides claiming the other walked away from the bargaining table.

    Read more here.

    Monday: Consumer credit for May and NY Federal Reserve’s Survey of Consumer Expectations for June.

    Tuesday: NFIB small business optimism survey for June.

    Wednesday: Consumer Price Index report and housing starts for June.

    Thursday: Producer Price Index report for June.

    Friday: University of Michigan consumer sentiment and inflation expectations for July.

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  • Expect more rate hikes from the Fed after the latest jobs report | CNN Business

    Expect more rate hikes from the Fed after the latest jobs report | CNN Business


    Washington, DC
    CNN
     — 

    An interest rate hike later this month was already in the cards for the Federal Reserve. But after the June jobs report, the timing of a second hike remains unclear.

    Job gains remain robust, wage growth is still going strong, and unemployment continues to hover near historic lows. That means the job market is still fueling demand in the economy, which the Fed has been trying to slow through rate hikes. And Fed officials have made it clear they think the central bank still has more work to do to bring down inflation, which is still running well above the 2% goal.

    Federal Reserve Bank of Chicago President Austan Goolsbee, a voting member of the Fed committee that decides interest rates, said in an interview Friday that he sees “a decent chance of further tightening down the pipeline” and that inflation “needs to come down more.”

    Other Fed officials have struck a similarly hawkish tone on inflation, hinting strongly at a hike in July.

    “I remain very concerned about whether inflation will return to target in a sustainable and timely way,” said Federal Reserve Bank of Dallas President Lorie Logan on Thursday during a meeting hosted by the Central Bank Research Association. “I think more restrictive monetary policy will be needed to achieve the Federal Open Market Committee’s goals of stable prices and maximum employment.”

    Fed officials voted last month to hold the key federal funds rate steady at a range of 5-5.25% to reassess the economy after a string of 10 consecutive rate hikes and to monitor the effects of bank stresses in the spring, according to minutes from that meeting released Wednesday.

    “We can take some time and assess and collect more information and then be able to act, knowing that we also communicated through our projections that we don’t think we’re done, based on what we know,” said New York Fed President John Williams Wednesday during a moderated discussion in New York. “And obviously we’re absolutely committed to achieving our 2% inflation goal.”

    And Fed Chair Jerome Powell himself has doubled down on the need for more rate increases in recent speeches, not ruling out back-to-back hikes, despite economic indicators showing slight progress on inflation.

    Financial markets are pricing in a more than a 90% chance of a rate hike later this month, according to the CME FedWatch Tool.

    The Fed wants to see the labor market slow down broadly, bringing it into “better balance,” as Powell has frequently described it. That means wage growth would need to cool consistently, monthly payroll growth would need to be close to a range of 70,000 and 100,000 — the smallest job gain needed to keep up with population growth — and unemployment would need to rise, according to economists. Job market conditions don’t resemble that just yet.

    “This is clearly a very tight labor market, so I expect the Fed to look at this data and say there is justification here for continued small rate increases because the labor market is not cooling enough,” Dave Gilbertson, labor economist at payroll software company UKG, told CNN.

    Labor costs are higher because of a persistent difficulty in hiring, weighing on labor-intensive service providers such as hospitals and restaurants, which has put upward pressure on consumer prices since businesses typically raise wages to address hiring challenges.

    Powell homed in on that dynamic in recent remarks, and research from top economists argues the Fed will have to slow the economy further to fully address the labor market’s stubborn impact on inflation. Whether that means a full-blown recession or a so-called soft landing remains to be seen, but some Fed officials are optimistic.

    “I feel like we are on a golden path of avoiding recession,” Goolsbee told CNBC Friday.

    And there has been some progress on bringing the job market back into better balance while inflation has come down. Job openings fell to 9.82 million in May, down from a peak of 12 million in March 2022, though they still greatly exceed the number of unemployed people seeking work. And June’s jobs total of 209,000 is still robust by historical standards.

    But Gilbertson said labor shortages have been largely driven by demographic shifts, which might keep the job market tight for the foreseeable future.

    Beyond the expected hike in July, the Fed is going to remain laser-focused on wage growth to inform its decision-making later in the year. Central bank officials will pay particular attention to the Employment Cost Index, which recently showed that pay gains picked up in the first three months of the year. The index for the second quarter will be released in late July — after the Fed meets.

    “The focus is on the path of wage inflation because of its pass-through to services inflation,” said Sonia Meskin, head of US Macro at BNY Mellon IM.

    The June jobs report showed that average hourly earnings growth was unchanged at 0.4% from the month before and also unchanged at 4.4% year-over-year — not a welcome development.

    Core inflation hasn’t decelerated as fast as the headline measure because of the tightness in the labor market. The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 3.8% in May from a year earlier, down from April’s 4.3% rise; while the core measure edged lower to 4.6% from 4.7% during the same period.

    Within the core measure, services inflation also remains sticky and Powell said in last month’s post-meeting news conference that “we see only the earliest signs of disinflation there” and that the services sector’s “largest cost would be wage cost.”

    The Fed’s strategy to address services inflation is simply by curbing demand through more rate hikes. So, in addition to the labor market, the Fed is highly attentive to consumer spending, which has cooled in the past several months, according to figures from the Commerce Department.

    Other headwinds are expected to weigh on consumers in the months ahead, such as the resumption of student loan payments and the Supreme Court blocking President Joe Biden’s student loan forgiveness program. Americans are also running down their savings accounts while racking up debt, so US consumers may need to start cutting back soon.

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  • Employers are preparing for a recession, but that doesn’t always mean layoffs | CNN Business

    Employers are preparing for a recession, but that doesn’t always mean layoffs | CNN Business


    Minneapolis
    CNN
     — 

    Areas of the US economy have started to crack under the weight of persistently high inflation and a string of 10 consecutive rate hikes from the Federal Reserve.

    But despite all that, the labor market has kept humming right along. And that’s largely expected to be the case, again, in Friday’s monthly jobs report from the Bureau of Labor Statistics.

    Economists are forecasting a net gain of 190,000 jobs for May, according to Refinitiv. While that would mark a significant retreat from April’s surprisingly strong 253,000 jobs added, it would land slightly above the average monthly gains seen during the strong labor market in the years leading up to the pandemic.

    Economists are also expecting the unemployment rate to tick back up to 3.5%. The US jobless rate has hovered at decade-lows for more than a year, with the current 3.4% rate matching a 53-year low hit in January.

    Private sector employment increased by 278,000 jobs in May, according to ADP’s monthly National Employment Report, frequently seen as a proxy for the government’s official number. That’s significantly higher than estimates of 170,000 jobs added but slightly below the previous month’s revised total of 291,000.

    Additional labor market data released Thursday showed that initial weekly jobless claims for the week ended May 27 totaled 232,000, almost no change from the previous week’s revised total of 230,000 applications.

    “In the last few months, the job market has continued to defy gravity, adding a steady clip of jobs and holding unemployment at historically low levels despite a backdrop of rising interest rates, banking turmoil, tech layoffs and debt ceiling negotiations,” Daniel Zhao, lead economist at employment review and search site Glassdoor, wrote in a note this week. “After a healthy April jobs report, May is likely to repeat with an equally strong performance.”

    Consumer spending and the labor market — two ares of strength in the economy — have, in a way, continued to feed on themselves.

    Last week, a Commerce Department report showed that not only did the Fed’s preferred inflation gauge heat up in April but so did consumer spending. Economists largely attributed consumers’ resilience to the healthy labor market as well as ample dry powder stockpiled from home refinances and from the temporary pause in student loan payments.

    In turn, that’s kept businesses busy.

    “With demand for goods and services holding up, employers who have been cautious and have been very nervous about over-hiring are — when push comes to shove — having to keep hiring just to keep pace with business activity,” Julia Pollak, chief economist for online employment marketplace ZipRecruiter, told CNN. “They’re very worried about a recession later this year, but they need to keep hiring today to provide the pizzas that people are demanding and to prevent flights being canceled.”

    She added: “Companies have also learned the hard way how costly staffing shortages can be.”

    But labor shortages are becoming far less acute: This past Memorial Day weekend, 1% of flights were canceled, Pollak said, noting that cancellations were fivefold higher a year before.

    “And while that’s a good news story — the end of shortages and disruptions during the pandemic is good for most consumers and good for businesses — it does come at some cost, which is a measurable decline in worker and job seeker leverage,” she said.

    Labor turnover data released Wednesday showed that the US employment market remained tight in April.

    Job openings bounced up to 10.1 million positions, bucking economists’ predictions for a fourth-consecutive monthly decline, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey report. The jump brought the ratio of vacancies to unemployed to almost 1.8, which is well above a range of 1.0 to 1.2 that is considered consistent with a balanced labor market, according to Michael Feroli, JPMorgan chief US economist.

    Although the April JOLTS data showed that fewer people were voluntarily quitting their jobs, the amount of layoffs and discharges dropped during the month, suggesting that employers are continuing to hoard workers, noted economist Matthew Martin of Oxford Economics.

    While monthly job gains haven’t tailed off as much as anticipated to this point, there is a notable slowdown that’s occurred from the blockbuster job gains of the past three years.

    But whether the softening is a sign of a return to pre-pandemic form or perhaps of a downswing into a downturn, remains to be seen.

    Some of the traditional recession indicators have been flashing red. Layoff announcements have quadrupled so far this year to 417,500, which — excluding 2020 — is the highest January to May total since 2009, according to a report from Challenger, Gray & Christmas released Thursday. Falling consumer confidence, monthly declines in the Conference Board’s Leading Economic Index, and drops in temporary help employment are also signaling that a downturn is just ahead. However, that long-predicted recession isn’t here just yet.

    “We were in such an unusual place during the pandemic with some of those indicators at completely extraordinary heights that they have experienced extraordinary declines,” Pollak said. “But those declines were just a return to normal, not a contraction, and it’s not a recession.”

    The government’s May jobs report is scheduled for Friday at 8:30 a.m. ET.

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  • High speed trains are racing across the world. But not in America | CNN

    High speed trains are racing across the world. But not in America | CNN



    CNN
     — 

    High speed trains have proved their worth across the world over the past 50 years.

    It’s not just in reducing journey times, but more importantly, it’s in driving economic growth, creating jobs and bringing communities closer together. China, Japan and Europe lead the way.

    So why doesn’t the United States have a high-speed rail network like those?

    For the richest and most economically successful nation on the planet, with an increasingly urbanized population of more than 300 million, it’s a position that is becoming more difficult to justify.

    Although Japan started the trend with its Shinkansen “Bullet Trains” in 1964, it was the advent of France’s TGV in the early 1980s that really kick-started a global high-speed train revolution that continues to gather pace.

    But it’s a revolution that has so far bypassed the United States. Americans are still almost entirely reliant on congested highways or the headache-inducing stress of an airport and airline network prone to meltdowns.

    China has built around 26,000 miles (42,000 kilometers) of dedicated high-speed railways since 2008 and plans to top 43,000 miles (70,000 kilometers) by 2035.

