- Nick Chubb injury: Browns’ Jerome Ford in line to be ‘featured back;’ Kareem Hunt reportedly visits Cleveland CBS Sports
- With Nick Chubb’s injury, the Browns need a running back: Who’s available and who should they add? (poll) cleveland.com
- Browns’ Nick Chubb done for season with knee injury so bad ESPN refused to show replay in loss to Steelers Yahoo Sports
- Nick Chubb CARTED OFF vs. Steelers with knee injury | CBS Sports CBS Sports
- Cleveland Browns studs and duds: Deshaun Watson fumbles away the win in Week 2 Dawg Pound Daily
- View Full Coverage on Google News
Tag Archives: Jerome
Jerome Adams and his wife, Lacey, fight cancer and the “Trump Effect”
Now, two years after Adams left office as only the 20th surgeon general in U.S. history, the couple feel it as acutely as ever. As Donald Trump announced this month that he will run for president again, they had hoped it all would have faded away by now.
They would rather talk about public health, in a very personal way. This summer, Lacey Adams was diagnosed with a third recurrence of melanoma. Both Adamses have been sharing her experiences on social media and in public appearances, hoping to spread a message about skin-cancer prevention. But the stigma of his association with Trump, even though neither of them is a supporter of his political campaign, remains.
Trump is “a force that really does take the air out of the room,” Adams, 48, said. “The Trump hangover is still impacting me in significant ways.” He said the 2024 Trump campaign “will make things more difficult for me.”
The former surgeon general’s predicament underscores one of the givens of today’s political environment: Association with Trump becomes a permanent tarnish, a kind of reverse Midas touch. Whether indicted or shunned or marginalized, a cavalcade of former Trump World figures have foundered in the aftermath of one of the more chaotic presidencies in modern American history.
Lacey saw it coming. She said she “hated Trump” and did not want her husband to leave his comfortable life in Indiana, where he practiced anesthesiology and served as state health commissioner under then-Indiana governor Mike Pence, who was Trump’s vice president when Jerome became surgeon general. Lacey, 46, worried about a lasting “stigma” but her husband talked her into supporting their move by saying he thought he could make a bigger difference inside the administration than outside it, especially when it came to his efforts to combat opioid addiction.
Now Jerome bristles at his forever label as “Trump’s surgeon general,” an image sealed by his highly public role during the much-criticized early White House response to the coronavirus pandemic. Other surgeons general, he feels, have been less intensely identified with the president who appointed them, permitting them to glide into a life of prestigious and sometimes lucrative opportunities, unencumbered by partisan politics.
Not him. “It was a lot harder than he thought to find a landing spot because of the Trump Effect,” Lacey said. For eight months after leaving office, Jerome could not find a job. The couple started to worry about how they would support their three children, especially since Lacey does not work outside the home.
“People still are afraid to touch anything that is associated with Trump,” Jerome said. Though he was quick to add in the interview that he is “not complaining.” He added, “It is context.”
Finally, in September 2021, Purdue University President Mitch Daniels, a former Indiana governor and Republican stalwart, hired Adams as the first executive director of health equity initiatives at the school.
Even as Adams was seeking to define the next chapter of his life, he was engaged in an almost constant battle on social media. His frequent tweets about everything from his personal life to public health issues have invariably drawn attacks from both the right and the left. Rather than ignore his critics, he has often punched back, engaging in Twitter spats that stretch for days.
He has battled on social media over his recommendation that people continue to wear masks in crowded indoor settings, his criticism of President Biden’s declaration of an end to the pandemic and about his advocacy for coronavirus vaccinations for children and for adults to get booster shots. He takes heat from the left for a pro-life stance on abortion and from the right for his opposition to laws that dictate what a doctor can say to a patient about abortion.
“I get mad at him for being addicted to Twitter,” Lacey said. “People hated him because he was part of Trump’s administration. Now the Trump people hate him.”
Carrie Benton, an Ohio medical lab scientist who has tangled with Jerome Adams on social media, is critical of what she considers “blanket statements” he is now making about topics such as masking. But she also feels he should still be held accountable for errors committed by the Trump administration early in the pandemic.
The pushback has done little to dissuade Adams. He invites debate. He wants to argue, genially. He tries to search for ways to use his platform as a former surgeon general that do not turn into politically charged spats.
“It is hard to find an issue,” he said.
In August, an issue found him, and it was precisely the topic that he had hoped would not feel so personal anymore. During a routine follow-up check, doctors discovered tumors on the outside of Lacey’s right thigh.
“Here we go again,” Lacey said to herself.
She had first been diagnosed with melanoma 12 years ago, in 2010, when she spotted a “weird mole.” She had it removed. She thought she was in the clear.
“No big deal,” she said.
As an adolescent growing up in the Midwest, she had been a frequent visitor to tanning beds. She did not worry much about the sun, even though she is very light-skinned. After having the mole removed, she changed her ways. Sunscreen. Long sleeves. She joked that her mother would chase her around with floppy hats. She started getting regular dermatology checks. It was all good. Until it was not.
In early 2018, just as her anesthesiologist husband was starting as surgeon general under Trump, she noticed lumps on her groin while shaving her bikini line. The doctor in her house, newly minted as America’s doctor, was constantly on the go as he sought to get a grasp on his job, serving as a public health advocate and overseeing thousands of members of the U.S. Public Health Service Commissioned Corps. “The doctor in my house is my absent-minded professor, always running in 100 directions,” she said.
So Lacey called the doctor next door: her neighbor in Indiana and dear friend, Amy Hoffman, an emergency room physician. When Hoffman realized why her friend was calling, she put her on the speakerphone, so that her husband, an oncologist, could listen in.
He just had one question: Was it on the same side as the melanoma from years earlier? Yes, she said. She could hear the worry in their voices.
“Stop unpacking,” she said they told her. “Stop going to fancy events with your husband. You need to make this a priority.”
She was soon ushered into a special area of Walter Reed National Military Medical Center reserved for high-ranking officials and their families. She was given a fuzzy robe with an embroidered White House logo.
“All of a sudden it is like you are in the Ritz-Carlton,” she recalled, and asked herself, “Why am I deserving of this special attention?”
A scan showed a tumor somewhere between the size of a pea and a grape. She needed to have surgery. Doctors eventually removed 12 lymph nodes, some of which were cancerous. While she was recovering from surgery, still groggy from the anesthesia, her husband came into the room with a request that was hard for her to comprehend through the fog of the drugs: He wanted her Facebook password.
She had taken a selfie at the medical center and posted it to her Facebook page, and she also took a little dig at the administration. The White House was not happy, he told her. They wanted it taken down.
In the months to come, she would again think she had beaten cancer. She underwent a year of immunotherapy treatments. She rang the bell, a tradition among cancer patients completing treatments, at Walter Reed after scans showed she was cancer free.
“Cancer, schmancer,” she thought.
There were other things to worry about. Her husband had come to Washington hoping to focus on opioid addiction, a plague that had hit members of his family. Instead, he was thrust into a much more public role with the arrival of the coronavirus. As the Trump administration struggled with effective responses, the new surgeon general kept setting off firestorms.
He shared a Valentine’s Day poem on social media that said the regular flu was a greater risk than covid and urged people to get flu shots. He told African Americans, who were contracting the coronavirus in disproportionate numbers, to take precautions to protect their “Big Mama.”
In each instance, he fumbled the messaging, making incomplete or poorly explained statements. He asked people not to buy masks because there was a shortage. He said people were at a greater risk of catching the regular flu than covid because projections by the Trump administration, later shown to be inaccurate, suggested more people would get the regular flu.
