White House celebrates falling inflation while GOP points to negative real wages

Haisten Willis

May 10, 11:14 AM May 10, 11:14 AM

The White House celebrated falling inflation even as real wages remain in negative territory.

Inflation fell slightly to 4.9% for the month ending in April, a welcome sign that the Federal Reserve's efforts to tame price growth are working. However, the figure is still far above the Fed's 2% target.

TRANSPARENCY RESTORED TO THE WHITE HOUSE?

"With today's report, annual inflation has come down 45% since last summer," a statement from White House press secretary Karine Jean-Pierre reads. "The annual inflation rate has now come down 10 months in a row at a time when our economy and job market are strong, with the unemployment rate at its lowest level in more than 50 years."

Inflation had been running at 5% the month before and peaked at 9.1% last June. Prices overall grew by 0.4 percentage points between March and April (as opposed to an annual basis), according to the consumer price index.

The Biden administration also pointed to gas prices, which are down by close to $1.50 a gallon, on average, since last summer, along with slight dips in grocery prices.

The Republican National Committee released its own statement pointing to 25 consecutive months of negative real wages, which means that people, on average, have seen their spending power decline over the last two years.

"Core consumer prices, excluding food and energy, rose 5.5 percent compared to last year as Bidenflation refuses to break," reads the statement from RNC spokesman Tommy Pigott. "Real wages have been negative ever since Biden forced through his $1.9 trillion 'stimulus.' Now, Biden is threatening default in an attempt to double down on his destructive, inflationary agenda that sent prices surging."

Jean-Pierre referenced the debt ceiling battle in her statement as well.

"With all this progress, the single biggest threat to our economy would be if House Republicans fail to prevent default," she said. "As the president said to congressional leaders yesterday, we must take default off the table — and then have a separate conversation about the budget."

SVB collapse: Banks borrowed $164.8 billion from Fed in past week

Samuel Schaffer

March 16, 08:48 PM March 16, 08:48 PM

Banks borrowed nearly $165 billion in emergency funds from the Federal Reserve in the past week.

The record-setting amount is up from $4.58 billion the previous week. The immense increase in borrowing is a sign of escalated funding strains in the wake of the collapse of Silicon Valley Bank.

HUNTER BIDEN SUSPICIOUS ACTIVITY REPORTS CAN BE REVIEWED BY HOUSE GOP

The previous record high for emergency cash borrowed was set during the 2008 financial crisis and was $111 billion, according to Bloomberg.

Nearly $12 billion of the emergency funds was reportedly borrowed from the Fed’s new Bank Term Funding Program, which is geared toward providing extra funds for banks when they need the liquidity, according to the Fed.

The program is a new option this week and was announced Sunday.

News of the increased borrowing comes as the international financial industry struggles with uncertainty. SVB was shut down last week, and Credit Suisse had to borrow over $50 billion from the Swiss National Bank.

Thursday, a government-led $30 billion rescue effort was announced to save First Republic Bank and stave public panic.

SVB collapse: Federal Reserve launches review of bank failure

Misty Severi

March 13, 08:15 PM March 13, 08:15 PM

The Federal Reserve launched a review of its oversight and regulation of Silicon Valley Bank on Monday after the bank collapsed Friday.

Fed Chairman Jerome Powell announced that Vice Chairman for Supervision Michael Barr would lead the review. The report will be released to the public on May 1, 2023.

SVB COLLAPSE: SENATE GOP GETS SECOND BRIEFING ON BANK FAILURE AFTER BEING 'EXCLUDED' FROM FIRST

"The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve," Powell said in a news release.

SVB, which was the 16th largest federally insured bank, was closed by regulators in the state Friday. The shutdown came after attempts to raise capital failed. The bank failure is the largest since 2008. The bank scared investors earlier in the week when it announced that it sold off Treasurys at a loss, causing a run on the bank.

Barr supported the review, agreeing that the bank closure deserved a careful examination of the supervision and regulation the reserve used on the firm.

"We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience," Barr said in the release.

Although there are fears that the failure of SVB and subsequent closure of the New York-based Signature Bank, which closed on Sunday, was a repeat of the 2008 economic crisis, White House press secretary Karine Jean-Pierre told reporters that was not the case.

"This is not 2008," Jean-Pierre said. "The Obama-Biden administration put in place tough requirements to ensure banks have more capital and sufficient liquid assets. Depositors have more protection for their deposits, and regulators have the tools to supervise larger institutions that deal with disruptions."

President Joe Biden said the federal government will not bail out the banks, but he guaranteed SVB would have deposits, including uninsured amounts, so customers would have access to their money as early as Monday.