    Meanwhile, the United States has just 375 route-miles of track cleared for operation at more than 100 mph.

    “Many Americans have no concept of high-speed rail and fail to see its value. They are hopelessly stuck with a highway and airline mindset,” says William C. Vantuono, editor-in-chief of Railway Age, North America’s oldest railroad industry publication.

    Cars and airliners have dominated long-distance travel in the United States since the 1950s, rapidly usurping a network of luxurious passenger trains with evocative names such as “The Empire Builder,” “Super Chief” and “Silver Comet.”

    Deserted by Hollywood movie stars and business travelers, famous railroads such as the New York Central were largely bankrupt by the early 1970s, handing over their loss-making trains to Amtrak, the national passenger train operator founded in 1971.

    In the decades since that traumatic retrenchment, US freight railroads have largely flourished. Passenger rail seems to have been a very low priority for US lawmakers.

    Powerful airline, oil and auto industry lobbies in Washington have spent millions maintaining that superiority, but their position is weakening in the face of environmental concerns and worsening congestion.

    US President Joe Biden’s $1.2 trillion infrastructure bill includes an unprecedented $170 billion for improving railroads.

    Some of this will be invested in repairing Amtrak’s crumbling Northeast Corridor (NEC) linking Boston, New York and Washington.

    There are also big plans to bring passenger trains back to many more cities across the nation – providing fast, sustainable travel to cities and regions that have not seen a passenger train for decades.

    Add to this the success of the privately funded Brightline operation in Florida, which has been given the green light to build a $10 billion high-speed rail link between Los Angeles and Las Vegas by 2027, plus schemes in California, Texas and the proposed Cascadia route linking Portland, Oregon, with Seattle and Vancouver, and the United States at last appears to be on the cusp of a passenger rail revolution.

    Amtrak plans to introduce its new generation Avelia Liberty trains to replace the Acelas, pictured, on the NEC later this year.

    “Every president since Ronald Reagan has talked about the pressing need to improve infrastructure across the USA, but they’ve always had other, bigger priorities to deal with,” says Scott Sherin, chief commercial officer of train builder Alstom’s US division.

    “But now there’s a huge impetus to get things moving – it’s a time of optimism. If we build it, they will come. As an industry, we’re maturing, and we’re ready to take the next step. It’s time to focus on passenger rail.”

    Sherin points out that other public services such as highways and airports are “massively subsidized,” so there shouldn’t be an issue with doing the same for rail.

    “We need to do a better job of articulating the benefits of high-speed rail – high-quality jobs, economic stimulus, better connectivity than airlines – and that will help us to build bipartisan support,” he adds. “High-speed rail is not the solution for everything, but it has its place.”

    Only Amtrak’s Northeast Corridor has trains that can travel at speeds approaching those of the 300 kilometers per hour (186 mph) TGV and Shinkansen.

    Even here, Amtrak Acela trains currently max out at 150 mph – and only in short bursts. Maximum speeds elsewhere are closer to 100 mph on congested tracks shared with commuter and freight trains.

    This year, Amtrak plans to introduce its new generation Avelia Liberty trains to replace the life-expired Acelas on the NEC.

    Capable of reaching 220 mph (although they’ll be limited to 160 mph on the NEC), the trains will bring Alstom’s latest high-speed rail technology to North America.

    The locomotives at each end – known as power cars – are close relatives of the next generation TGV-M trains, scheduled to debut in France in 2024.

    Sitting between the power cars are the passenger vehicles, which use Alstom’s Tiltronix technology to run faster through curves by tilting their bodies, much like a MotoGP rider does. And it’s not just travelers who will benefit.

    “When Amtrak awarded the contract to Alstom in 2015 to 2016, the company had around 200 employees in Hornell,” says Shawn D. Hogan, former mayor of the city of Hornell in New York state.

    “That figure is now nearer 900, with hiring continuing at a fast pace. I calculate that there has been a total public/private investment of more than $269 million in our city since 2016, including a new hotel, a state-of-the-art hospital and housing developments.

    “It is a transformative economic development project that is basically unheard of in rural America and if it can happen here, it can happen throughout the United States.”

    Alstom has spent almost $600 million on building a US supply chain for its high-speed trains – more than 80% of the train is made in the United States, with 170 suppliers across 27 states.

    “High-speed rail is already here. Avelia Liberty was designed jointly with our European colleagues, so we have what we need for ‘TGV-USA’,” adds Sherin.

    “It’s all proven tech from existing trains. We’re ready to go when the infrastructure arrives.”

    And those new lines could arrive sooner than you might think.

    In March, Brightline confirmed plans to begin construction on a 218-mile (351-kilometer) high-speed line between Rancho Cucamonga, near Los Angeles, and Las Vegas, carving a path through the San Bernardino Mountains and across the desert, following the Interstate 15 corridor.

    The 200 mph line will slash times to little more than one hour – a massive advantage over the four-hour average by car or five to seven hours by bus – when it opens in 2027.

    Mike Reininger, CEO of Brightline Holdings, says: “As the most shovel-ready high-speed rail project in the United States, we are one step closer to leveling the playing field against transit and infrastructure projects around the world, and we are proud to be using America’s most skilled workers to get there.”

    Brightline West expects to inject around $10 billion worth of benefits into the region’s economy, creating about 35,000 construction jobs, as well as 1,000 permanent jobs in maintenance, operations and customer service in Southern California and Nevada.

    It will also mark the return of passenger trains to Las Vegas after a 30-year hiatus – Amtrak canceled its “Desert Wind” route in 1997.

    Brightline hopes to attract around 12 million of the 50 million one-way trips taken annually between Las Vegas and LA, 85% of which are taken by bus or car.

    Contruction is underway on California High Speed Rail (CHSR,) a high-speed system between Los Angeles and San Francisco.

    Meanwhile, construction is progressing on another high-speed line through the San Joaquin Valley.

    Set to open around 2030, California High Speed Rail (CHSR) will run from Merced to Bakersfield (171 miles) at speeds of up to 220 mph.

    Coupled with proposed upgrades to commuter rail lines at either end, this project could eventually allow high-speed trains to run the 350 miles (560 kilometers) between Los Angeles to San Francisco metropolitan areas in just two hours and 40 minutes.

    CHSR has been on the table as far back as 1996, but its implementation has been controversial.

    Disagreements over the route, management issues, delays in land acquisition and construction, cost over-runs and inadequate funding for completing the entire system have plagued the project – despite the economic benefits it will deliver as well as reducing pollution and congestion. Around 10,000 people are already employed on the project.

    Costing $63 billion to $98 billion, depending on the final extent of the scheme, CHSR is to connect six of the 10 largest cities in the state and provide the same capacity as 4,200 miles of new highway lanes, 91 additional airport gates and two new airport runways costing between $122 billion and $199 billion.

    With California’s population expected to grow to more than 45 million by 2050, high-speed rail offers the best value solution to keep the state from grinding to a smoggy halt.

    Brightline West and CHSR offer templates for the future expansion of high-speed rail in North America.

    By focusing on pairs of cities or regions that are too close for air travel and too far apart for car drivers, transportation planners can predict which corridors offer the greatest potential.

    “It’s logical that the US hasn’t yet developed a nationwide high-speed network,” says Sherin. “For decades, traveling by car wasn’t a hardship, but as highway congestion gets worse, we’ve reached a stage where we should start looking more seriously at the alternatives.

    “The magic numbers are centers of population with around three million people that are 200 to 500 miles apart, giving a trip time of less than three hours – preferably two hours.

    “Where those conditions apply in Europe and Asia, high-speed rail reduces air’s share of the market from 100% to near zero. The model would work just as well in the USA as it does globally.”

    French high-speed train the TGV Duplex, built in the 1990s, has a maximum speed of 186 miles per hour.

    Sherin points to the success of the original generation of Acela trains as evidence of this.

    “When the first generation Acela trains started running between New York City and Washington in 2000, Amtrak attracted so many travelers that the airlines stopped running their frequent ‘shuttles’ between the two cities,” he adds.

    However, industry observer Vantuono is more pessimistic.

    “A US high-speed rail network is a pipe dream,” he says. “A lack of political support and federal financial support combined with the kind of fierce landowner opposition that CHSR has faced in California means that the challenges for new high-speed projects are enormous.”

    According to the International Energy Agency (IEA), urban and high-speed rail hold “major promise to unlock substantial benefits” in reducing global transport emissions.

    Dr. Fatih Birol, the IEA’s executive director, argues that rail transport is “often neglected” in public debates about future transport systems – and this is especially true in North America.

    “Despite the advent of cars and airplanes, rail of all types has continued to evolve and thrive,” adds Birol.

    Globally, around three-quarters of rail passenger movements are made on electric-powered vehicles, putting the mode in a unique position to take advantage of the rise in renewable energy over the coming decades.

    Here, too, the United States lags far behind the rest of the world, with electrification almost unheard of away from the NEC.

    Rail networks in South Korea, Japan, Europe, China and Russia are more than 60% electrified, according to IEA figures, the highest share of track electrification being South Korea at around 85%.

    In North America, on the other hand, less than 5% of rail routes are electrified.

    The enormous size of the United States and its widely dispersed population mitigates against the creation of a single, unified network of the type being built in China and proposed for Europe.

    Air travel is likely to remain the preferred option for transcontinental journeys that can be more than 3,000 miles (around 4,828 kilometers).

    But there are many shorter inter-city travel corridors where high-speed rail, or a combination of new infrastructure and upgraded railroad tracks or tilting trains, could eventually provide an unbeatable alternative to air travel and highways.

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  • Retail spending fell in March as consumers pull back | CNN Business

    Retail spending fell in March as consumers pull back | CNN Business


    Washington, DC
    CNN
     — 

    Spending at US retailers fell in March as consumers pulled back after the banking crisis fueled recession fears.

    Retail sales, which are adjusted for seasonality but not for inflation, fell by 1% in March from the prior month, the Commerce Department reported on Friday. That was steeper than an expected 0.4% decline, according to Refinitiv, and above the revised 0.2% decline in the prior month.

    Investors chalk up some of the weakness to a lack of tax returns and concerns about a slowing labor market. The IRS issued $84 billion in tax refunds this March, about $25 billion less than they issued in March of 2022, according to BofA analysts.

    That led consumers to pull back in spending at department stores and on durable goods, such as appliances and furniture. Spending at general merchandise stores fell 3% in March from the prior month and spending at gas stations declined 5.5% during the same period. Excluding gas station sales, retail spending retreated 0.6% in March from February.

    However, retail spending rose 2.9% year-over-year.

    Smaller tax returns likely played a role in last month’s decline in retail sales, along with the expiration of enhanced food assistance benefits, economists say.

    “March is a really important month for refunds. Some folks might have been expecting something similar to last year,” Aditya Bhave, senior US economist at BofA Global Research, told CNN.

    Credit and debit card spending per household tracked by Bank of America researchers moderated in March to its slowest pace in more than two years, which was likely the result of smaller returns and expired benefits, coupled with slowing wage growth.