He used the words “Big Mama,” which led to accusations that he was using Trump-style racist dog whistles, because it was a term of affection in his own family that he thought would help him connect with African Americans.
Those missteps, which Adams has blamed on a partisan atmosphere, drew heavy criticism, which might be expected. What he had not anticipated was how people would come for his loved ones. On social media, trolls called his family ugly. They criticized Adams, who is Black, for marrying a White woman.
While her husband was trying to fend off critics and nasty commenters by sharpening his messaging, Lacey, like many Americans, was putting off medical appointments while limiting her movements because of the risk of contracting the coronavirus. She had a clear scan in January 2020. It was not until July that year that she returned for another scan. It revealed a tumor on her back.
The cancer had returned for a second round: This time it was Stage 4. She started immunotherapy. And again she beat it. For two years she passed routine scans, with good results. Then, this past summer, came the tests that revealed the cancer had returned. His wife cries herself to sleep some nights. He marvels at her resilience.
She has been speaking and writing about the disease that lurks inside her and threatens to deprive her of so many things she looks forward to, like the days her children, now 18, 16 and 12, graduate or get married.
Some days she is too ill from side effects of her treatments to do much. But other times she is full of energy and ready to go. People might look at her and not know she is sick, and that is one of her points: Melanoma is a stealthy disease, the doctors keep telling her. It can hide inside people without any outward signs. She had once had a mole, but other times nothing showed up on her skin. The disease was hiding from her.
She understands that she has been given a platform few have. No one would be listening to a mom from Indiana if she were not the wife of the former surgeon general.
The other day, her husband asked if he could post a photo of her on Twitter. She said for him to go ahead. It showed her in profile, lying in bed with the covers partly obscuring her face, on a day when she was not feeling great. He asked for prayers, but he also gave some advice: “See a dermatologist right away if a mole changes/looks different from your others!”
What happened next was nothing short of amazing to them. People wished the best for Lacey even though they were not fans of Jerome: “I don’t agree with your politics. God bless your sweet wife.” “I’m sorry your wife has cancer, even though I completely disagree with some of your decisions.”
Some people even wanted advice. “Should we worry about a single mole or look for odd shapes and changes in several?” That person did not mention Trump at all. That might be a person they could help. That might be, they dared to imagine, the end of the Trump Effect, and the beginning of a Lacey Effect.
Jerome Powell just warned that the US housing market needs a ‘difficult correction’ so that folks can afford homes again — but here’s why it’ll look nothing like 2008
Real estate investors have largely done well for the past few years. But with higher interest rates, things could be about to change.
The U.S. Federal Reserve raised its benchmark interest rates by 0.75 basis points on Wednesday, marking the third such hike in a row.
Higher interest rates translate to bigger mortgage payments — not good news for the housing market. But cooling down housing prices is part of what needs to be done to bring inflation under control.
Don’t miss
“For the longer term what we need is supply and demand to get better aligned, so that housing prices go up at a reasonable level, at a reasonable pace, and that people can afford houses again,” Fed Chair Jerome Powell said on Wednesday. “We probably in the housing market have to go through a correction to get back to that place.”
“From a sort of business cycle standpoint, this difficult correction should put the housing market back into better balance.”
Those words might sound scary, especially to those who lived through the last financial crisis — where the housing market went through a very, very difficult correction.
But experts say there are good reasons to believe that regardless of how things play out, it won’t be a return to 2008.
Higher lending standards
Questionable lending practices within the financial industry were a major factor that led to the housing crisis in 2008. Financial deregulation made it easier and more profitable to give out risky loans — even to those who could not afford them.
So when an increasing number of borrowers could not repay their loans, the housing market cratered.
That’s why the Dodd-Frank Act was enacted in 2010. The act put restrictions on the financial industry, including creating programs to stop mortgage companies and lenders from giving out dicey loans.
Recent data suggests that lenders are indeed more stringent in their lending practices.
According to the Federal Reserve Bank of New York, the median credit score for newly originated mortgages was 773 for the second quarter of 2022. Meanwhile, 65% of newly originated mortgage debt was to borrowers with credit scores over 760.
In its Quarterly Report on Household Debt and Credit, the New York Fed stated that “credit scores on newly originating mortgages remain quite high and reflect continuing stringent lending criteria.”
Homeowners in good shape
When home prices went up, homeowners built more equity.
According to mortgage technology and data provider Black Knight, mortgage holders now have access to an additional $2.8 trillion in equity in their homes compared to a year ago. That represents an increase of 34% and over $207,000 in additional equity that is available to each borrower.
Moreover, most homeowners did not default on their loans even at the height of the COVID-19 pandemic, where lockdowns sent shockwaves across the economy.
Of course, it was those mortgage forbearance programs that saved the struggling borrowers: they were able to pause their payments until they regained financial stability.
The result looks great: the New York Fed said that the share of mortgage balances 90 days plus past due remained at 0.5% at the end of Q2, near a historic how.
Supply and demand
On a recent episode of The Ramsey Show, host Dave Ramsey pointed out that the big problem in 2008 was a “tremendous oversupply because foreclosures went everywhere and the market just froze.”
And the crash wasn’t caused by interest rates or the health of the economy but rather “a real estate panic.”
Right now, the demand for housing remains strong while supply is still in shortage. That dynamic could start to change as the Fed tries to curb demand by hiking interest rates.
Ramsey acknowledges the slowing rate of increase in home prices right now but doesn’t expect a crisis like 2008.
“It’s not always as simple as supply and demand — but it almost always is,” he says.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Jerome Powell’s Dilemma: What If the Drivers of Inflation Are Here to Stay?
To counter the impact of a decline in global commerce and persistent shortages of labor, commodities and energy, central bankers might lift interest rates higher and for longer than in recent decades—which could result in weaker economic growth, higher unemployment and more frequent recessions.
The Federal Reserve’s current round of interest-rate increases, which economists say have pushed the U.S. to the brink of a recession, could be a taste of this new environment.
“The global economy is undergoing a series of major transitions,” said
Mark Carney,
former Bank of Canada and Bank of England governor, in a speech at an economics conference in March. “The long era of low inflation, suppressed volatility and easy financial conditions is ending.”
Target rate for
many central banks
Target rate for
many central banks
Target rate for
many central banks
Target rate for
many central banks
Target rate for
many central banks
This new era would mark an abrupt about-face after a decade in which central bankers worried more about the prospects of anemic economic growth and too-low inflation, and used monetary policy to spur expansions. It also would be a reversal for investors accustomed to low interest rates.
The challenges for policy makers will take center stage from Thursday to Saturday when they gather for the Kansas City Fed’s annual retreat in Jackson Hole, Wyo., being held in person for the first time since 2019.
The Fed could still succeed at curbing inflation by raising interest rates. Postpandemic headwinds might abate or fail to materialize if protectionism and geopolitical risks recede, labor productivity improves, a slowdown in China’s economy reduces demand for global commodities, or new technologies reduce the costs of developing new energy sources.
Mr. Powell with Mark Carney, then Bank of England Governor, in Jackson Hole, Wyo., in 2019.
Photo:
Amber Baesler/Associated Press
“Since the pandemic, we’ve been living in a world where the economy is being driven by very different forces,” Fed Chairman
Jerome Powell
said on a June panel discussion in Portugal. “What we don’t know is whether we will be going back to something that looks more like, or a little bit like, what we had before.”
European Central Bank President
Christine Lagarde
on the panel offered a more pessimistic appraisal: “I don’t think that we are going to go back to that environment of low inflation.”
The new environment reflects the stalling or potential reversal of three forces that pushed inflation down in recent decades by limiting workers’ ability to win higher wages and companies’ ability to raise prices.
