Powell: Higher rates may not lead to deep US recession
WASHINGTON — The last time the Federal Reserve faced inflation as high as it is now, in the early 1980s, it jacked interest rates to double-digit levels — and in the process created a deep recession and sharply high unemployment. On Thursday, Chair Jerome Powell suggested that this time, the Fed need not go that far. “We think we can avoid the high social costs that Paul Volcker and the Fed had to come up with to bring down inflation,” Powell said in an interview at the Cato Institute, referring to the Fed chair in the early 1980s who sent punitive measures to curb high inflation. Short term loan rates are up to around 19%.
Stocks recover from a stumble on Wall Street and end higher
NEW YORK – The stock market recovered from a midday stumble and ended higher, on track for its first weekly gain in four weeks. The S&P 500 rose 0.7% on Thursday. The Nasdaq Composite and Dow Jones Industrial Average ended higher after their own bumpy rides. Interest rate policies were in focus as the European Central Bank raised its largest rate ever, in line with moves by the US Federal Reserve and other central banks to fight inflation. Meanwhile, Fed Chair Jerome Powell reiterated the Fed’s commitment to keep rates high “until the job is done” to control inflation.
Yellen pushed Biden’s economic plans in battleground Michigan
WASHINGTON — Treasury Secretary Janet Yellen pressed the case for Democratic economic policy during a visit to Ford’s Rouge electric vehicle assembly plant in election-year battleground Michigan. After a production-line tour, Yellen touted recent legislative successes for the Biden administration. Yellen said she was more optimistic about the economy’s trajectory than she had been for “quite a while” and said she knew “we’re headed in the right direction.” Yellen’s visit to Detroit was part of a month-long tour as well as a larger White House campaign to introduce new legislation intended to help the economy, boost computer chip manufacturing, lower prescription drug prices, expand clean energy and rebuild the nation’s infrastructure.
Fewer Americans applied for unemployment benefits last week
WASHINGTON — The number of Americans filing for unemployment benefits fell to the lowest level since May last week, despite repeated efforts by the Federal Reserve to cool the economy and rein in inflation. Applications for jobless assistance fell by 6,000 to 222,000 in the week ended Sept. 3, the Labor Department said Thursday. First-time applications usually reflect layoffs. The four-week average for claims, which smooths out some weekly fluctuations, fell 7,500 to 233,000. U.S. hiring strengthened significantly in 2022 even as the country faces rising interest rates and weak economic growth.
Long-term mortgage rates are now at their highest level since 2008
WASHINGTON — Average long-term U.S. mortgage rates jumped again this week to their highest level in nearly 14 years, sure to keep more potential buyers out of the housing market since the Federal Reserve began raising its benchmark lending rate. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate jumped to 5.89%, the highest since November 2008, after the Great Recession began after the collapse of the housing market. The average rate on 15-year fixed-rate mortgages, popular among people looking to refinance their homes, climbed above 5% for the first time since 2009.
UK to set energy prices, end fracking ban to ease crisis
LONDON – British Prime Minister Liz Truss says her Conservative government will cap domestic energy prices for homes and businesses to ease the cost-of-living crisis. He also said he would allow more North Sea oil drilling and lift a ban on fracking to boost the UK’s domestic energy supply. The Truss told lawmakers on Thursday that a two-year “energy price guarantee” would mean the average household’s bill for heating and electricity would not exceed £2,500 a year. Bills starting in October were due to rise to £3,500 a year, three times the cost a year earlier. Critics say that means taxpayers will foot the bill, rather than energy companies that are seeing lucrative profits.
As the housing market cools, homebuyers regain leverage
LOS ANGELES — Homebuyers are regaining leverage at the negotiating table as the housing market slows, new data from Redfin shows. On average, US homes bought during the four-week period in August sold for less than asking price. That hasn’t happened since at least March 2021, according to the real estate brokerage. Years of soaring home prices and very high mortgage rates have remained a deterrent for many homebuyers, but with more homes selling for less than their asking price, the housing market is becoming less skewed, at least in favor of sellers.
Cheaper electric vehicles are coming despite high battery costs
Warren, Mich. – Auto companies are coming out with more affordable electric vehicles which should widen their appeal to a larger group of buyers. Despite increasing battery consumption. The latest EV arrived Thursday from General Motors, a Chevrolet Equinox small SUV. It has a starting price of around $30,000 and a range-per-charge of 250 miles or 400 kilometers. If you pay more, you can get a range of 300 miles or 500 kilometers. GM won’t reveal exact pricing for the Equinox EV until it goes on sale, sometime next year. But the SUV is at the low end of Edmunds.com’s price list for electric vehicles sold in the United States. The average price of an EV is now around $65,000.
The European Central Bank has made its biggest interest rate hike ever
FRANKFURT, Germany — The European Central Bank made its biggest interest rate hike yet to combat record inflation that is straining consumers and pushing the 19 countries that use the euro currency into recession. The bank’s 25-member governing council on Thursday raised its key benchmarks by an unprecedented three-quarters of a percentage point. The ECB has joined the US Federal Reserve and other central banks in a global push for faster rate hikes. Russia’s war in Ukraine has fueled inflation in Europe, with Russia sharply reducing supplies of cheap natural gas used to heat homes, generate electricity and run factories. This has increased the price of gas by 10 times or more.
The S&P 500 added 26.31 points, or 0.7%, to 4,006.18. The Dow Jones Industrial Average rose 193.24 points, or 0.6%, to 31,774.52. The Nasdaq tacked on 70.23 points, or 0.6%, to 11,862.13. The Russell 2000 index of smaller companies rose 14.90 points, or 0.8%, to 1,846.91.