    Enhanced pandemic-era benefits provided through the Supplemental Nutrition Assistance Program expired in February, which might have also held back spending in March, according to a Bank of America Institute report.

    Average hourly earnings grew 4.2% in March from a year earlier, down from the prior month’s annualized 4.6% increase and the smallest annual rise since June 2021, according to figures from the Bureau of Labor Statistics. The Employment Cost Index, a more comprehensive measure of wages, has also shown that worker pay gains have moderated this past year. ECI data for the first quarter of this year will be released later this month.

    Still, the US labor market remains solid, even though it has lost momentum recently. That could hold up consumer spending in the coming months, said Michelle Meyer, North America chief economist at Mastercard Economics Institute.

    “The big picture is still favorable for the consumer when you think about their income growth, their balance sheet and the health of the labor market,” Meyer said.

    Employers added 236,000 jobs in March, a robust gain by historical standards but smaller than the average monthly pace of job growth in the prior six months, according to the Bureau of Labor Statistics. The latest monthly Job Openings and Labor Turnover Survey, or JOLTS report, showed that the number of available jobs remained elevated in February — but was down more than 17% from its peak of 12 million in March 2022, and revised data showed that weekly claims for US unemployment benefits were higher than previously reported.

    The job market could cool further in the coming months. Economists at the Federal Reserve expect the US economy to head into a recession later in the year as the lagged effects of higher interest rates take a deeper hold. Fed economists had forecast subdued growth, with risks of a recession, prior to the collapses of Silicon Valley Bank and Signature Bank.

    For consumers, the effects of last month’s turbulence in the banking industry have been limited so far. Consumer sentiment tracked by the University of Michigan worsened slightly in March during the bank failures, but it had already shown signs of deteriorating before then.

    The latest consumer sentiment reading, released Friday morning, showed that sentiment held steady in April despite the banking crisis, but that higher gas prices helped push up year-ahead inflation expectations by a full percentage point, rising from 3.6% in March to 4.6% in April.

    “On net, consumers did not perceive material changes in the economic environment in April,” Joanne Hsu, director of the surveys of consumers at the University of Michigan, said in a news release.

    “Consumers are expecting a downturn, they’re not feeling as dismal as they were last summer, but they’re waiting for the other shoe to drop,” Hsu told Bloomberg TV in an interview Friday morning.

    This story has been updated with context and more details.

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  • What markets are watching after digesting the US jobs data | CNN Business

    What markets are watching after digesting the US jobs data | CNN Business

    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
     — 

    In an unusual coincidence, the US jobs report was released on a holiday Friday — meaning stock markets were closed when the closely-watched economic data came out.

    It was the first monthly payroll report since Silicon Valley Bank and Signature Bank collapsed. It also marked a full year of jobs data since the Federal Reserve began hiking interest rates in March 2022.

    While inflation has come down and other economic data point to a cooling economy, the labor market has remained remarkably resilient.

    Investors have had a long weekend to chew over the details of the report and will likely skip the typical gut-reaction to headline numbers.

    What happened: The US economy added 236,000 jobs in March, showing that hiring remained robust though the pace was slower than in previous months. The unemployment rate currently stands at 3.5%.

    Wages increased by 0.3% on the month and 4.2% from a year ago. The three-month wage growth average has dropped to 3.8%. That’s moving closer to what Fed policymakers “believe to be in line with stable wage and inflation expectations,” wrote Joseph Brusuelas, chief economist at RSM in a note.

    “That wage data tends to suggest that the risk of a wage price spiral is easing and that will create space in the near term for the Federal Reserve to engage in a strategic pause in its efforts to restore price stability,” he added.

    The March jobs report was the last before the Fed’s next policy meeting and announcement in early May. The labor market is cooling but not rapidly or significantly, and further rate hikes can’t be ruled out.

    At the same time Wall Street is beginning to see bad news as bad news. A slowing economy could mean a recession is forthcoming.

    Markets are still largely expecting the Fed to raise rates by another quarter point. So how will they react to Friday’s report?

    Before the Bell spoke with Michael Arone, State Street Global Advisors chief investment strategist, to find out.

    This interview has been edited for length and clarity.

    Before the Bell: How do you expect markets to react to this report on Monday?

    Michael Arone: I think that this has been a nice counterbalance to the weaker labor data earlier last week and all the recession fears. This data suggests that the economy is still in pretty good shape, 10-year Treasury yields increased on Friday indicating there’s less fear about an imminent recession.

    There’s this delicate balance between slower job growth and a weaker labor market without economic devastation. I think this report helps that.

    As it relates to the stock market, I would expect the cyclical sectors to do well — your industrials, your materials, your energy companies. If interest rates are rising, that’s going to weigh on growth stocks — technology and communication services sectors, for example. Less recession fears will mean investors won’t be as defensively positioned in classic staples like healthcare and utilities.

    Could this lead to a reverse in the current trend where tech companies are bolstering markets?

    Yes, exactly. It’s difficult to make too much out of any singular data point, but I think this report will hopefully lead to broader participation in the stock market. If those recession fears begin to abate somewhat, and investors recognize that recession isn’t imminent, there will be more investment.

    What else are investors looking at in this report?

    We’ve seen weakness in the interest rate sensitive parts of the market — areas that are typically the first to weaken as the economy slows down. So things like manufacturing, things like construction. That’s where the weakness in this jobs report is. And the services areas continue to remain strong. That’s where the shortage of qualified skilled workers remains. I think that you’re seeing continued job strength in those areas.

    What does this mean for this week’s inflation reports? It seems like the jobs report just pushed the tension forward.

    it did. I expect that inflation figures will continue to decelerate — or grow at a slower rate. But I do think that the sticky part of inflation continues to be on the wage front. And so I think, if anything, this helps alleviate some of those inflation pressures, but we’ll see how it flows through into the CPI report next week. And also the PPI report.

    Is the Federal Reserve addressing real structural changes to the labor market?

    The Fed was confused in February 2020 when we were in full employment and there was no inflation. They’re equally confused today, after raising rates from zero to 5%, that we haven’t had more job losses.

    I’m not sure why, but from my perspective, the Fed hasn’t taken into consideration the structural changes in the labor force, and they’re still confused by it. I think the risk here is that they’ll continue to focus on raising rates to stabilize prices, perhaps underestimating the kind of structural changes in the labor economy that haven’t resulted in the type of weakness that they’ve been anticipating. I think that’s a risk for the economy and markets.

    A few weeks ago, Before the Bell wrote about big problems brewing in the $20 trillion commercial real estate industry.

    After decades of thriving growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall. Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Fed’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.

    Recent banking stress will likely add to those woes. Lending to commercial real estate developers and managers largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.

    Since then, things have gotten worse, CNN’s Julia Horowitz reports.

    In a worst-case scenario, anxiety about bank lending to commercial real estate could spiral, prompting customers to yank their deposits. A bank run is what toppled Silicon Valley Bank last month, roiling financial markets and raising fears of a recession.

    “We’re watching it pretty closely,” said Michael Reynolds, vice president of investment strategy at Glenmede, a wealth manager. While he doesn’t expect office loans to become a problem for all banks, “one or two” institutions could find themselves “caught offside.”

    Signs of strain are increasing. The proportion of commercial office mortgages where borrowers are behind with payments is rising, according to Trepp, which provides data on commercial real estate.

    High-profile defaults are making headlines. Earlier this year, a landlord owned by asset manager PIMCO defaulted on nearly $2 billion in debt for seven office buildings in San Francisco, New York City, Boston and Jersey City.

    Dig into Julia’s story here.

    Tech stocks led market losses in 2022, but seemed to rebound quickly at the start of this year. So as we enter earnings season, what should we expect from Big Tech?

    Daniel Ives, an analyst at Wedbush Securities, says that he has high hopes.

    “Tech stocks have held up very well so far in 2023 and comfortably outpaced the overall market as we believe the tech sector has become the new ‘safety trade’ in this overall uncertain market,” he wrote in a note on Sunday evening.

    Even the recent spate of layoffs in Big Tech has upside, he wrote.

    “Significant cost cutting underway in the Valley led by Meta, Microsoft, Amazon, Google and others, conservative guidance already given in the January earnings season ‘rip the band- aid off moment’, and tech fundamentals that are holding up in a shaky macro [environment] are setting up for a green light for tech stocks.”

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  • Wall Street says bad news is no longer good news. Here’s why | CNN Business

    Wall Street says bad news is no longer good news. Here’s why | CNN Business

    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
     — 

    There’s been a seismic shift in investor perspective: Bad news is no longer good news.

    For the past year, Wall Street has hoped for cool monthly economic data that would encourage the Federal Reserve to halt its aggressive pace of interest rate hikes to tame inflation.

    But at its March meeting — just days after a series of bank failures raised concerns about the economy’s stability — the central bank signaled that it plans to pause raising rates sometime this year. With an end to interest rate hikes in sight, investors have stopped attempting to guess the Fed’s next move and have turned instead to the health of the economy.

    This means that, whereas softening economic data used to signal good news — that the Fed could potentially stop raising rates — now, cooling economic prints simply suggest the economy is weakening. That makes investors worried that the slowing economy could fall into a recession.

    What happened last week? Markets teetered after a slew of economic reports signaled that the red-hot labor market is finally cooling (more on that later), flashing warning signals across Wall Street.

    Investors accordingly shed high-growth, large-cap stocks that have surged recently to rush into defensive stocks in industries like health care and consumer staples.

    While tech stocks recovered somewhat by the end of the short trading week — markets were closed in observance of Good Friday — the Nasdaq Composite still slid 1.1%. The broad-based S&P 500 fell 0.1% and the blue-chip Dow Jones Industrial Average gained 0.6%.

    What does this mean for markets? Now that Wall Street is in “bad news is bad news and good news is good news” mode, it will be looking for signs that the economy remains resilient.

    What hasn’t changed is that investors still want to see cooling inflation data. While the central bank has signaled that it will pause hiking rates this year, its actions so far have only somewhat stabilized prices. The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 5% for the 12 months ended in February — far above its 2% inflation target.

    Moreover, Wall Street might be overly optimistic about how the Fed will act going forward: Some investors expect the central bank to cut rates several times this year, even though the central bank indicated last month that it does not intend to lower rates in 2023.

    It’s unclear how markets will react if the Fed doesn’t cut rates this year. But there likely won’t be a notable rally unless the central bank pivots or at least indicates that it plans to soon, said George Cipolloni, portfolio manager at Penn Mutual Asset Management.

    Commentary that’s hawkish or reveals inflation worries could hurt markets, he adds. “It keeps that boiling point and that temperature a little high.”

    What comes next? The Fed holds its next meeting in early May. Before then, it will have to parse through several economic reports to get a sense of how the economy is doing, and what it will be able to handle. Markets currently expect the Fed to raise interest rates by a quarter point, according to the CME FedWatch tool.

    The labor market appears to be cooling somewhat, at least according to the slew of data released last week. But it’s still far too early to assume that the job market has lost its strength.