• Force 1: Globalization. Increased flows of trade, money, people and ideas flourished with the Cold War’s end and China’s entry into the international trading system in the 1990s. Multinational companies using new technologies constructed global supply chains focused on driving down costs by finding the cheapest place and workers to produce products. Worldwide competition drove prices lower for many goods.
This helped keep U.S. inflation stable. Over the 20 years ending in 2019, U.S. goods prices rose an average of 0.4% a year, while services prices grew 2.6% annually, leaving “core inflation”—which excludes volatile food and energy prices—around 1.7%.
After the pandemic and the Ukraine war disrupted supply chains, many business leaders adopted new processes to increase reliability even if they cost more, such as by moving production closer to home or buying from multiple suppliers. And tensions between Western democracies and Russia and China raise concerns about a possible further retreat from globalization and rise of protectionism, which would raise production costs.
“If you had all of your supply chain in just one country, you have to question why take that risk in a world where pandemics could hit or country relations could deteriorate or wars could happen between countries,” said Richmond Fed President
Tom Barkin,
a former McKinsey & Co. executive. It is difficult to predict just how durable such changes will be, he added.
• Force 2: Labor markets. In an August 2020 book, “The Great Demographic Reversal,” former British central banker
Charles Goodhart
and economist Manoj Pradhan argued that the low inflation since the 1990s had less to do with central-bank policies and more with the addition of hundreds of millions of low-wage Asian and Eastern European workers, which held down labor costs and prices of manufactured goods exported to richer countries.
A farmworker adjusts sprinklers in Ventura County, Calif., in 2021.
Photo:
patrick t. fallon/Agence France-Presse/Getty Images
Mr. Goodhart wrote that global labor glut was giving way to an era of worker shortages, and hence higher inflation.
Meanwhile, the U.S. labor force has roughly 2.5 million fewer workers since the pandemic began, compared to what it would have if the prepandemic trend in workforce participation had continued and after accounting for the aging of the population, according to an analysis by Didem Tüzemen, an economist at the Kansas City Fed. Its growth had already slowed before Covid-19, reflecting an aging population, declining birthrates and less immigration. The slower growth rate of the U.S. workforce could force wages higher, feeding inflation.
Wages rose about 3% annually before the pandemic. Average hourly earnings grew 5.2% in the year ended in July.
Dotted lines are estimates
Without impacts of
aging labor force and
declining population
growth
Without impacts of
declining population
growth
Dotted lines are estimates
Without impacts of
aging labor force
and declining
population growth
Without impacts of
declining population
growth
Dotted lines are estimates
Without impacts of
aging labor force and
declining population
growth
Without impacts of
declining population
growth
Without impacts of aging labor force and declining
population growth
Without impacts of declining population growth
Dotted lines
are estimates
Without impacts of aging labor force and
declining population growth
Without impacts of declining
population growth
Dotted lines
are estimates
Roughly a million people moved to the U.S. annually in the years after the 2007-09 recession. That pace began to taper during the Trump administration and turned into a trickle after the pandemic started. The slowdown left the U.S. with 1.8 million fewer immigrants of working age—about 0.9% of the working-age population—than if pre-2019 immigration trends had continued, according to research by Giovanni Peri, a labor economist at the University of California, Davis.
Mr. Powell in a May interview pointed to the potential for reduced immigration to create a “persistent imbalance between supply and demand in the labor market.” He added: “If you have a slower growing labor market, you’re going to have a smaller economy.”
• Force 3: Energy, commodity prices. Energy and commodity firms haven’t heavily invested in new production over the past decade, creating risks of more persistent shortages when global demand is growing. When the Fed broke the back of high inflation in the early 1980s, then-Chairman Paul Volcker enjoyed some helpful tailwinds in the form of decadelong investments in oil.
Before the emergence of these three factors, the Fed could raise rates at a leisurely pace and could pursue policies that simultaneously kept unemployment and inflation low, something economists later dubbed the “divine coincidence.”
That was possible when the main threats to the economy were “demand shocks”—pullbacks in hiring, consumer spending and business investment—which slow both inflation and growth, as in the recessions of 2001 and 2007-09.
Ben Bernanke, then Fed chairman, testifies on Capitol Hill in 2008.
Photo:
Susan Walsh/ASSOCIATED PRESS
The Fed cut rates to near zero in 2008 to stimulate economic activity, held them there until 2015, then raised them at a glacial pace by historical standards. The unemployment rate fell below 4% in 2018, and inflation stayed at or just below the central bank’s 2% target. After raising the fed-funds rate to around 2.4% at the end of 2018, Mr. Powell cut rates slightly following a growth scare in 2019.
Those experiences heavily shaped the Fed’s initial response to the pandemic in 2020. Fearing another decade of sluggish growth and too-low inflation, it cut rates to near zero and promised to keep providing stimulus even after the White House and Congress aggressively boosted federal spending.
‘Supply shocks’
Rather than reducing economic demand, the forces that emerged during the pandemic were what economists call “supply shocks”—events that curtail the economy’s ability to provide goods and services, which in turn hurt growth and spurred inflation. Covid-19 lockdowns and stronger demand for goods disrupted supply chains, as did Russia’s Ukraine invasion and the West’s financial counterassault. Labor shortages emerged across the U.S.
With supply shocks, the Fed faces a harder trade-off between growth and inflation, because attacking inflation invariably means damping growth and employment. In such an environment, “there is no divine coincidence anymore,” said
Jean Boivin,
a former Bank of Canada official who heads the BlackRock Investment Institute.
The Fed and most other central banks initially misread the economy because, in early 2021, price increases could be traced clearly to the effects of the pandemic, affecting a small number of goods, such as used cars. By the end of the year, however, higher inflation had become increasingly broad-based.
One measure produced by the Dallas Fed, called a “trimmed mean” annual inflation rate, which excludes the most volatile categories to capture an underlying trend, rose from 2% last August to 3.5% in January and 4.3% in June.
“This is looking like the 1990s turned on its head,” said Stephen Cecchetti, a Brandeis University economics professor. “Every forecaster back then underestimated growth and overestimated inflation systemically for almost the whole decade. Now, it looks like we’re in for the reverse of this, which will be very, very unpleasant because it means we’re suddenly going to hit trade-offs.”
A wheat field burns after Russian shelling in Ukraine in July.
Photo:
Evgeniy Maloletka/Associated Press
The low-inflation environment of the past 30 years caused consumers and businesses to not think much about price increases. Fed officials now worry that even if prices rise temporarily, consumers and businesses could come to expect higher inflation to persist. That could help fuel higher inflation as workers demand higher pay that employers would pass onto consumers through higher prices.
“The risk is that because of a multiplicity of shocks, you start to transition to a higher-inflation regime,’’ Mr. Powell said on the June panel. “Our job is literally to prevent that from happening. And we will prevent that from happening.”
share your thoughts
How should the Federal Reserve respond to higher inflationary pressures? Join the conversation below.
Last year, Mr. Powell suggested he was skeptical of the idea that the forces underpinning globalization would shift overnight, as Mr. Goodhart suggested. But he has given more attention to the idea in the aftermath of the Ukraine war, which has highlighted the potential for significant economic and financial fallout from geopolitical conflicts.
By sending inflation, and especially energy prices, to such elevated levels, the war could serve as a trigger “to make people realize that inflation—and quite high inflation—is a real possibility,” said Mr. Goodhart. In turn, that could weaken the public’s confidence that “everything will go back to normal.”
“The argument of central banks, that they will get inflation back to target at 2% two years from now, is becoming increasingly implausible because they’ve said that all along and, of course, they haven’t achieved it,” he said.
