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With additional report from Ari Hawkins
skip the runway — Don’t watch it now, but the geek business community, and conversations in the White House and Federal Reserve, seem to be avoiding a recession in a mild, rarely-executed “soft landing.” It doesn’t just look like it, it might actually be. gaining altitude.
you would certainly think so Look at today’s (ostensibly) strong retail sales, a still-red job market, and surging factory production.
In theory it should all be great. In a way it is. Recession is… what’s that word? bad. Terrible at times.
But the US economy skips the runway en masse (To stick with the airplane metaphor) And soaring blue again is also potentially bad.
Here’s why. The Fed’s preeminent goal, at the expense of everything else, is to take inflation from where he was in June (over 9%) to the central bank’s long-term target of 2%. to bring it closer.
Chairman Jerome Powell and his colleagues have made some progress with every rate hike. But that’s not all.Inflation is still super high By historical standards. And Tuesday’s consumer price data showed him up 6.4% on an annualized basis in January, when he actually rose 0.5% last month.
retail sales Looked hot. But it could actually be the result of (too tedious to describe here) seasonal adjustment problems. That could be reversed in February.
January’s blockbuster 517,000 jobs number (twice the Wall Street consensus) makes a very similar case where seasonal adjustments, weather and other issues have made it appear larger than it actually is. can do.
Despite these dubious numbers, economists are trying to undermine projections of a near-term economic slowdown. JP Morgan doubled its first-quarter growth forecast to 2% from 1%. Goldman Sachs recently lowered his recession probability this year to 25%.
The Atlanta Fed’s watchful ‘GDP Now’ forecast is 2.4%, a very healthy number.
The combination of moderate inflation success and declining inflation fears has paid off big for Wall Street over the past few months as investors gain confidence that the Fed won’t crash planes.
And that’s actually a pretty big deal. One of the things the Fed wants to do in fighting inflation is Tighten Fiscal situation due to interest rate hike. The opposite is happening. Wall Street is celebrating. The Federal Reserve is not happy about it.
That probably means more rate hikes. “There are increasing signs that markets are pricing in a no-land scenario,” Torsten Throck, an economist at investment firm Apollo Management, said in a note today.
The Federal Reserve already has a gripe That progress has led to lower wage inflation. And they don’t like the latest inflation, retail sales and employment data as much as Wall Street. As a result, the Fed may view positive economic data as likely to boost inflation, but it also needs to do more to keep Wall Street in check. This means that at the end of the current rate hike cycle, interest rates will be even higher than the current bank consensus of 5.1%.
As a result, the current number is only good looks But it will still lead to more rate hikes, and they will last longer. That means a much greater risk of a crash and a severe recession.
This should be obvious— The Federal Reserve does not expect the economy to remain in a state of inflation near its current state for very long. The bank believes this kind of economy will turn into a nightmare in which prices soar and outpace wage growth.
The Biden White House and Democrats in general should expect milder economic data and less enthusiasm on Wall Street. After all, there is nothing wrong with soft landings.
Welcome to POLITICO Nightly. Get news, tips and ideas at [email protected]Or contact the author tonight. [email protected] or on Twitter @Morning Money Ben.
— The deficit is expected to reach $1.4 trillion this year amid sustained inflation. Inflation is unlikely to fall to the Federal Reserve’s 2% target until 2026, the Congressional Budget Office forecast in its Annual Fiscal Outlook. Additionally, independent analysts at the agency say the federal deficit under President Joe Biden will hit $1.4 trillion this year, and the gap between how much the federal government spends and what the federal government brings in will grow even further over the next decade. It said it would expand by $3 trillion, more than the Independent Budget Office originally predicted last May.
— Club for Growth endorses Scott and dings McConnell. Senator Rick Scott (R-Florida) has gained early support in his bid for re-election, with Club for Growth, the highest-spending conservative Republican super PAC, offering its backing. The club’s support for Republicans in Florida also includes an accusation of Senate Minority Leader Mitch McConnell, leaving deep and unresolved rifts within the party into the 2024 cycle. A further indication that In the 2022 midterm elections, Scott chaired the Republican Senate Committee and clashed with McConnell on strategic issues. After the midterm elections, Scott announced he would challenge McConnell for leadership of the Republican Party, but he failed.