    President Joe Biden said in a statement Friday that the March data is “a good jobs report for hard-working Americans.”

    The March jobs report revealed that US employers added a lower-than-expected 236,000 jobs last month. Economists expected a net gain of 239,000 jobs for the month, according to Refinitiv.

    The unemployment rate dropped to 3.5%, according to the Bureau of Labor Statistics. That’s below expectations of holding steady at 3.6%.

    The jobs report was also the first one in 12 months that came in below expectations.

    But that doesn’t mean that the job market isn’t strong anymore.

    “The labor market is showing signs of cooling off, but it remains very tight,” Bank of America researchers wrote in a note Friday.

    Still, other data released last week help make the case that cracks are finally starting to form in the labor market. The Job Openings and Labor Turnover Survey for February revealed last week that the number of available jobs in the United States tumbled to its lowest level since May 2021. ADP’s private-sector payroll report fell far short of expectations.

    What this means for the Fed is that the cooldown in the latest jobs report likely won’t be enough for the central bank to pause rates at its next meeting.

    “The Fed will more than likely raise rates in May as the labor market continues to defy the cumulative effects of the rate hikes that began over a year ago,” said Quincy Krosby, chief global strategist at LPL Financial.

    Monday: Wholesale inventories.

    Tuesday: NFIB Small Business Optimism Index. Earnings from CarMax (KMX), Albertsons (ACI) and First Republic Bank (FRC).

    Wednesday: Consumer Price Index and FOMC meeting minutes.

    Thursday: OPEC monthly report and Producer Price Index. Earnings from Delta Air Lines (DAL).

    Friday: Retail sales and University of Michigan consumer sentiment survey. Earnings from JPMorgan Chase (JPM), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C) and PNC Financial Services (PNC).

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  • The Fed could easily drive Black unemployment much higher than the overall jobless rate | CNN Business

    The Fed could easily drive Black unemployment much higher than the overall jobless rate | CNN Business


    New York
    CNN
     — 

    Millions of jobs could be on the chopping block this year, as the Federal Reserve continues its rate-hiking campaign to tame inflation. But the effects of that action likely won’t reverberate evenly across the economy.

    The Fed has seen some success: Inflation has cooled for eighth consecutive months, according to the February Consumer Price Index. The Producer Price Index shows a dramatic drop in wholesale prices in February. And the Fed’s favored inflation gauge, the Personal Consumption Expenditures price index, has also started to moderate.

    But the job market has proved to be a formidable force, humming steadily in the face of climbing rates meant to slow its growth. After adding more than half a million jobs in January, the US economy then added 311,000 jobs in February, with an unemployment rate of 3.6% — just above a half-century low — according to the Bureau of Labor Statistics.

    However, the jobless rate isn’t expected to be that low for long.

    At its most recent policy-making meeting, the Fed released projections for the year ahead that showed unemployment could jump to 4.5%, representing another 1.5 million job losses, by the end of the year.

    While that’s a small improvement from the central bank’s previous 4.6% jobless rate estimate, economists say it’s possible the unemployment rate could rise above the Fed’s expectations. Moreover, they say that historically disadvantaged groups could be disproportionately affected by the central bank’s stringent monetary policy.

    While some groups often sidelined in the job market have seen benefits from this hot job market — women have seen a faster pace of job gains than men in recent months, for example — others, including Black women and Latino men, have seen slower recoveries in jobless rates since the onset of the Covid pandemic.

    Recession fears gained traction last month when the collapse of Silicon Valley Bank sent markets wobbling, raising concerns about the economy’s ability to handle more stress. Goldman Sachs revised its estimate of the United States entering a recession over the next 12 months to a 35% chance, up from its estimate of a 25% chance before the banking sector turmoil.

    That’s of particular concern to certain demographic groups: Jobless rates for Black and Hispanic Americans often increase by more than those of their White counterparts during recessions, said Rakesh Kochhar, a senior researcher focusing on demographics and social trends at the Pew Research Center.

    History makes that discrepancy clear.

    A Pew Research Center report comparing two recessions in recent decades shows how Black and Hispanic Americans experience disproportionate effects on their jobless rates during periods of economic downturn. From the second quarter of 2007 to the second quarter of 2009, during the Great Recession, the unemployment rate rose 6.5 percentage points for Black Americans. The Hispanic unemployment rate climbed 6.3 percentage points. For White workers, it increased 4 percentage points.

    And from the first quarter of 1990 to the first quarter of 1991, the unemployment rate climbed 1.4 percentage points for Black Americans and 2.1 percentage points for Hispanic Americans. The White unemployment rate rose 1.3 percentage points.

    Economists say it’s hard to guess the trajectory of the unemployment rate this year, noting it could very well exceed the Fed’s estimate.

    “There’s just tons of momentum, and once you slow the economy enough to get the unemployment rate moving up, it’s very hard to sort of turn that cruise ship back around,” said Josh Bivens, research director and chief economist at the Economic Policy Institute.

    As such, the Fed’s tightening efforts could easily drive the Black unemployment rate much higher than the overall jobless rate, said William Spriggs, an economics professor at Howard University and chief economist to the AFL-CIO.

    “If the Fed continues to use unemployment as its measure of labor force slack, and thinks they want a 4.5% unemployment rate — to make that happen, the Fed would have to induce net job loss in the labor market,” Spriggs told CNN in an email. “If we go through two months of negative job growth, all bets are off. The Black unemployment rate will easily get to 9% in that scenario.”

    One other likely consequence of growing unemployment is slowing wage growth, Bivens said.

    Like rising unemployment, stunted wage growth tends to hit marginalized groups harder. A 2021 Economic Policy Institute report shows that a 1 percentage point increase in overall unemployment correlates with about 0.5% slower wage growth for White median hourly wages. Wage growth falls by roughly 0.8% for Black median hourly wages.

    “A lot of people have this idea that in a recession, if unemployment rises by a couple of percentage points, as long as you’re not one of those unlucky people to lose the job, you’ve dodged the bullet,” Bivens said. “And that’s not true at all.”

    Still, a robust labor market isn’t a permanent solution to bridging employment disparities, even if the Fed does keep rates lower, says Wendy Edelberg, director of the Hamilton Project and a senior fellow in economic studies at the Brookings Institution.

    The job market’s recent strength is unsustainable, she said. The US economy needs about 75,000 net job gains a month to keep stable and is currently adding about 350,000 net job gains a month on average, according to Edelberg.

    “[The Fed is] right to be confident that one of the things that’s going to have to happen to get inflation back down to a normal, stable level is to get job growth to a normal, sustainable level,” Edelberg said. “But if the Fed’s actions resulted in a slower labor market, then inflation stayed high — that would be a disaster.”

    The March jobs report from the Department of Labor, due to be released Friday at 8:30 a.m., is expected to show the US economy gained 240,000 positions last month. ADP’s private-sector payroll report, generally seen by investors as a proxy for the trajectory of Friday’s number, fell short of expectations, with just 145,000 jobs added. Economists had expected private hiring would rise by 200,000 positions last month.

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  • China’s economic recovery is on track. But youth unemployment is getting worse | CNN Business

    China’s economic recovery is on track. But youth unemployment is getting worse | CNN Business


    Hong Kong
    CNN
     — 

    China’s economic recovery appears to be on track as it gradually emerges from three years of its strict zero-Covid policy. But rising youth unemployment underscores the tough challenges ahead for the new government to achieve its economic targets and maintain social stability.

    The National Bureau of Statistics on Wednesday released key economic indicators for January and February combined, a usual practice to avoid any distortion by the long Lunar New Year holiday, which usually falls on different dates every year.

    Industrial production rose by 2.4%, accelerating from December’s 1.3% growth. Retail sales increased 3.5%, reversing a 1.8% decline in the previous month. The growth figures are in line with market expectations.

    Investment in fixed assets, such as real estate and infrastructure, jumped 5.5%, beating estimates. In particular, capital spending on electricity and heating facilities and railways soared around 20%.

    “The economic data released today confirmed the recovery in China was well on track,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

    Recent PMI figures had indicated a strong recovery in China’s economic activity, with February’s factory output from large, state-owned enterprises hitting the highest level in more than a decade.

    “The fading of virus disruptions led to a rapid improvement in economic conditions at the start of the year,” analysts from Capital Economics wrote.

    But there are some weak spots in Wednesday’s data.

    Youth unemployment surged. The jobless rate for 16- to 24-year-olds hit 18.1% in the January-to-February period, compared to 16.7% in December. The overall unemployment rate also increased to 5.6%.

    The real estate sector remains mired in a deep slump.

    Property investment fell 5.7% from a year ago in the first two months of this year, although it was an improvement from the 12.2% drop seen in December. Property sales by floor area contracted 3.6%.

    At the just-concluded session of the National People’s Congress, the country’s rubber-stamp parliament, the government set a cautious growth plan for this year, with a GDP target of around 5% and a job creation target of 12 million.

    But Li Qiang, the new premier who took office on Saturday, admitted it’s “not an easy task” to achieve the stated goals.

    At his first news conference on Monday, Li highlighted the challenge to create enough jobs.

    “This year’s college graduates are expected to reach 11.58 million people. From the perspective of employment, there will be certain pressure,” he said. “We will further expand employment channels and help young people.”

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  • From Wile E. Coyote to edibles: Recession forecasts are getting weird | CNN Business

    From Wile E. Coyote to edibles: Recession forecasts are getting weird | CNN Business

    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
     — 

    Understanding the economy is a complicated task, and even the experts are struggling to answer seemingly simple questions like “Are we on the brink of a recession?” or “Why isn’t inflation falling faster?”

    Many have resorted to the use of metaphor to convey the current complexity of the economy.

    It’s a communications tactic that some Federal Reserve officials have long favored. In the early 1980s, Nancy Teeters, the first woman appointed to the Federal Reserve Board, came up with an apt metaphor to explain why she disagreed with steep rate hikes implemented by then-Fed Chairman Paul Volcker.

    Her colleagues were “pulling the financial fabric of this country so tight that it’s going to rip,” she said. “Once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again,” she added, before remarking that “none of these guys has ever sewn anything in his life.”

    These days, economists and analysts are turning to increasingly outlandish metaphors to help translate their thoughts.

    Here are some of the most interesting descriptors used recently and what they mean:

    Wile E. Coyote

    If you think back to Saturday morning cartoons, you may remember the never-ending, and mostly futile, chase between Wile E. Coyote and his nemesis, Road Runner. That pursuit often ended with Wile E. running off a cliff and into mid-air.

    The toons were fun sources of entertainment in our salad years, but former Treasury Secretary Larry Summers says they now double as a case study for the Fed and the economy.

    “The [Federal Reserve’s] process of bringing down inflation will bring on a recession at some stage, as it almost always has in the past,” Summers told CNN last week.

    And for the US economy, it could likely mean a “Wile E. Coyote moment,” Summers said — if we run off the cliff, gravity will eventually win out.

    “The economy could hit an air pocket in a few months,” he said.