Recession risk
The Fed’s aggressive interest-rate increases this year could be the first example of what happens with U.S. monetary policy in this new environment. Faster and bigger rate rises create greater risks of recession and could upend popular investment strategies by leading to more frequent losses for the two main components of traditional asset portfolios—stocks and long-term U.S. Treasury bonds.
The closed doors of the Pasadena, Calif., community job center during the coronavirus outbreak in May 2020.
Photo:
Damian Dovarganes/Associated Press
Fed officials have raised the fed-funds rate by a cumulative 2.25 percentage points this year, the fastest pace since they began using the rate as their primary policy-setting tool in the early 1990s. The rate influences other borrowing costs throughout the economy.
The Fed began with a quarter-point increase in March, followed by a half-point rise in May and increases of 0.75 point each in June and in July. At their meeting last month, officials debated how and when to dial back the pace of those increases, according to minutes of the meeting released Aug. 17.
An important shift occurred between Fed officials’ May and June meetings, when Mr. Powell secured consensus that they would need to raise rates high enough to slow growth. Through the summer, Fed officials have been unusually united over their goal, but if the labor market cools and the economy slows, Mr. Powell could face a trickier task forging agreement.
Several former Fed officials who have worked closely with Mr. Powell say he is likely to err on the side of raising rates too much, rather than too little, because tolerating excessive inflation would represent a much greater institutional failure for the central bank. Mr. Powell has hammered home the primacy of lowering inflation to the Fed’s 2% target.
“We can’t fail on this,” Mr. Powell told lawmakers on June 23, describing the Fed’s commitment as “unconditional.”
Write to Nick Timiraos at nick.timiraos@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
President Biden, Fed Chairman Jerome Powell Meet With Inflation at Its Highest in 40 Years
President Biden discussed steps to address high inflation at a White House meeting with Federal Reserve Chairman
Jerome Powell
as his administration signals growing urgency to ease rapidly rising prices that threaten the U.S. economy.
The Tuesday meeting highlighted how much the White House is relying on outside forces to help combat the highest inflation in four decades. Administration officials earlier had played down inflation worries while promoting the $1.9 trillion Covid-19 relief package in March 2021 and in seeking additional spending on healthcare, education and climate change last year.
It was the third meeting between the two men. They most recently met last November for Mr. Biden’s interview that led him to offer a second four-year term to Mr. Powell. They were joined Tuesday by Treasury Secretary
Janet Yellen,
who is Mr. Powell’s immediate predecessor as Fed chair.
Mr. Biden congratulated Mr. Powell on his recent Senate confirmation and promised to maintain a hands-off approach to the Fed. “I’m not going to interfere with their critically important work,” he said in remarks to reporters at the start of the meeting. “They have a laser focus on addressing inflation, just like I am.”
Brian Deese, the director of the White House National Economic Council, told reporters that it was “a very constructive meeting focused on the outlook for the U.S. and the global economy” but declined to provide details on the private meeting beyond noting Mr. Biden’s respect for the Fed’s independence.
Neither the White House nor the Fed provided additional detail on the meeting.
The Fed is in the process of raising interest rates at the most aggressive pace since the 1980s. Minutes from the Fed’s May 3-4 policy meeting, released last week, show the central bank is likely to lift its benchmark interest rate, currently in a range between 0.75% and 1%, by a half percentage point at its next two meetings, in June and July. The Fed raised rates by a half percentage point at its meeting in early May for the first time since 2000.
The Fed is trying to cool demand to moderate price pressures. But Mr. Powell has conceded that the central bank’s ability to do that without forcing the economy into a recession depends on developments outside the central bank’s control, including global energy markets that have been badly disrupted by Russia’s war in Ukraine and supply chains snarled by the Covid-19 pandemic.
“It is going to be a challenging task, and it’s been made more challenging in the last couple of months because of global events,” Mr. Powell said in an interview with The Wall Street Journal on May 17. Mr. Powell indicated the central bank could continue raising rates at a faster clip until it sees clear and convincing evidence that inflationary pressures are easing.
Mr. Biden’s meeting with Mr. Powell, who won Senate confirmation to a second term earlier in May, comes as the White House has been seeking to draw a sharper contrast with Republicans on the economy and inflation ahead of the fall midterm elections.
Senior White House advisers have expressed frustration in recent weeks with their messaging around inflation, according to people familiar with the matter. Some officials have said they should publicly accept that the administration’s stimulus contributed to higher prices while arguing that such steps were worthwhile, while others have been opposed to making such concessions.
Political advisers have trotted out different inflation counterattacks, for example, by linking higher prices to corporate greed or blaming them on Russian President
Vladimir Putin.
But economic advisers haven’t eagerly embraced those lines.
Mr. Biden also hasn’t said whether he would ease tariffs on certain Chinese imports, resolving an internal split. Several of his economic advisers, including Ms. Yellen, Commerce Secretary
Gina Raimondo
and members of the Council of Economic Advisers, have favored paring back tariffs imposed by President
Donald Trump
in an effort to reduce consumer costs. Trade Representative
Katherine Tai
and others are reluctant to relinquish U.S. leverage over China.
The administration, which together with the Fed once referred to rising inflation as “transitory,” has taken a number of other steps to demonstrate its commitment to easing price pressures but faces difficulty assuring Americans that rising costs will soon subside.
Consumer confidence has slumped amid rising prices of food and gas. Average gasoline prices reached $4.62 a gallon Tuesday. The global oil market could face additional strains following the European Union’s pledge to ban most Russian oil.
Gasoline prices have risen in recent months even as the Biden administration has tapped oil supplies from the U.S. Strategic Petroleum Reserve, releasing one million barrels of oil a day.
The Fed, meanwhile, has been blamed by lawmakers and economists for failing to move faster to withdraw monetary stimulus after Mr. Biden secured his Covid-19 relief spending in early 2021. The Fed initially believed that surging inflation would abate on its own, but the central bank abandoned that view in November in the midst of signs of growing labor-market imbalances.
Consumer prices rose 6.3% in April from a year earlier, slowing from 6.6% in March, as measured by the Commerce Department’s personal-consumption expenditures price index. So-called core prices—which exclude volatile food and energy prices—increased 4.9% in April from a year earlier, down from 5.2% in the year through March.
The White House’s decision to underscore the role of the Fed in tackling inflation is notable because it is one of the few times in the past 70 years where the country has faced high inflation and in which the government has explicitly called on the central bank to address those price pressures.
During episodes of high inflation after World War II and in the 1960s and 1970s, the White House often pressured the Fed against tightening monetary policy and sought to use other tools, such as tax increase or price controls, to rein in high prices.
The Fed’s autonomy to set interest rates without interference from the executive branch was established in 1951 after a showdown between the central bank and President
Harry Truman.
In 1970, President Richard Nixon put a loyal, longtime adviser,
Arthur Burns,
in charge of the Fed and made clear his low regard for the institution’s autonomy. “When we get through, this Fed won’t be independent if it’s the only thing I do in this office,” he said at the time.
The Fed throughout the 1970s both misread the U.S. economy and didn’t believe it had the authority to fight inflation if that required pushing the economy into a recession. Those mistakes prompted the Fed, under Paul Volcker in 1979, to raise interest rates to punishingly high levels, sparking a double-dip recession in the early 1980s that sent unemployment up sharply.
Mr. Biden, in a Wall Street Journal op-ed, again asserted that congressional Republicans wanted to increase taxes on many Americans and sunset programs such as Social Security and Medicare, based on a proposal from Sen. Rick Scott (R., Fla.), who leads the Senate GOP campaign arm. Republican leaders such as Senate Minority Leader
Mitch McConnell
(R., Ky.) have disavowed Mr. Scott’s plan.