"All customers who had deposits at these banks can rest assured, rest assured they'll be protected and they'll have access to their money as of today. That includes small businesses across the country that bank there and need to make payroll, pay their bills, and stay open for business," Biden said Monday morning. "No losses will be borne by the taxpayers."

Stocks fall back into bear current market territory amid recession fears

Zachary Halaschak

June 13, 09:39 AM June 13, 09:39 AM

Stocks plunged back into bear sector territory on Monday as traders ever more stress that a recession or stagflation is on the horizon.

The S&P 500 fell 2.4% to enter into a bear market place. A bear sector is when an index drops to underneath 20% from a the latest large. The S&P 500 has fallen 20.6% considering that the commence of the 12 months, its most latest peak.

The Chicago Board Alternatives Exchange Volatility Index, far better recognized as the VIX, is intended to gauge concern in the marketplaces. The index was up a lot more than 83% given that the start off of the year, an enormous leap that shows the excessive stress and anxiety buyers have about the economy’s foreseeable future.

Shares had formerly entered a bear market place briefly previous week, but they managed to claw back some of all those losses before tumbling back again into the pink all over again on Tuesday/Wednesday.

NEW House Gross sales Drop TO PRE-PANDEMIC Ranges

The last sustained bear market place was a limited period of time at the begin of the coronavirus pandemic. Prior to the pandemic, the previous time the economy experienced a bear marketplace was in the course of the economical disaster far more than a ten years ago, which lasted for 517 times.

A driving factor driving the rout in the stock marketplace is the Federal Reserve’s financial tightening. Just after many years of ultra-unfastened financial coverage, with curiosity fees at around zero, the Fed is now functioning to swiftly raise prices in an effort to crush the country’s spiraling inflation.

Customer selling prices amplified an explosive 8.6% in May perhaps on an once-a-year foundation, the best rate of inflation due to the fact the early 1980s. The Fed has indicated it strategies to hike curiosity charges several times this calendar year, which may mean the bear market place will have some staying electrical power. The inflation report came in hotter than anticipated and brought on amplified panic in the markets on Friday and Monday.

The central bank enhanced its desire level goal by a quarter of a share stage in March and subsequently hiked rates by half a percentage position before this month.

The fifty percent-issue hike is analogous to two simultaneous price improves and shows that the central bank is rising ever more much more concerned about inflation. The last time the Fed designed these types of an aggressive transfer was much more than two decades back.

By elevating curiosity prices, the Fed hopes to gradual shelling out. Some market place-watchers dread that, mainly because the Fed is now transferring so aggressively, it will sluggish the financial system down far too much and result in a recession.

Some investors have expected that if the inventory sector drops as well precipitously the Fed will intervene and pause its rate hike cycle or even slash costs, whilst presented the historic amounts of inflation it appears that the central bank has no intentions of carrying out so, even if it implies stocks will carry on to crater.

Federal Reserve Financial institution of Kansas City President Esther George recently signaled that Fed management would not be drawn off course by stock market declines.

“I assume what we are looking for is the transmission of our plan by way of markets' comprehension, and that tightening should really be predicted,” she explained. “It is a person of the avenues by way of which tighter monetary situations will emerge.”

There are also issues about stagflation. Stagflation, a portmanteau of stagnation and inflation, is when inflation is growing at the identical time that economic development and the labor current market are struggling.

The term is usually made use of to describe the U.S. economic system of the 1970s when both equally inflation and unemployment have been high. At the time, a lot of major economists imagined these a problem was unattainable, as it was believed that substantial inflation could be traded off for reduced unemployment.

Bear markets and inventory selloffs do not essentially point out a recession, but they often go hand-in-hand.

The Countrywide Bureau of Economic Investigate, a personal academic group, defines a economic downturn as “a sizeable decline in economic exercise that is unfold throughout the economic system and that lasts a lot more than a several months.”

Whilst gross domestic product or service declined by a 1.4% once-a-year level in the to start with quarter of this calendar year, most forecasters are projecting that there will be favourable expansion for the next quarter, a reassuring prediction for all those fearing a economic downturn.

However, quite a few economists think a economic downturn could be ideal all over the corner.

Goldman Sachs assigns a 35% possibility of a economic downturn in the subsequent two yrs, although Wells Fargo’s economic design tasks a 30% opportunity of a recession transpiring in the up coming six months by itself.

As the Fed carries on to elevate fascination charges all eyes will be on the inventory current market to see what occurs future. Best Fed officers are established to fulfill in June and July, and many traders foresee far more of the intense half-stage hikes pursuing those gatherings.