    Antibiotics

    When describing the state of the economy, Summers doesn’t just rely on Looney Tunes. He also borrows from the medical community.

    While describing why the Fed can’t end its rate hike regimen when inflation shows signs of showing, Summers has compared higher interest rates to medicine for a country sick with high inflation. The entire dose must be taken for the treatment to fully work, he says.

    “We’ve all had the experience of taking a course of drugs and giving up, stopping the drugs, before the course was exhausted, simply because we felt better. And then, whatever infection we had came back and it was harder to fight the second time,” Summers told Boston’s NPR news station WBUR in February.

    For what it’s worth, Before the Bell is also guilty of using this one.

    Fog report

    We may be driving in the fog, landing a plane in the fog or even just walking in it.

    What’s important in this oft-used scenario is that it’s hard to see and we’re doing something that typically requires clear visibility.

    Clients “facing the fog of uncertainty in financial markets, economic growth and geopolitics,” should “avoid unnecessary lane changes,” and “allow extra time to reach your destination,” advised Goldman Sachs analysts earlier this year.

    It’s essentially a fancy way of saying that no one really knows what’s going on in this economy. Instead of attempting to find a way out of the chaos, investors should slow down, stay the course and wait for recovery.

    Edibles

    Late last year, investment analyst Peter Boockvar used a semi-illicit metaphor to explain why he thought the Fed might be over-tightening the economy into recession. He compared the Fed to an inexperienced consumer of weed gummies, which can take a long time to kick in.

    During that waiting period, an eager consumer may think the drugs aren’t working and eat more before the effects of the first dose even set in. They then inevitably find themselves way too stoned and feeling not-so-great.

    Boockvar was careful to note that he himself does not indulge in this practice, by the way.

    Storm chasing

    JPMorgan Chase CEO Jamie Dimon should receive an honorary degree in meteorology for his recessionary weather predictions.

    The Big Bank exec has repeatedly referred to economic recession as a storm gathering on the horizon — occasionally he’ll update the public on how far away and how bad that storm is.

    Last summer Dimon spooked markets when he compared a possible upcoming recession to a “hurricane.” In November, he downgraded it to a “storm.”

    By January, his forecast was simply “storm clouds,” adding that he probably should never have used the term “hurricane.”

    Polyurethane

    Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, has likened the economy to a bendable piece of plastic. Much like the economy, he wrote, polyurethane, “displays flexibility and adaptability, but also durability and strength.”

    He added that “the material’s ability to be stretched, bent, stressed and flexed without breaking, while in fact returning to its original condition, is what makes it so chemically unique. In recent years the US economy has displayed a remarkable resilience to stresses and an extraordinary ability to adapt to changing conditions.”

    Last week Senator Elizabeth Warren grilled Federal Reserve Chair Jerome Powell about American job losses being potential casualties of the central bank’s battle against high inflation.

    Warren, a frequent critic of the Fed’s leader, noted that an additional 2 million people would have to lose their jobs if the unemployment rate rises from its current 3.6% rate to reach the Fed’s projections of 4.6% by the end of the year.

    “If you could speak directly to the two million hardworking people who have decent jobs today, who you’re planning to get fired over the next year, what would you say to them?” Warren asked.

    Powell argued that all Americans, not just two million, are suffering under high inflation.

    “Will working people be better off if we just walk away from our jobs and inflation remains 5% or 6%?” Powell replied.

    Warren cautioned Powell that he was “gambling with people’s lives.”

    The discussion was part of a larger cost-benefit conversation that keeps popping up around the jobs market: Which is worse — widespread job loss or elevated inflation?

    CNN spoke with two top economic analysts with different perspectives to gain a deeper understanding of the debate.

    Below is our interview with Johns Hopkins economist Laurence Ball.

    Yesterday we published our interview with Roosevelt Institute director Michael Konczal, you can read that here.

    This interview has been edited for length and clarity.

    Before the Bell: Is it necessary to increase the unemployment rate to successfully fight inflation?

    Laurence Ball: There’s a trade off between inflation and unemployment. When the economy is very strong and unemployment is pushed down, inflation tends to be higher. Right now there are almost two job openings per unemployed worker, the supply of workers looking for jobs and the demand for firms to hire is out of whack. That’s leading to faster wage increases, which sounds good except that gets passed through to faster price increases and more inflation. So somehow the labor market has to be brought back towards a normal balance of workers and jobs and that means slowing down the economy, and that probably means raising unemployment.

    Can you explain the cost-benefit analysis of two million jobs lost to get down to 2% inflation?

    If we assume we have to get inflation down to 2%, then it’s just an unhappy fact of life that that’s going to require higher unemployment. But a lot of people, including me, think that if the Fed gets it down to 4% or 3%, that’s the time to declare victory or say, ‘close enough for government work.’

    It gets more and more expensive in terms of how much unemployment it costs to go from 3% to 2% inflation. Those last few points will have disproportionately large costs, and it’s very dubious if that’s really worth it.

    Now, the Fed has the political problem that they’ve been insisting on a 2% target rate for years. If they say right at this moment that 3% or 4% is okay that would be seen as surrendering or moving the goalposts. I think a likely outcome is that inflation gets down to 3% or 4% and the Fed continues to say their target is a 2% inflation rate but never does what has to be done to get it there.

    If you examine Fed history you see that 5% appears to be a magic number. When inflation is above 5% it becomes this big political issue. When it goes below 5% it disappears from the headlines.

    What do you think is important for our readers to know about this back-and-forth between Powell and Warren?

    Behind all of this, in a market economy there’s sort of a basic glitch. We have this thing called unemployment, we sort of chronically have not enough jobs for everybody and that’s a big problem. The problem can be reduced somewhat in the short run if you get the economy going very fast. But then that leads to inflation. Accepting that unemployment has to go back up is just recognizing that there’s this glitch in the market economy or capitalism. It’s not clear how we can get around that.

    CNN Business’ David Goldman reports: 

    In an extraordinary action to restore confidence in America’s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.

    In a related action, the government shut down Signature Bank, a regional bank that was teetering on the brink of collapse in recent days. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

    SVB collapse: live updates

    In a joint statement Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature’s customers whole. By guaranteeing all deposits — even the uninsured money that customers kept with the failed banks — the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations.

    The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future.

    Wall Street investors were relieved that the government intervened as stock futures rebounded on Sunday evening, although the rally is fading Monday morning. Markets had tumbled more than 3% Thursday and Friday as investors feared more bank failures and systemic risk for the tech sector.

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  • Takeaways from the February jobs report | CNN Business

    Takeaways from the February jobs report | CNN Business


    Minneapolis
    CNN
     — 

    February’s jobs report had a little something for everyone.

    For workers, there were jobs; for employers, there were workers filling shortfalls caused by the pandemic; for the Federal Reserve, there were indications that the labor market was loosening and wage pressures were easing.

    Then again, the total of 311,000 net jobs added was significantly higher than expectations of 205,000, and the unemployment rate surprisingly grew to 3.6%.

    The report was a “mixed bag” at a time when the Fed — which this week signaled a more hawkish approach after a strong batch of recent economic data — is weighing to go lighter or heavier on rate hikes.

    Here are some takeaways from Friday’s report:

    Economists were anticipating that January’s blockbuster 504,000 net job gain was an anomaly due to a combination of factors such as annual data adjustments, warm weather and employers hoarding workers.

    But the US labor market in February showed that, overall, it remained fairly resistant to the Fed’s yearlong barrage of interest rate hikes. The latest employment snapshot from the Bureau of Labor Statistics also showed only a slight downward revision to the January jobs total.

    “This report, it’s not about the Federal Reserve, it’s not about inflation, it’s about you; it’s about how workers are doing,” said Claudia Sahm, founder of Sahm Consulting and a former Fed economist. “And once again, we had a month in which we were adding jobs on net, and this is really good for workers.”

    There are also encouraging signs for employers, she said, noting some of the biggest gains were in industries that have been suffering from the deepest shortages since the pandemic.

    The leisure and hospitality industry added 105,000 jobs in February, accounting for 34% of the entire month’s total gains and putting the sector that much closer to matching its pre-pandemic levels. As of February, the leisure and hospitality industry was 410,000 jobs, or 2.42%, shy of February 2020 employment levels, a CNN analysis of BLS data shows.

    “Right now, we’re still in a phase of getting back to normal in terms of not having labor shortages, not having the costs of serving customers rise and rise,” Sahm said. “I would much rather see us get back to normal by workers coming back as opposed to customers going away.”

    Despite the Fed hammering out a succession of rate hikes during the past year, construction employment hasn’t yet faltered. In February, the construction industry added 24,000 jobs, marking 12 consecutive months of employment growth.

    “Contractors are continuing to work through existing backlogs that have grown over the past two years as new opportunities arose and supply chain issues extended construction timelines,” wrote Nick Grandy, construction and real estate senior analyst at RSM US.

    Notable sectors that recorded job losses during the month were in information, which was down another 25,000 jobs (-0.8%); transportation and warehousing, which was down 21,500 jobs (0.3%); and manufacturing, which was down 4,000 positions.

    While the headline job figure and relatively minimal losses show overall strength, there is an indication of a pullback across industries. The BLS’ employment diffusion index, which shows the percentage of 250 industries that added jobs, fell to 56, which is the lowest reading since April 2020.

    “That indicates that the impact of high interest rates is spilling over to more industries,” said Julia Pollak, chief economist at ZipRecruiter.

    The labor market has remained extremely tight and fairly out of whack for the past three years. Friday’s report showed that “a modicum of slack crept back into the jobs market,” wrote Wells Fargo economists Sarah House and Michael Pugliese.

    The unemployment rate moved to 3.6% from its 53-year-low of 3.4%. That increase was in part due to more people reentering the workforce and joining the ranks of the unemployed, which the BLS classifies as people without jobs actively searching for work.

    February’s employment report showed a 0.1 percentage point increase in the labor force participation rate to 62.5% — the highest it’s been since April 2020.

    The average workweek ticked down to 34.5 hours from a revised 34.6 hours, signaling a “significant overall drop” in labor demand, said Brad McMillan, chief investment officer for Commonwealth Financial Network.

    Still, with the prime-age employment to population ratio increasing to 80.5% — on par with early 2020 levels — there may be little space left for sustained labor supply gains, according to Matt Colyar, a Moody’s Analytics economist.

    “February’s figure, apart from early 2020 readings, is higher than any rate during the previous decade-long expansion,” Colyar noted. “Even in corners of the economy where demand has slumped, businesses have shown little appetite to lay off workers en masse. As other sectors continue to hire rapidly, an acceleration in wage growth will remain a looming threat.”

    A softening in average hourly earnings is helping fuel hopes for a soft landing.

    At 0.2% on the month, wage growth was below expectations and measured 4.6% year over year.

    “There were signs in today’s report that progress on inflation can be made without torpedoing employment,” the Wells Fargo economists noted.