Mr. Biden has pointed to strong job growth and low unemployment during his watch while acknowledging that high inflation is hurting the bottom lines of American households. In the op-ed, he said the administration would be seeking to bring inflation down and “move the economy to stable and steady growth.”
Administration officials were fanning out across cable television this week, with plans for Mr. Biden to cap the initiative with remarks after the coming May jobs report. White House officials said the president intends to focus heavily on his economic agenda in June through travel, events and policy announcements during the month.
“We can approach this challenge and we can focus our efforts on bringing inflation down without having to sacrifice all of the economic gains that we’ve made because of the unique position of strength that we are in because of the progress that we have made,” said the White House’s Mr. Deese.
Write to Nick Timiraos at nick.timiraos@wsj.com and Ken Thomas at ken.thomas@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Jerome Powell Will Face a Very Different Economy in a Second Term
Over his first term in office, Jerome Powell became arguably the most dovish chairman in the Federal Reserve’s modern history, giving priority to full employment in an era in which inflation seemed extinct. In his second term, he may have to execute the reverse: giving priority to inflation at the risk of sacrificing jobs.
The pivot could be painful for both Mr. Powell and President Biden. On Monday, Mr. Biden praised Mr. Powell for his commitment to “maximum employment” so that “American workers get steady wage increases after decades of stagnation, and…the benefits of economic growth are broadly shared.” Yet economic conditions have been substantially reordered in just the past year. Inflation, at 6.2%, is its highest in 31 years. While employment remains 4.2 million below its pre-pandemic peak, labor shortages are widespread, and wage growth is accelerating. All that threatens the Fed’s 2% inflation target.
Fed Chair Jerome Powell Faces Reappointment Amid Tumult
As Jerome H. Powell’s term as the chair of the Federal Reserve nears its expiration, President Biden’s decision over whether to keep him in the job has grown more complicated amid Senator Elizabeth Warren’s vocal opposition to his leadership and an ethics scandal that has engulfed his central bank.
Mr. Powell, whose four-year term as chair expires early next year, continues to have a good chance of being reappointed because he has earned respect within the White House for his aggressive use of the Fed’s tools in the wake of the pandemic recession, people familiar with the administration’s internal discussions said.
But the decision and the timing of an announcement remain subject to an unusually high level of uncertainty, even for a top economic appointment. The White House will most likely announce Mr. Biden’s choice in the coming weeks, but that, too, is tenuous.
The administration is preoccupied with other major priorities, including passing spending legislation and lifting the nation’s debt limit. But the uncertainty also reflects growing complications around Mr. Powell’s renomination. Ms. Warren, Democrat of Massachusetts, has blasted his track record on big bank regulation and last week called him a “dangerous man” to lead the central bank.
She has also taken aim at Mr. Powell for not preventing top Fed officials from trading securities in 2020, a year in which the central bank rescued markets, potentially giving the officials privileged information. Two regional presidents traded for their own profit in assets that the Fed’s actions could have influenced, according to recent disclosures. And Richard H. Clarida, the Fed’s vice chair, moved money from bond funds into stock funds in late February 2020, just before the Fed hinted that it would rescue markets and the economy.
“It is not clear why Chair Powell did not takes steps to prevent these activities,” Ms. Warren said during a Senate floor speech on Tuesday, after sending a letter on Monday calling for the Securities and Exchange Commission to investigate whether the transactions amounted to insider trading. “The responsibility to safeguard the integrity of the Federal Reserve rests squarely with him.”
On Tuesday, Karine Jean-Pierre, a White House spokeswoman, told reporters that Mr. Biden continued to “have confidence in Powell at this time.”
The White House’s decision over Mr. Powell’s future is pending at a critical moment for the U.S. economy. Millions of jobs are still missing compared with before the pandemic, and inflation has jumped higher as strong demand clashes with supply chain disruptions, presenting dueling challenges for the Fed chair to navigate. The Fed’s next leader will also shape its involvement in climate finance policy, a possible central bank digital currency and the response to the central bank’s ethics dilemma.
“This is starting to feel like an incredibly consequential time for the Fed,” said Dennis Kelleher, the chief executive of Better Markets, a group that has been critical of the Fed’s deregulatory moves in recent years and has criticized it for insufficient ethical oversight.
The administration is under pressure to make a prompt decision, in part because the Fed’s seven-person Board of Governors in Washington will soon face a spate of openings. One governor role is already open. Mr. Clarida’s term ends early next year, leaving another vacancy, and Randal K. Quarles’s term as the board’s vice chair for supervision will expire next week, although his term as a governor runs through 2032.
By announcing key picks soon, the Biden administration could ensure that someone was ready to step into Mr. Quarles’s leadership role. And nominating several officials at once could give the president a chance to show that he is heeding the concerns of Democrats in Congress, who want to see more diversity at the Fed and officials who favor tougher bank regulation.
But the ethics scandal threatens to complicate the picks.
Recent financial disclosures showed that Robert S. Kaplan at the Federal Reserve Bank of Dallas traded millions of dollars in individual stocks last year, and that Eric S. Rosengren at the Federal Reserve Bank of Boston traded real estate-tied securities even as he warned publicly about problems in that sector. The trades have drawn criticism because they occurred during a year in which the Fed hugely influenced a wide range of financial markets.
Both men resigned from their roles as regional presidents amid the controversy, though Mr. Rosengren said he was leaving for health reasons.
Attention has now turned to Mr. Clarida. All of his trades were in broad funds, not individual securities, and have been public since May, but have drawn attention amid the current reckoning. He sold a stake in a bond fund totaling at least $1 million and moved that money into stock funds on Feb. 27, 2020. The transaction gave him more exposure to stocks shortly before the Fed rolled out policies that goosed such investments.
The Fed has said Mr. Clarida’s trades were part of a planned portfolio rebalancing, but declined to specify when the planning happened.
Mr. Powell kicked off an internal ethics review last month. A Fed spokesperson said on Monday that an independent government watchdog would carry out an investigation into whether senior officials broke relevant ethics rules or laws.
But some progressives have seized on the problems to bolster their case that Mr. Powell should not be reappointed. Jeff Hauser, the founder and executive director of the Revolving Door Project, which has urged Mr. Biden to keep corporate influence out of his administration, has pointed out that the Fed chair himself moved money around last year, listing 26 transactions, albeit all in broad-based funds. He also noted that Lael Brainard, a Fed governor and a longtime favorite to replace Mr. Powell if he is not reappointed, did not report any transactions year.
“If you’re trying to go above and beyond, and be beyond reproach, not trading is the better option,” Mr. Hauser said.
It is not clear how much the blowback will ultimately fall on Mr. Powell. During his testimony to a Senate committee last week, lawmakers asked him about the ethics issues without explicitly blaming him for them.
The trades were not historically abnormal. Mr. Kaplan transacted in stocks throughout his tenure, including when Mr. Powell’s predecessor, Treasury Secretary Janet L. Yellen, led the central bank. Ms. Yellen’s vice chair, Stanley Fischer, bought and sold individual stocks, his 2017 disclosures showed. Ms. Brainard herself has in the past made broad-based transactions. It was the Fed’s more expansive role in 2020 that spurred the backlash.
Agencies often need a “wake-up call” to notice evolving problems with their oversight rules, said Norman Eisen, a senior fellow at the Brookings Institution and an ethics adviser in President Barack Obama’s White House.
“My own view is that Chair Powell is pivoting briskly to address the weaknesses in the Fed’s ethics system,” he said.