— Nikki Haley calls for a fitness test for politicians over the age of 75 at the start of the campaign: Former South Carolina Gov. Nikki Haley, in her speech announcing the 2024 presidential campaign today, stressed the need for a generational shift and called for mandatory performance testing for politicians over the age of 75. bottom. Haley, who was ambassador to the United Nations under President Donald Trump, said: “In America, permanent politicians will finally retire.” “Congress has term limits. And politicians over the age of 75 must take a mental ability test.”
scotland exit — Scottish Prime Minister Nicola Sturgeon announced his resignation this morning amid a storm of controversy that threatens to complicate the Scottish National Party’s move for independence from Britain. Ali Hawkins Nightly report.
At a press conference in Edinburgh, Mr Sturgeon said, “There is a much more intense, dare I say, brutality in your life as a politician than in previous years… It takes its toll on you and those around you. I am,” he said.
SNP national officials were asked to begin a process to elect a new leader, which has not been done since 2004, Sturgeon said.
Scottish officials have expressed concern that her unexpected departure could affect Scotland’s fight for independence in the UK and the upcoming national elections.
Former Scottish FM Alex Salmond said in response to Sturgeon’s resignation “the movement is left with no clear strategy for independence”, adding that “there is no clear successor”. .
At the same time, a senior Scottish Labor Party official said Sturgeon’s resignation was an unexpected opportunity to reclaim his position. There are opportunities, but they have to be proficient enough to take them.”
Sturgeon, who has been head of government for the past eight years, became leader of the independent Scottish National Party after Scotland voted 55% to 45% to remain part of the United Kingdom in the 2014 referendum. .
Sturgeon called for another referendum after Britain voted to leave the European Union in 2016, but after the UK Supreme Court ruled that the Scottish Parliament had no power to do so. Closed.
Sturgeon vowed to use the next British general election to boost support for independence-minded parties.
A poll after she pushed a law that would make it easier for 16-year-old transgender community members to receive documents that match their gender identity without requiring a medical diagnosis of gender identity disorder Sturgeon’s position in the
The policy received backlash when it was passed in December and was eventually withdrawn by the UK.
In recent weeks, the controversy seemed to come to a head after a transgender woman convicted of rape was first placed in a women’s prison, before being placed in a male institution.
Sturgeon refuted claims that her resignation was the result of recent controversy, but public perceptions and the “almost irrational” and controversial nature of the political debate played a role in her resignation. admitted that he had fulfilled
Sturgeon did not say who he wanted to lead the fight for Scottish independence, saying he would continue in that role until a successor was found.
Inside the Indian Amazon — Flipkart, India’s largest e-commerce company, topped the world in 2018. Affluent urban youth, the target of the companies, purchased a variety of goods, such as books, clothing, and electronics, that exceeded their expectations. And the sales were spotlighted by his US company Walmart, which paid him $16 billion for a 77% stake, cementing Flipkart’s role as the country’s most valuable start-up. . Now Flipkart faces the aftermath of a series of internal mistakes that have allowed its competitors to catch up. This includes Amazon, an online retailer owned by Jeff Bezos. Some analysts quip that it’s powerful enough to easily swallow Flipkart’s consumer base.read Mihir DalalInvestigate Flipkart and fight to keep the e-commerce crown in the rest of the world.
iowa goes to war — On the day the Democratic National Committee voted to strip Iowa of the nation’s first presidential caucuses, a former congressman named Dave Nagle sat at his desk on the seventh floor of the old department with a faded contact card. I was flipping through a rolodex full of.store building, writing David Siders.
Frost stuck to the window. Nagle knew what was coming. In Philadelphia, where the DNC met, everyone was writing Iowa obituaries. And when the vote had gone as expected, his wife, Debi, who had been following the proceedings on Twitter from the next room, came to the door.
“So,” he said, looking up from his desk. “This is war”
At first glance, the war seemed already lost. The DNC voted Iowa as an early caucus state after a failed process that made it impossible for the AP to declare a winner, and voted for much of the Democratic Party left in the state after the midterm elections. wiped out.
But Iowa Democrats are signaling that moving Iowa will reduce support for Democrats across the country among white, working-class voters in the wider Midwest. .
And now, in a carefully worded statement, Iowa’s top Democratic Party officials have expressed a willingness to host unauthorized caucuses in the state, ignoring the national party calendar and pushing on their own. .
Nagle was suggesting just that. Read about Iowa’s internal strife over the caucuses and why he thinks the DNC vote is just the beginning of the story.
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