    As of February, the annualized rate of wage growth during the past three months is slightly under 3.6%, a pace seen when inflation was below the Fed’s target, said economist Dean Baker, co-founder of the Center for Economic and Policy Research.

    “Perhaps most important from the Fed’s perspective is the slowdown in wage growth,” Baker wrote in a statement. “The 3.6% annual rate over the last three months can hardly be seen as posing a serious threat of inflation. This slowing in the average hourly wage, coupled with the 4% rate reported in the fourth quarter Employment Cost Index, should provide solid evidence that wage growth has slowed sharply.”

    A hot batch of January economic data helped to send the Fed into a more hawkish turn. Fed Chair Jerome Powell told members of Congress this week that the Fed is prepared to increase the pace of its rate hikes if warranted.

    “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell told lawmakers.

    There’s still more data to come before the Fed meets for its two-day policymaking meeting on March 21-22, notably the Consumer Price Index, Producer Price Index and the Commerce Department’s retail sales report. However, Friday’s jobs report likely won’t spur a more dovish turn from the Fed, said Sean Snaith, an economist and director of the University of Central Florida’s Institute for Economic Forecasting.

    “We didn’t go from a four-alarm fire to a five-alarm fire with this data report, but the inflation flames aren’t out either,” he wrote in a note Friday. “And nothing today indicates that the Fed needs to change its more aggressive approach to raising interest rates.”

    Still, economist Gregory Daco cautioned that the Fed shouldn’t fall into the trap of confirmation bias by letting the stronger-than-expected economic data influence the analysis of Friday’s jobs report and next week’s CPI report.

    The Fed may see the low unemployment rate and the robust job gains as fueling wage growth, said Daco, chief economist at EY Parthenon.

    “Our view, however, is slower job growth in the goods sector, easing hours worked and moderating sequential wage growth momentum and a rise in the labor force participation rate indicate a welcome easing of labor market tightness,” Daco noted. “While we acknowledge this report was by no means a weak one, we also observe that some of the job gains were in sectors where there has been a structural employment shortfall — health care and education in particular. Employment strength in those sectors may not be indicative of cyclical wage pressures, but rather easing structural constraints.”

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  • The US economy added 311,000 jobs in February, outpacing expectations | CNN Business

    The US economy added 311,000 jobs in February, outpacing expectations | CNN Business


    Minneapolis
    CNN
     — 

    The US economy added 311,000 jobs in February, according to the latest monthly employment snapshot from the Bureau of Labor Statistics, released Friday.

    That’s a pullback from the blockbuster January jobs report, when a revised 504,000 positions were added, but shows the labor market is still emitting plenty of heat.

    The unemployment rate ticked up to 3.6% from 3.4%.

    February’s net job gains surpassed economists’ estimates for a more modest month, with only 205,000 to be added. Separately, downward revisions to December’s and January’s totals weren’t that drastic.

    While Friday’s report is a strong one, that’s actually bad news in the broader context of the Federal Reserve’s campaign to curb high inflation, said PNC Financial Services chief economist Gus Faucher.

    “It’s much hotter than the economy can run, and so this means the Fed is going to have to continue to hike interest rates,” he told CNN. “And that makes a recession more likely.”

    Barring a surprisingly low Consumer Price Index inflation report next week, Faucher said he expects the Fed to go forward with a half-point rate hike at its March 21-22 meeting, which would be a higher pace than the recent, more moderate quarter-point increase.

    The Fed has been battling for almost a year to slow the economy and crush the highest inflation in 40 years, but the labor market continues to defy those efforts.

    “Coming up on the one-year anniversary of the Fed’s first rate hike, we never thought we would see the economy churning out 311,000 more jobs this month,” said Chris Rupkey, chief economist of FwdBonds, in a statement. “The party is on and the labor market is having a blast. The economy clearly is not landing, it is soaring.”

    The monthly job gains remain well above pre-pandemic norms, when roughly 180,000 jobs were added per month between 2010 and 2019, BLS data shows. However, the labor market remains tight and imbalances continue to persist in the ongoing recovery efforts from the devastating pandemic.

    Labor turnover data released earlier this week for January showed that there were 1.9 job openings for every person looking for one. Fed Chair Jerome Powell has frequently highlighted how the labor market remains short of pre-pandemic growth projections by more than 3 million people.

    The pandemic accelerated expected demographic trends (the aging out of the massive Baby Boom generation) with increased retirements; people also dropped out of the workforce for care-related needs and health concerns such as long Covid; and there were hundreds of thousands of workers who died from Covid.

    February’s employment report showed a 0.1 percentage point increase in the labor force participation rate to 62.5% — the highest its been since April 2020. However, it remains below pre-pandemic levels of 63.4%.

    Additionally, there was some upward movement in the jobless rate, which increased 0.2 percentage points to 3.6%.

    “Contributing to upward pressure here, there were more people looking for work,”said Mark Hamrick, senior economic analyst at Bankrate.

    Industries with notable job gains included leisure and hospitality, retail trade, government and health care. After being crushed during the pandemic, the leisure and hospitality has been steadily adding back employees and trying to meet increased demand from consumers shifting their spending from goods to services.

    Average hourly earnings — a closely watched metric as the Fed seeks to evaluate the impact of rising wages on inflation — grew 0.2% month-on-month and were up 4.6% over the year before.

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  • China to increase defense spending 7.2%, sets economic growth target of ‘around 5%’ for 2023 | CNN Business

    China to increase defense spending 7.2%, sets economic growth target of ‘around 5%’ for 2023 | CNN Business


    Hong Kong
    CNN
     — 

    China has set an official economic growth target of “around 5%” for 2023, as it seeks to revive the world’s second-largest economy after a year of tepid growth because of pandemic measures.

    It will also expand its defense budget 7.2%, marking a slight increase over growth the previous year.

    Both figures for the coming year were released at the opening of the annual gathering of the National People’s Congress (NPC), the country’s rubber-stamp legislature, which draws nearly 3,000 delegates to Beijing for the next eight days.

    “China’s economy is staging a steady recovery and demonstrating vast potential and momentum for further growth,” outgoing Premier Li Keqiang told delegates while delivering a government work report at the opening of the congress on Sunday.

    The economy added more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5%, according to the work report, which emphasized China’s focus on ensuring stable growth, employment and prices amid global inflation and set the GDP target.

    China also unveiled its annual military budget for 2023, which will increase 7.2% to roughly 1.55 trillion yuan ($224 billion) in a draft budget report released Sunday morning.

    The spending increase marks the second year in a row that the annual hike in military spending has exceeded 7% and tops last year’s 7.1% growth, amid rising geopolitical tensions and a regional arms race. As with other recent years, the figure stays well below the symbolically significant double-digit expansion.

    “The armed forces should intensify military training and preparedness across the board, develop new military strategic guidance, devote greater energy to training under combat conditions and make well-coordinated efforts to strengthen military work in all directions and domains,” Li’s work report said.

    The GDP target and military spending are among the most closely watched in the opening day proceedings, with the GDP target figure in particular being monitored this year as China emerges from its economically draining zero-Covid policy. The new figure appears modest against what some analysts had predicted could be a more robust aim for the year ahead.

    The NPC meeting is a key yearly political event that occurs alongside a gathering of China’s top political advisory body, with the events together known as the Two Sessions.

    This is the first Two Sessions since Chinese leader Xi Jinping secured a norm-breaking third term atop the Chinese Communist Party hierarchy in October. Xi is set to enter his third term as President, a largely ceremonial title, during the congress.

    China’s GDP expanded by just 3% in 2022, widely missing the official target of “around 5.5%” mainly due to prolonged Covid restrictions. It was the second lowest annual growth rate since 1976, behind only 2020 – when the initial Covid outbreaks nearly paralyzed the economy.

    In December, after the Communist Party abruptly ended its zero-Covid policy, a massive wave of infections swept across the country, throwing supply chains and factories into chaos. But the disruptions started to fade away in January, and the economic recovery picked up pace last month.

    Official data released Wednesday showed China’s factories had their best month in nearly 11 years in February, underscoring how quickly economic activity has bounced back following the end of the Covid exit wave. The services and construction industries also had their best performance in two years.

    Moody’s Investors Service has since raised its China growth forecast to 5% for both 2023 and 2024, up from 4% previously, citing a stronger than expected rebound in the short term.

    Analysts had predicted a difficult track to recovery for China amid global headwinds, which may have also been reflected in the conservative 2023 target of “around 5%” announced Sunday.

    The global economy will weaken further this year as rising interest rates and Russia’s war in Ukraine continue to weigh on activity, the International Monetary Fund estimated in January. Global growth will likely slow from 3.4% in 2022 to 2.9% in 2023.

    China is set to release its import and export data for the first two months of this year on Tuesday, which will provide a glimpse into demand for global trade.

    During the congress, the ruling Communist Party’s new economic team, including various ministers and financial chiefs, will be unveiled with other key appointments – already selected by the Communist Party leadership – also approved. Premier Li’s replacement will be formally appointed during the meeting, which runs until March 13.

    The new economic team will face the tough task of reviving the Chinese economy as it navigates a growing array of challenges, including sluggish consumption, rising unemployment, a historic downturn in real estate, and increasing tension with the United States over technology sanctions.

    The 7.2% increase in planned defense spending marks the first time in the past decade that the budget growth rate has increased for three consecutive years, as Beijing continues to modernize and build-up its military, while asserting pressure on Taiwan – the self-governing island democracy the Chinese Communist Party claims as its own despite never having ruled.

    China now controls the world’s largest navy by size and continues to advance its fleet of nuclear submarines and stealth fighter jets.

    The military budget expanded 7.1% to 1.45 trillion yuan in 2022, compared with 6.8% the previous year. The last year China’s annual defense spending grew by double digits was 2015. The size of this year’s budget is more than double that of ten years ago.

    Chinese officials have repeatedly sought to portray their military spending as reasonable relative to other countries like the United States – part of China’s bid to present itself as a peaceful power, despite its aggression in the region including its militarization of the South China Sea and heavy patrolling around Taiwan.

    During a press conference Saturday ahead of the opening day, NPC spokesperson Wang Chao said China’s defense budget maintained a “relatively moderate and reasonable growth rate.”

    “China’s defense expenditure as a percentage of GDP has remained stable over the years. It remains basically stable, lower than the world average,” Wang said.

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  • Fact check: Republicans at CPAC make false claims about Biden, Zelensky, the FBI and children | CNN Politics

    Fact check: Republicans at CPAC make false claims about Biden, Zelensky, the FBI and children | CNN Politics


    Washington
    CNN
     — 

    The Conservative Political Action Conference is underway in Maryland. And the members of Congress, former government officials and conservative personalities who spoke at the conference on Thursday and Friday made false claims about a variety of topics.

    Rep. Jim Jordan of Ohio uttered two false claims about President Joe Biden. Rep. Marjorie Taylor Greene of Georgia repeated a debunked claim about Ukrainian President Volodymyr Zelensky. Sen. Tommy Tuberville of Alabama used two inaccurate statistics as he lamented the state of the country. Former Trump White House official Steve Bannon repeated his regular lie about the 2020 election having been stolen from Trump, this time baselesly blaming Fox for Trump’s defeat.