Ms. Warren cited regulation, not ethics issues, upon first announcing that she would not support Mr. Powell. Democrats have raised concerns for years about the deregulatory approach that the Fed has embraced under Mr. Quarles’s leadership. Mr. Powell has largely deferred to his vice chair for supervision as the central bank made bank stress tests more transparent and enabled big banks to become more intertwined with venture capital.
Critics say reappointing Mr. Powell amounts to retaining that more hands-off regulatory approach. And some progressive groups suggest that if Mr. Powell stays in place, Mr. Quarles will feel emboldened to stick around: He has hinted that he might stay on as a Fed governor once his leadership term ends.
That would mean four of seven Fed Board officials — a majority — would remain Republican-appointed. Two other governors — Michelle W. Bowman and Christopher J. Waller — were nominated by President Donald J. Trump.
During Mr. Powell’s Senate testimony last week, Ms. Warren said renominating him as chair meant “gambling that, for the next five years, a Republican majority at the Federal Reserve, with a Republican chair who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again.”
Even without Ms. Warren’s approval, Mr. Powell would most likely draw enough support to clear the Senate Banking Committee, the first step before the full Senate could vote on his nomination, because of his continued backing from the committee’s Republicans. But having a powerful Democratic opponent whose support the administration needs on other legislative priorities is not helpful.
The Fed chair does have some powerful allies in the administration, including Ms. Yellen, the Treasury secretary. But the decision rests with Mr. Biden.
“I know he will talk to many people and consider a wide range of evidence and opinions,” Ms. Yellen said on CNBC on Tuesday.
Jerome Adams says CDC relaxing mask guidance is ‘premature’
Jerome Adams, the surgeon general in the Trump administration, said the Centers for Disease Control and Prevention’s relaxing masking guidelines amid a surge in coronavirus infections because of the delta variant “premature.”
“Last year Tony Fauci and I famously, prematurely, & wrongly advised against masks. I felt it was the best call at the time, but now regret it. I’m worried the CDC also made a similarly premature, misinterpreted, yet still harmful call on masking in the face of delta variant,” Adams said in a series of postings on Twitter Saturday.
He said the mask guidelines should pertain to areas where coronavirus cases are increasing and vaccine rates are declining.
Adams made the comments a day after current CDC Director Rochelle Walensky warned of a “pandemic of the unvaccinated” as the delta variant spreads across the country.
“We are seeing outbreaks of cases in parts of the country that have low vaccination coverage, because unvaccinated people are at risk.”
In Los Angeles County, a mandate took effect on Saturday that requires both vaccinated and unvaccinated people wear masks indoors.
Adams blamed the confusion on the changing science around the novel coronavirus, which was first reported in December 2019 in China.
”What Dr. Fauci and I said was based on the science & conditions at the time, and amounted to ’save the medical masks (which were all that was available) for the medical workers.’ Both the conditions & the science changed, but what people heard and held to was masks don’t work,” he said in another posting.
“What @CDCgov said was based on the science & conditions at the time, and amounted to ‘you’re safe IF you vax it OR mask it,’” Adams said. “Both the conditions (rising cases) & the science (delta variant) changed, but what people heard and held to was masks were no longer needed.”
He predicted that states will soon enact mask mandates like Los Angeles County that “conflict with mask guidance @CDCgov issued a month ago.”
“The sooner CDC says we were wrong & hits the reset button, the better. Trust me - I know more than anyone,” he said.
Adams said based on the emerging data, the CDC should be advising people to “vax it AND mask it” in areas with increasing coronavirus cases and positivity rates.
“CDC was well intended, but the message was misinterpreted, premature, & wrong. Let’s fix it,” he said.
New infections spiked 70 percent from the previous seven-day average to about 26,300 cases, Walensky said during a briefing on Friday.
At the same time, hospital admissions jumped 36 percent to about 2,790 a day, while deaths from coronavirus rose 26 percent to 211 per day.
According to the CDC, more than 160 million Americans are vaccinated, representing about 48 percent of the population.
Business News Live: Elon Musk, Bitcoin and Jerome Powell
Treasury Secretary Janet L. Yellen said on Wednesday that she is grappling with a host of “thorny” issues related to a provision in the $1.9 trillion stimulus package that restricts states from using federal aid money to fund tax cuts, suggesting that the looming legal battle over the matter could be long and complicated.
At a Senate Banking Committee hearing, Ms. Yellen said her team at the Treasury Department was working on developing guidance on how the $200 billion allocated for states and cities can be used.
The Treasury Department has said the intent of the law is for the relief money to pay for matters related to the coronavirus pandemic, not to subsidize tax cuts.
But Ms. Yellen acknowledged that the issue is a “thorny” one.
“We will have to define what it means to use money from this act as an offset for tax cuts,” Ms. Yellen said. “Given the fungibility of money, it’s a hard question to answer.”
The Treasury Department has 60 days from when the law was enacted to craft guidance on how the money can be spent. Ms. Yellen said she believes that states and cities should have a lot of flexibility in how they deploy the funds.
Last week, the Ohio attorney general sought a preliminary injunction that would bar the federal government’s ability to enforce what he described as the “tax mandate.”
Several Republican governors and 21 Republican attorneys general have asked for clarification on the provision. Ms. Yellen wrote a letter to the attorneys general on Tuesday evening explaining why there are restrictions on the use of the funds. She foreshadowed the legal argument that Treasury might use if litigation moves forward.
“It is well-established that Congress may place such reasonable conditions on how states may use federal funding,” she wrote. “Congress includes those sorts of reasonable funding conditions in legislation routinely, including with respect to funding for Medicaid, education and highways.”
Senator Mike Crapo, Republican of Idaho, urged Ms. Yellen to provide clear guidance for states quickly.
“It seems to me the states are hamstrung right now. They can’t do anything,” he said.
America’s top two economic officials told senators on Wednesday that the economy is healing but still in a deep hole, and that continued government support is providing a critical lifeline to families and businesses.
Jerome H. Powell, the Federal Reserve chair, and Janet L. Yellen, the Treasury Secretary and Mr. Powell’s immediate predecessor at the Fed, are testifying before the Senate Banking Committee. Their prepared comments echoed their testimony before House lawmakers on Tuesday.
Mr. Powell said in his remarks that the government averted the worst possible outcomes in the pandemic economic recession with its aggressive spending response and super-low Fed interest rates.
“But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes,” he said.
Ms. Yellen, who pushed hard for the recently-passed $1.9 trillion relief package, said that responding to a crisis with a needed surge of temporary spending without paying for it was “appropriate.”
“Longer-run, we do have to raise revenue to support permanent spending that we want to do,” she said.
She said that expanded unemployment insurance, part of the recent relief package, does not seem to be discouraging work and is needed at a time when the labor market is not at full strength.
“While unemployment remains high, it’s important to provide the supplementary relief,” Ms. Yellen said, noting that the aid lasts until the fall. She said that as the economy recovers, the aid “should be phased out.”
The Biden administration is also making plans for a $3 trillion infrastructure package. The fact that the government is spending so much, and contemplating spending more, at a time when the economy is recovering has stoked concerns about inflation among some economists and lawmakers.
Some onlookers fear that the Fed, which has interest rates at rock-bottom and is buying bonds in big quantities to help the economy, might be too slow to react to higher prices.
“I do worry that the Fed may be behind the curve when inflation inevitably picks up,” Senator Patrick J. Toomey, Republican from Pennsylvania, said during his opening remarks.
But Mr. Powell has consistently pushed back on concerns about runaway inflation, and did so again on Wednesday.
“We think the inflation dynamics that we’ve seen around the world for a quarter-century are essentially intact — we’ve got a world that’s short of demand, with very low inflation,” Mr. Powell said. “We think those dynamics haven’t gone away overnight, and won’t.”
Asked specifically about potential supply and demand mismatches — particularly in the context of a ship that had gotten stuck in the Suez Canal, but also in general as the economy reopens — he struck a similarly unconcerned tone.
“A bottleneck, by definition, is temporary,” he said.
He also batted back concerns about a recent increase in market-based interest rates. The yield on 10-year Treasury notes, a closely watched government bond, has moved up since the start of the year.
“Rates have responded to news about vaccination, and ultimately, about growth,” Mr. Powell said. “That has been an orderly process. I would be concerned if it were not an orderly process, or if conditions were to tighten to a point where they might threaten our recovery.”
The fashion retailer H&M is facing a potential boycott by millions of consumers in China after a statement by the company expressing deep concerns over reports of forced labor in Xinjiang stirred a social media storm this week.
The statement, which can be found on the website of the Swedish retailer, was posted last September after growing global scrutiny around use of Uyghur forced labor in the Xinjiang region of China.
In it, H&M said that it was “deeply concerned by reports from civil society organizations and media that include accusations of forced labor and discrimination of ethno-religious minorities” in Xinjiang and that it had ended sourcing cotton from growers in the region.
More than eight months later, and in the wake of sanctions by Western countries against China for its treatment of Uyghurs, H&M is now facing an angry online backlash from Chinese consumers. The outrage has been stoked by comments from celebrities and groups like the Communist Youth League, an influential Communist Party organization.
“Want to make money in China while spreading false rumors and boycotting Xinjiang cotton? Wishful thinking!” the group said in a post, echoing one of the People’s Liberation Army’s statements that called H&M’s statement “ignorant and arrogant.”
By Wednesday evening, at least three major Chinese e-commerce platforms — Pinduoduo, Jingdong and Tmall — had removed H&M from search results and withdrawn its products from sale, underscoring the pressures faced by foreign companies doing business in China while navigating political and cultural debates ranging from the country’s sovereignty to its checkered human rights record.
On Wednesday night, H&M China responded with a post on the Sina Weibo microblogging site, saying that the company did not “represent any political position.”
“H&M Group respects Chinese consumers as always,” the statement said. “We are committed to long-term investment and development in China.”
H&M is the world’s second-largest fashion retailer by sales, and China is its fourth-biggest market.
On Monday the European Union, United States, Britain and Canada announced sanctions on Chinese officials in an escalating row over the treatment of Uyghurs, in Xinjiang. Roughly one in five cotton garments sold globally contains cotton or yarn from the region, where authorities have used coercive labor programs and mass internment to remold as many as one million Uyghurs, Kazakhs and other largely Muslim minorities into model workers obedient to the Communist Party.
State broadcaster CCTV criticized H&M, and said that it was “a miscalculation to try to play a righteous hero.” H&M, it said, “will definitely pay a heavy price for its wrong action.”
Claire Fu contributed reporting.
Journalists at Stat, the medical and science news website lauded for its pandemic coverage, will join the Boston Newspaper Guild, union representatives said in a statement Wednesday.
Stat, headquartered in Boston, focuses on science, health and biotech journalism and has close to 40 editorial staff members. It was one of the first outlets to extensively cover the outbreak of the coronavirus in January 2020 and saw a boost in traffic and revenue in the past year as its ambitious coverage gained attention. Helen Branswell, Stat’s infectious disease reporter, won the 2020 George Polk public service award for her work covering the pandemic.
Damian Garde, a biotech reporter for Stat, said in an interview that workers hoped union protections would help make Stat an even more attractive and competitive employer.
“When people look at the Stat trajectory, they point to my colleague Helen Branswell’s very prescient coverage ahead of the Covid-19 pandemic really becoming what it would become,” he said. “And I think one of the lessons there is: If you invest in people like Helen Branswell, you, too, can have prescient coverage.”
Stat, which was started in 2015 by the Boston Red Sox owner John W. Henry, is produced by Boston Globe Media Partners, the parent company of The Boston Globe newspaper, which is owned by Mr. Henry and his wife, Linda Pizzuti Henry. The two publications have separate staffs.
Scott Steeves, the president of the Boston Newspaper Guild, said in a statement that the addition of Stat workers would mean a stronger voice for the union.
“At a time when independent journalism is so important, Guild members strive to deliver the highest-quality news product possible while also standing together to ensure economic and workplace protections,” he said.
Mr. Garde said the union eligibility of certain Stat employees was still under discussion as part of the ongoing negotiations between the Boston Newspaper Guild and Globe management. Globe union employees have been without a contract for more than two years as a standoff over a new contract continues.
Globe management did not immediately respond to a request for comment.
The Boston Newspaper Guild is affiliated with the NewsGuild, which also represents New York Times employees.
Elon Musk, the chief executive of Tesla who recently added “Technoking” to his title, said on Wednesday that the company would accept Bitcoin as payment for cars in the United States, a move that is at odds with the company’s image as an environmentally friendly electric-car maker.
Tesla will hold the digital currency, rather than convert payments to dollars, and handle the crypto transactions internally, Mr. Musk said.
“Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,” Mr. Musk explained in a tweet. That means when someone buys a Tesla with Bitcoin, the price of the car could well rise — or fall — over time. In other words, Tesla is turning one-time payments into assets with shifting value, or, essentially, investments.
Buyers outside the United States will have the option to use Bitcoin “later this year,” Mr. Musk said.
Mr. Musk’s embrace of Bitcoin is hailed by many cryptocurrency enthusiasts, but the digital currency’s affect on climate change has come under increasing scrutiny.
“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing,” Bill Gates recently told The New York Times. Depending on the study, the annual carbon emissions from the electricity required to mine Bitcoin and process its transactions are equal to the amount emitted by all of New Zealand. Or Argentina.
There is also an electronic waste problem associated with bitcoin mining, argues Alex de Vries, an economist who created the Bitcoin Energy Consumption Index and tracks the unintended consequences of digital trends. Bitcoin mining is done with highly specialized equipment that has a short life span, and the tools cannot be repurposed, making investment in the digital currency even more problematic from an environmental perspective, he told The Times.
Mr. Musk said last month that the company bought $1.5 billion in Bitcoin for its treasury. The announcement on Wednesday confirms speculation in the crypto community that Tesla would not simply contract out payments to a third-party processor and treat Bitcoin like dollars.
Since Tesla’s Bitcoin purchase in February, the price of Bitcoin and other cryptocurrencies has soared to record highs, but trading has been volatile.
Analysts are pleased with the symbolism at least. “This is a seminal moment for Tesla and for the crypto world,” wrote Daniel Ives and Strecker Backe, analysts at the investment firm Wedbush. “This morning’s news formalizes the strategy of Musk and Tesla diving into the deep end of the pool of bitcoin and crypto from a transactional perspective.”
The comedian John Cleese is selling a digital sketch that comes with a nonfungible token, or NFT, to authenticate its authorship via blockchain technology. It’s a joke, sort of.
Evoking a classic con, the sale of the Brooklyn Bridge, the Monty Python actor is auctioning an image of the bridge by “The Unnamed Artist John Cleese,” with bidding running through April Fools’ Day. “I don’t make the jokes,” Mr. Cleese told the DealBook newsletter. “I just point them out.”
The project highlights the hyper-commodification of art in a frenzied market. Christie’s recently held its first NFT auction, selling the work of an artist known as Beeple for $69,346,250. That’s how much Mr. Cleese is asking for the sketch (plus 50 cents) if a bidder wants to “buy it now.” He’ll split the proceeds evenly with his partners: a comedy writer, an animator and a law professor doubling as crypto consultant.