    Rep. Kat Cammack of Florida incorrectly said a former Obama administration official had encouraged people to harass Supreme Court Justice Brett Kavanaugh. Rep. Ralph Norman of South Carolina inaccurately claimed Biden had laughed at a grieving mother and inaccurately insinuated that the FBI tipped off the media to its search of former President Donald Trump’s Florida residence. Two other speakers, Rep. Scott Perry of Pennsylvania and former Trump administration official Sebastian Gorka, inflated the number of deaths from fentanyl.

    And that’s not all. Here is a fact check of 13 false claims from the conference, which continues on Saturday.

    Marjorie Taylor Greene said the Republican Party has a duty to protect children. Listing supposed threats to children, she said, “Now whether it’s like Zelensky saying he wants our sons and daughters to go die in Ukraine…” Later in her speech, she said, “I will look at a camera and directly tell Zelensky: you’d better leave your hands off of our sons and daughters, because they’re not dying over there.”

    Facts First: Greene’s claim is false. Ukrainian President Volodymyr Zelensky didn’t say he wants American sons and daughters to fight or die for Ukraine. The false claim, which was debunked by CNN and others earlier in the week, is based on a viral video that clipped Zelensky’s comments out of context.

    19-second video of Zelensky goes viral. See what was edited out

    In reality, Zelensky predicted at a press conference in late February that if Ukraine loses the war against Russia because it does not receive sufficient support from elsewhere, Russia will proceed to enter North Atlantic Treaty Organization member countries in the Baltics (a region made up of Latvia, Lithuania and Estonia) that the US will be obligated to send troops to defend. Under the treaty that governs NATO, an attack on one member is considered an attack on all. Ukraine is not a NATO member, and Zelensky didn’t say Americans should fight there.

    Greene is one of the people who shared the out-of-context video on Twitter this week. You can read a full fact-check, with Zelensky’s complete quote, here.

    Right-wing commentator and former Trump White House chief strategist Steve Bannon criticized right-wing cable channel Fox at length for, he argued, being insufficiently supportive of Trump’s 2024 presidential campaign. Among other things, Bannon claimed that, on the night of the election in November 2020, “Fox News illegitimately called it for the opposition and not Donald J. Trump, of which our nation has never recovered.” Later, he said Trump is running again after “having it stolen, in broad daylight, of which they [Fox] participate in.”

    Facts First: This is nonsense. On election night in 2020, Fox accurately projected that Biden had won the state of Arizona. This projection did not change the outcome of the election; all of the votes are counted regardless of what media outlets have projected, and the counting showed that Biden won Arizona, and the election, fair and square. The 2020 election was not “stolen” from Trump.

    NATIONAL HARBOR, MARYLAND - MARCH 03: Former White House chief strategist for the Trump Administration Steve Bannon speaks during the annual Conservative Political Action Conference (CPAC) at the Gaylord National Resort Hotel And Convention Center on March 03, 2023 in National Harbor, Maryland. The annual conservative conference entered its second day of speakers including congressional members, media personalities and members of former President Donald Trump's administration. President Donald Trump will address the event on Saturday. (Photo by Anna Moneymaker/Getty Images)

    Bannon has a harsh message for Fox News at CPAC

    Fox, like other major media outlets, did not project that Biden had won the presidency until four days later. Fox personalities went on to repeatedly promote lies that the election was stolen from Trump – even as they privately dismissed and mocked these false claims, according to court filings from a voting technology company that is suing Fox for defamation.

    Rep. Jim Jordan claimed that Biden, “on day one,” made “three key changes” to immigration policy. Jordan said one of those changes was this: “We’re not going to deport anyone who come.” He proceeded to argue that people knowing “we’re not going to get deported” was a reason they decided to migrate to the US under Biden.

    Facts First: Jordan inaccurately described the 100-day deportation pause that Biden attempted to impose immediately after he took office on January 20, 2021. The policy did not say the US wouldn’t deport “anyone who comes.” It explicitly did not apply to anyone who arrived in the country after the end of October 2020, meaning people who arrived under the Biden administration or in the last months of the Trump administration could still be deported.

    Biden did say during the 2020 Democratic primary that “no one, no one will be deported at all” in his first 100 days as president. But Jordan claimed that this was the policy Biden actually implemented on his first day in office; Biden’s actual first-day policy was considerably narrower.

    Biden’s attempted 100-day pause also did not apply to people who engaged in or were suspected of terrorism or espionage, were seen to pose a national security risk, had waived their right to remain in the US, or whom the acting director of Immigration and Customs Enforcement determined the law required to be removed.

    The pause was supposed to be in effect while the Department of Homeland Security conducted a review of immigration enforcement practices, but it was blocked by a federal judge shortly after it was announced.

    Rep. Ralph Norman strongly suggested the FBI had tipped off the media to its August search of Trump’s Mar-a-Lago home and resort in Florida for government documents in the former president’s possession – while concealing its subsequent document searches of properties connected to Biden.

    Norman said: “When I saw the raid at Mar-a-Lago – you know, the cameras, the FBI – and compare that to when they found Biden’s, all of the documents he had, where was the media, where was the FBI? They kept it quiet early on, didn’t let it out. The job of the next president is going to be getting rid of the insiders that are undermining this government, and you’ve gotta clean house.”

    Facts First: Norman’s narrative is false. The FBI did not tip off the media to its search of Mar-a-Lago; CNN reported the next day that the search “happened so quietly, so secretly, that it wasn’t caught on camera at all.” Rather, media outlets belatedly sent cameras to Mar-a-Lago because Peter Schorsch, publisher of the website Florida Politics, learned of the search from non-FBI sources and tweeted about it either after it was over or as it was just concluding, and because Trump himself made a public statement less than 20 minutes later confirming that a search had occurred. Schorsch told CNN on Thursday: “I can, unequivocally, state that the FBI was not one of my two sources which alerted me to the raid.”

    Brian Stelter, then CNN’s chief media correspondent, wrote in his article the day after the search: “By the time local TV news cameras showed up outside the club, there was almost nothing to see. Websites used file photos of the Florida resort since there were no dramatic shots of the search.”

    It’s true that the public didn’t find out until late January about the FBI’s November search of Biden’s former think tank office in Washington, which was conducted with the consent of Biden’s legal team. But the belated presence of journalists at Mar-a-Lago on the day of the Trump search in August is not evidence of a double standard.

    And it’s worth noting that media cameras were on the scene when Biden’s beach home in Delaware was searched by the FBI in February. News outlets had set up a media “pool” to make sure any search there was recorded.

    Sen. Tommy Tuberville, a former college and high school football coach, said, “Going into thousands of kids’ homes and talking to parents every year recruiting, half the kids in this country – I’m not talking about race, I’m just talking about – half the kids in this country have one or no parent. And it’s because of the attack on faith. People are losing faith because, for some reason, because the attack [on] God.”

    Facts First: Tuberville’s claim that half of American children don’t have two parents is incorrect. Official figures from the Census Bureau show that, in 2021, about 70% of US children under the age of 18 lived with two parents and about 65% lived with two married parents.

    About 22% of children lived with only a mother, about 5% with only a father, and about 3% with no parent. But the Census Bureau has explained that even children who are listed as living with only one parent may have a second parent; children are listed as living with only one parent if, for example, one parent is deployed overseas with the military or if their divorced parents share custody of them.

    It is true that the percentage of US children living in households with two parents has been declining for decades. Still, Tuberville’s statistic significantly exaggerated the current situation. His spokesperson told CNN on Thursday that the senator was speaking “anecdotally” from his personal experience meeting with families as a football coach.

    Tuberville claimed that today’s children are being “indoctrinated” in schools by “woke” ideology and critical race theory. He then said, “We don’t teach reading, writing and arithmetic anymore. You know, half the kids in this country, when they graduate – think about this: half the kids in this country, when they graduate, can’t read their diploma.”

    Facts First: This is false. While many Americans do struggle with reading, there is no basis for the claim that “half” of high school graduates can’t read a basic document like a diploma. “Mr. Tuberville does not know what he’s talking about at all,” said Patricia Edwards, a Michigan State University professor of language and literacy who is a past president of the International Literacy Association and the Literacy Research Association. Edwards said there is “no evidence” to support Tuberville’s claim. She also said that people who can’t read at all are highly unlikely to finish high school and that “sometimes politicians embellish information.”

    Tuberville could have accurately said that a significant number of American teenagers and adults have reading trouble, though there is no apparent basis for connecting these struggles with supposed “woke” indoctrination. The organization ProLiteracy pointed CNN to 2017 data that found 23% of Americans age 16 to 65 have “low” literacy skills in English. That’s not “half,” as ProLiteracy pointed out, and it includes people who didn’t graduate from high school and people who are able to read basic text but struggle with more complex literacy tasks.

    The Tuberville spokesperson said the senator was speaking informally after having been briefed on other statistics about Americans’ struggles with reading, like a report that half of adults can’t read a book written at an eighth-grade level.

    Rep. Jim Jordan claimed of Biden: “The president of the United States stood in front of Independence Hall, called half the country fascists.”

    Facts First: This is not true. Biden did not denounce even close to “half the country” in this 2022 speech at Independence Hall in Philadelphia. He made clear that he was speaking about a minority of Republicans.

    In the speech, in which he never used the word “fascists,” Biden warned that “MAGA Republicans” like Trump are “extreme,” “do not respect the Constitution” and “do not believe in the rule of law.” But he also emphasized that “not every Republican, not even the majority of Republicans, are MAGA Republicans.” In other words, he made clear that he was talking about far less than half of Americans.

    Trump earned fewer than 75 million votes in 2020 in a country of more than 258 million adults, so even a hypothetical criticism of every single Trump voter would not amount to criticism of “half the country.”

    Rep. Scott Perry claimed that “average citizens need to just at some point be willing to acknowledge and accept that every single facet of the federal government is weaponized against every single one of us.” Perry said moments later, “The government doesn’t have the right to tell you that you can’t buy a gas stove but that you must buy an electric vehicle.”

    Facts First: This is nonsense. The federal government has not told people that they can’t buy a gas stove or must buy an electric vehicle.

    The Biden administration has tried to encourage and incentivize the adoption of electric vehicles, but it has not tried to forbid the manufacture or purchase of traditional vehicles with internal combustion engines. Biden has set a goal of electric vehicles making up half of all new vehicles sold in the US by 2030.

    There was a January controversy about a Biden appointee to the United States Consumer Product Safety Commission, Richard Trumka Jr., saying that gas stoves pose a “hidden hazard,” as they emit air pollutants, and that “any option is on the table. Products that can’t be made safe can be banned.” But the commission as a whole has not shown support for a ban, and White House press secretary Karine Jean-Pierre said at a January press briefing: “The president does not support banning gas stoves. And the Consumer Product Safety Commission, which is independent, is not banning gas stoves.”