The highest bid for Mr. Cleese’s work is now about $36,000. “I think it’s very funny,” Mr. Cleese said. “At the same time, we might make some money.”
Hello! It is time you meet my alter ego “Unnamed Artist” I’m delighted to offer you the opportunity of a lifetime. I’m selling my 1st NFT. Though bidding starts at 100.00, you can “BUY IT NOW” for 69,346,250.50! https://t.co/Vuyx4trvPE pic.twitter.com/aC4oSVfGHF
— The Unnamed Artist (@JohnCleese) March 19, 2021
“Some things are worth pointing out, and some are not,” Mr. Cleese said. The Beeple sale was notable because it revealed a “mad world,” he added, with people disconnected from meaningful emotional experiences, like seeing a painting at a gallery. Yet the 81-year-old also conceded that someone younger, for whom the line between the physical and digital worlds is more blurred, could have feelings about an NFT.
The art world can’t afford to dismiss NFTs, Mr. Cleese said. Nor can he. By mocking the craze, he is now implicated in the thing he finds absurd — just how he’s made a living as a comedian.
Robinhood, the stock-trading app, said on Tuesday that it had filed a draft registration to go public, joining a wave of financial technology companies that plan to list on the stock market or that have raised new funding.
The exact timing or price of the offering has not been set. Private market investors have valued Robinhood at roughly $12 billion and some have speculated its initial public offering could top $20 billion. It is working with Goldman Sachs on its offering, a person familiar with the company said.
Robinhood used a process known as filing confidentially that allows it to keep some details under wraps in the early part of going public.
Financial technology companies have been booming. Coinbase, a cryptocurrency start-up, is expected to list its shares in the coming weeks, with investors estimating that it could be worth as much as $100 billion. Stripe, a start-up that offers payment processing services, raised funding this month that valued it at $95 billion, making it the most valuable start-up in the United States.
Robinhood began making plans to go public last year after its growth spiked in the pandemic, with some people using their stimulus checks to day trade.
But it paused those plans in January when a group of online traders banned together to drive up the stock prices of so-called “meme stocks” like GameStop, causing short-sellers to lose money and forcing the exchanges to halt trading of some stocks.
Amid the frenzy, Robinhood restricted the trading of some stocks, outraging many of its users and drawing nearly 50 lawsuits and multiple probes from regulators. Vlad Tenev, the company’s chief executive, was called to testify in front of Congress about the market frenzy and Robinhood’s role in it.
Despite the anger, the GameStop incident boosted Robinhood’s name recognition and led to more downloads of its app, which is popular because it charges no fees for stock trading. Robinhood has been criticized for making day trading into a gambling-like game, where investors don’t always understand the risk they are taking on.
Private investors have stood by the Menlo Park, Calif.-based company. During the frenzy, Robinhood raised two rounds of emergency funding totaling $4.4 billion in a matter of days.
Stocks on Wall Street rebounded on Wednesday, while shares in Europe were slightly lower. Oil prices climbed, also rebounding from a recent decline, after a container ship blocked traffic in the Suez Canal.
United States
-
The S&P 500 index rose about half a percent in early trading, while the Nasdaq composite was flat.
-
Yields on government bonds ticked higher. The yield on 10-Year Treasury notes was at 1.64 percent. Yields had declined on Tuesday after Jerome H. Powell, the Federal Reserve chair, continued to play down the prospects of high sustained inflation.
-
Intel rose about 2 percent in early trading. The company said on Tuesday that it planned to spend $20 billion on two new chip factories near facilities in Arizona amid a global shortage.
-
GameStop dropped about 20 percent after quarterly earnings released on Tuesday missed expectations and the company said in a filing it could sell additional shares.
-
Tesla’s shares were slightly lower after Elon Musk said the carmaker would accept Bitcoin, the cryptocurrency, as payment for cars in the United States.
Europe
-
The eurozone purchasing managers’ index for manufacturing and services for March was above 50 — the line between contraction and expansion — for the first time since October. Germany manufacturing output was at a record high and the index for British services rose to 56.8, well above expectations for a reading of 51.
-
The benchmark Stoxx Europe 600 index was 0.2 percent weaker, after opening 0.7 percent down. The FTSE 100 index in Britain was down 0.3 percent.
-
Data showed that inflation in Britain unexpectedly fell to an annual rate of 0.4 percent in February from 0.7 percent the month before. Analysts at RBC said they still expected inflation to rise in coming months, but the lower-than-expected February data reflected the pandemic’s disruption to normal seasonal price patterns. For example, clothing prices didn’t rise in the new year after the traditional sales period.
Oil Prices
-
Oil prices rose after a container ship got stuck in the Suez Canal, blocking traffic in one of the world’s busiest shipping arteries. The canal is important for the movement of oil as it travels from the Persian Gulf region to Europe and North America. Brent crude futures rose as much as 3.3 percent, to just under $63 a barrel, but then eased slightly after reports that the vessel had been refloated and workers were hoping to clear a space for shipping to resume.
-
Intel’s new chief executive is doubling down on chip manufacturing in the United States and Europe, a surprise bet that could please government officials worried about component shortages and dependence on factories in Asia. Patrick Gelsinger, who took the top job in February, said on Tuesday that he planned to spend $20 billion on two new factories near existing facilities in Arizona. He also vowed that Intel would become a major manufacturer of chips for other companies, in addition to producing the processors that it has long designed and sold.
-
Walt Disney Studios on Tuesday pushed back the release dates of six movies, including “Black Widow,” a hotly anticipated Marvel prequel. In addition, “Black Widow,” now scheduled for July 9 instead of May 7, and another major Disney movie, “Cruella” (May 28), will premiere on Disney+ at the same time they arrive in theaters. Disney pulled “Luca,” the next Pixar film, from theatrical release entirely, saying it would debut exclusively on Disney+ on June 18. The other movies that were delayed include “Free Guy,” an action-comedy starring Ryan Reynolds as a bank teller who finds himself inside a video game; “Shang-Chi and the Legend of the Ten Rings,” a Marvel extravaganza starring Simu Lieu alongside Awkwafina; and “Death on the Nile,” an all-star remake based on the Agatha Christie mystery.
-
Shares of GameStop tumbled in after-hours trading on Tuesday as quarterly earnings missed expectations and the company said in a filing it could sell additional shares. The company’s stock was down roughly 12 percent shortly after 6 p.m. The stock began to slide after the company said in a separate filing with the Securities and Exchange Commission that it was evaluating whether to sell additional stock “primarily to fund the acceleration of our future transformation initiatives.”
Watch Fed Chair Jerome Powell speak live to the Economic Club of New York
[The stream is slated to start at 2 p.m. ET. Please refresh the page if you do not see a player above at that time.]
Federal Reserve Chairman Jerome Powell speaks Wednesday to the Economic Club of New York on the “State of the U.S. Labor Market.”
The speech comes as job gains have slowed considerably after a rapid recovery following pandemic-inducted layoffs in March and April. Though nonfarm payrolls have recovered more than 12 million of the lost positions, primarily in the hospitality and health care professions, more than 10 million workers remain unemployed.
After seeing a loss of 227,000 in December, nonfarm payrolls grew by 49,000 in January and the unemployment rate fell to 6.3%.
The Fed has made inclusive employment gains a priority and has said it will not raise interest rates until it sees substantial progress towards that goal.
Read more
Job openings increased toward the end of 2020, but a big employment gap remains
Even with unprecedented gains, the jobs market is still struggling to get back to normal
Fed’s Bostic says economy could recover more quickly than expected
Subscribe to CNBC on YouTube.