    Rep. Ralph Norman claimed that Biden had just laughed at a mother who lost two sons to fentanyl.

    “I don’t know whether y’all saw, I just saw it this morning: Biden laughing at the mother who had two sons – to die, and he’s basically laughing and saying the fentanyl came from the previous administration. Who cares where it came from? The fact is it’s here,” Norman said.

    Facts First: Norman’s claim is false. Biden did not laugh at the mother who lost her sons to fentanyl, the anti-abortion activist Rebecca Kiessling; in a somber tone, he called her “a poor mother who lost two kids to fentanyl.” Rather, he proceeded to laugh about how Republican Rep. Marjorie Taylor Greene had baselessly blamed the Biden administration for the young men’s deaths even though the tragedy happened in mid-2020, during the Trump administration. You can watch the video of Biden’s remarks here.

    Kiessling has demanded an apology from Biden. She is entitled to her criticism of Biden’s remarks and his chuckle – but the video clearly shows Norman was wrong when he claimed Biden was “laughing at the mother.”

    Rep. Kat Cammack told a story about the first hearing of the new Republican-led House select subcommittee on the supposed “weaponization” of the federal government. Cammack claimed she had asked a Democratic witness at this February hearing about his “incredibly vitriolic” Twitter feed in which, she claimed, he not only repeatedly criticized Supreme Court Justice Brett Kavanaugh but even went “so far as to encourage people to harass this Supreme Court justice.”

    Facts First: This story is false. The witness Cammack questioned in this February exchange at the subcommittee, former Obama administration deputy assistant attorney general Elliot Williams, did not encourage people to harass Kavanaugh. In fact, it’s not even true that Cammack accused him at the February hearing of having encouraged people to harass Kavanaugh. Rather, at the hearing, she merely claimed that Williams had tweeted numerous critical tweets about Kavanaugh but had been “unusually quiet” on Twitter after an alleged assassination attempt against the justice. Clearly, not tweeting about the incident is not the same thing as encouraging harassment.

    Williams, now a CNN legal analyst (he appeared at the subcommittee hearing in his personal capacity), said in a Thursday email that he had “no idea” what Cammack was looking at on his innocuous Twitter feed. He said: “I used to prosecute violent crimes, and clerked for two federal judges. Any suggestion that I’ve ever encouraged harassment of anyone – and particularly any official of the United States – is insulting and not based in reality.”

    Cammack’s spokesperson responded helpfully on Thursday to CNN’s initial queries about the story Cammack told at CPAC, explaining that she was referring to her February exchange with Williams. But the spokesperson stopped responding after CNN asked if Cammack was accurately describing this exchange with Williams and if they had any evidence of Williams actually having encouraged the harassment of Kavanaugh.

    Sen. John Kennedy of Louisiana boasted about the state of the country “when Republicans were in charge.” Among other claims about Trump’s tenure, he said that “in four years,” Republicans “delivered 3.5% unemployment” and “created 8 million new jobs.”

    Facts First: This is inaccurate in two ways. First, the economic numbers for the full “four years” of Trump’s tenure are much worse than these numbers Kennedy cited; Kennedy was actually referring to Trump’s first three years while ignoring the fourth, which was marred by the Covid-19 pandemic. Second, there weren’t “8 million new jobs” created even in Trump’s first three years.

    Kennedy could have correctly said there was a 3.5% unemployment rate after three years of the Trump administration, but not after four. The unemployment rate skyrocketed early in Trump’s fourth year, on account of the pandemic, before coming down again, and it was 6.3% when Trump left office in early 2021. (It fell to 3.4% this January under Biden, better than in any month under Trump.)

    And while the economy added about 6.7 million jobs under Trump before the pandemic-related crash of March and April 2020, that’s not the “8 million jobs” Kennedy claimed – and the economy ended up shedding millions of jobs in Trump’s fourth year. Over the full four years of Trump’s tenure, the economy netted a loss of about 2.7 million jobs.

    Lara Trump, Donald Trump’s daughter-in-law and an adviser to his 2020 campaign, claimed that the last time a CPAC crowd was gathered at this venue in Maryland, in February 2020, “We had the lowest unemployment in American history.” After making other boasts about Donald Trump’s presidency, she said, “But how quickly it all changed.” She added, “Under Joe Biden, America is crumbling.”

    Facts First: Lara Trump’s claim about February 2020 having “the lowest unemployment in American history” is false. The unemployment rate was 3.5% at the time – tied for the lowest since 1969, but not the all-time lowest on record, which was 2.5% in 1953. And while Lara Trump didn’t make an explicit claim about unemployment under Biden, it’s not true that things are worse today on this measure; again, the most recent unemployment rate, 3.4% for January 2023, is better than the rate at the time of CPAC’s 2020 conference or at any other time during Donald Trump’s presidency.

    Multiple speakers at CPAC decried the high number of fentanyl overdose deaths. But some of the speakers inflated that number while attacking Biden’s immigration policy.

    Sebastian Gorka, a former Trump administration official, claimed that “in the last 12 months in America, deaths by fentanyl poisoning totaled 110,000 Americans.” He blamed “Biden’s open border” for these deaths.

    Rep. Scott Perry claimed: “Meanwhile over on this side of the border, where there isn’t anybody, they’re running this fentanyl in; it’s killing 100,000 Americans – over 100,000 Americans – a year.”

    Facts First: It’s not true that there are more than 100,000 fentanyl deaths per year. That is the total number of deaths from all drug overdoses in the US; there were 106,699 such deaths in 2021. But the number of overdose deaths involving synthetic opioids other than methadone, primarily fentanyl, is smaller – 70,601 in 2021.

    Fentanyl-related overdoses are clearly a major problem for the country and by far the biggest single contributor to the broader overdose problem. Nonetheless, claims of “110,000” and “over 100,000” fentanyl deaths per year are significant exaggerations. And while the number of overdose deaths and fentanyl-related deaths increased under Biden in 2021, it was also troubling under Trump in 2020 – 91,799 total overdose deaths and 56,516 for synthetic opioids other than methadone.

    It’s also worth noting that fentanyl is largely smuggled in by US citizens through legal ports of entry rather than by migrants sneaking past other parts of the border. Contrary to frequent Republican claims, the border is not “open”; border officers have seized thousands of pounds of fentanyl under Biden.

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  • The US dollar is at a crossroads | CNN Business

    The US dollar is at a crossroads | CNN Business

    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
     — 

    Wall Street investors are reaching for their neck braces in preparation for yet another volatile swing in stock markets: A surging US dollar.

    The greenback — which is not just the dominant global currency but also “the key variable affecting global economic conditions,” according to the New York Federal Reserve — reached a 20-year high last year after the Fed turned hawkish with its aggressive rate hikes.

    Since then, inflation seemed to have softened, pushing the dollar down. But in recent weeks, as a slew of economic data has shown the Fed’s inflation battle is far from over, the currency soared by about 4% from its recent lows, and now sits near a seven-week high.

    Investors are stressing about this sudden rebound, since a stronger dollar means American-made products become more expensive for foreign buyers, overseas revenue decreases in value and global trade weakens.

    Multinational companies, naturally, aren’t thrilled about any of this. And around 30% of all S&P 500 companies’ revenue is earned in markets outside the US, said Quincy Krosby, chief global strategist for LPL Financial.

    What’s happening: The US dollar “finds itself at a significant crossroads yet again,” said Krosby. “While the Fed remains steadfastly data dependent, the dollar’s course as well remains focused on inflation and the Fed’s monetary response.”

    “The strong US dollar has been a headwind for international earnings and stock performance (for US investors),” wrote Wells Fargo analysts in a recent note.

    February was a rough month for markets: The Dow ended February down 4.19%, the S&P 500 fell 2.6% and the Nasdaq lost just over 1%.

    What’s next: Investors are clearly focused on the next Fed policy meeting, which is still three weeks away, for signals about the direction of rates. But until then, investors may gain some insight Tuesday when Fed Chairman Jerome Powell speaks before the Senate Banking Committee.

    They’ll also be watching next Friday’s jobs report for any softening in the labor market that could temper the Fed’s hawkish mood.

    Don’t forget the debt ceiling: Another significant threat to the dollar is looming in Congress — the ongoing debt ceiling fight. The United States could start to default on its financial obligations over the summer or in the early fall if lawmakers don’t agree to raise the debt limit — its self-imposed borrowing limit — before then, according to a new analysis by the Bipartisan Policy Center.

    That could potentially lead to a disastrous downgrade to America’s credit rating and could send the dollar spiraling as investors start to sell off their US assets and move their money to safer currencies.

    “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise,” Treasury Secretary Janet Yellen told CNN in January.

    ▸ A lot has changed in the last twenty years. The gender pay gap hasn’t.

    In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.

    That’s a big leap from the 65 cents that women were earning in 1982. But it has barely moved from the 80 cents they were earning in 2002.

    “Higher education, a shift to higher-paying occupations and more labor market experience have helped women narrow the gender pay gap since 1982,” the Pew analysis noted. “But even as women have continued to outpace men in educational attainment, the pay gap has been stuck in a holding pattern since 2002, ranging from 80 to 85 cents to the dollar.”

    ▸ Initial jobless claims, which measures the number of people who filed for unemployment insurance for the first time last week, are due out at 8:30 a.m. ET on Thursday.

    This will be the last official jobs data investors see before February’s heavily anticipated unemployment report next Friday.

    Economists are expecting 195,000 Americans to have filed for unemployment, which is higher than the seasonally adjusted 192,000 who applied two weeks ago.

    Initial claims have come in lower than expected in recent weeks and remain well below their pre-pandemic levels.

    The white-hot labor market in the US added more than 500,000 jobs in January, blowing analysts’ expectations out of the water and bringing the unemployment rate to its lowest level since May of 1969.

    That’s bad news for the Federal Reserve where policymakers have been attempting to tame inflation by cooling the economy through painful interest rate hikes.

    ▸ It’s a big day for groceries. Kroger (KR), Costco (COST) and Anheuser-Busch (BUD) all report earnings on Thursday.

    Investors will be watching closely for clues about consumer sentiment during an uncertain retail earnings season. On Tuesday, Kohl’s reported that it had a rough holiday season and executives at the company put the blame on inflation. The company said higher prices squeezed sales and forced it to mark down some products to entice shoppers — which hurt its profit margin.

    Those comments echoed those of other big box retailers like Walmart (WMT) and Target (TGT), who have said consumers are feeling the pinch of inflation.

    Still, Target and Walmart’s bottom lines were bolstered by food sales even as consumers pulled back on discretionary purchases.

    The US Senate voted on Wednesday to overturn a Biden administration retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other ESG factors when picking investments.

    As my CNN colleagues Ali Zaslav, Clare Foran and Ted Barrett write: The rule is not mandated – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

    Republicans complained that the rule is a “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines.

    “This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,’” countered Senator Patty Murray (D-WA) on the Senate floor Wednesday. “It’s about acknowledging these factors are reasonable for asset managers to consider.”

    The measure will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

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