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Westlake Legal Group > Powell, Jerome H

Fed Officials Voice Concern About Slowdown’s Effect on Hiring

Westlake Legal Group 09dc-fed-facebookJumbo Fed Officials Voice Concern About Slowdown’s Effect on Hiring United States Economy Trump, Donald J Recession and Depression Powell, Jerome H International Trade and World Market Interest Rates Federal Reserve System Federal Open Market Committee

WASHINGTON — Several Federal Reserve policymakers, at their most recent meeting, voiced concern that weaker business activity and investment could lead to slower hiring and consumer spending, according to minutes of the meeting published on Wednesday.

The Fed cut interest rates for a second time this year at that meeting, in mid-September, after a reduction in July that was its first since the Great Recession. The moves are meant to insulate the economy from major fallout as trade tensions stoke uncertainty and a global slowdown bleeds into American factories.

Policymakers at the September meeting expected the economy to continue growing steadily with the help of their rate cuts, the minutes showed. But they were increasingly worried about risks to that outlook from President Trump’s trade war, the threat of a chaotic British exit from the European Union, and protests in Hong Kong.

“Participants generally had become more concerned about risks associated with trade tensions and adverse developments in the geopolitical and global economic spheres,” according to the minutes. “Several participants mentioned that uncertainties in the business outlook and sustained weak investment could eventually lead to slower hiring, which, in turn, could damp the growth of income and consumption.”

The Federal Reserve has two main tasks: promoting maximum employment and maintaining stable inflation, which it defines as 2 percent annual price gains. To achieve those goals, policymakers adjust interest rates to try to keep the economy growing at a steady and sustainable pace.

The policy-setting Federal Open Market Committee has become increasingly divided over how to achieve those objectives. That is because the economy’s prospects have been clouded by the trade war and other uncertainties even as consumer spending and job growth have held up.

Some policymakers favor lowering borrowing costs now to insulate the economy against potential shocks, arguing that changes in monetary policy affect the economy with a big lag. But others want to wait for a more pronounced weakening in the economic data, or worry that lowering rates could fuel financial bubbles.

Three people voted against the decision to cut rates in September, the most dissents since Jerome H. Powell became chair last year. Esther George, president of the Federal Reserve Bank of Kansas City, and Eric Rosengren, president of the Boston Fed, did not want to lower rates, while James Bullard, president of the St. Louis Fed, backed a bigger rate cut.

Little has changed since the central bank’s September meeting, and while key officials including Mr. Powell and Richard Clarida, the Fed’s vice chair, have avoided signaling whether or when they will seek to lower borrowing costs again, many investors expect another rate cut when policymakers meet at the end of this month.

Speaking in Denver on Tuesday, Mr. Powell said that “policy is never on a preset course and will change as appropriate in response to incoming information.” He noted that while the job market was strong and inflation was rising toward the Fed’s 2 percent target, “there are risks to this favorable outlook, principally from global developments.”

Despite their positive assessment of the current economy, Fed policymakers were attuned to risks other than the trade war when they met last month, the minutes showed.

Several noted that some statistical models suggested that the likelihood of a coming recession “had increased notably in recent months.” But a couple of officials stressed that such models were difficult to interpret.

Some were concerned that a prolonged inversion of the yield curve — a common recession signal in which interest rates on longer-dated bonds fall below those on short-term debt — could “be a matter of concern.” And “several” were concerned about financial stability, citing a buildup of corporate debt, stock buybacks financed with low-cost debt, and rapid lending in the commercial real estate market.

Despite the mounting risks, “a few” Fed officials felt that markets were expecting too many Fed interest rate cuts going forward, “and that it might become necessary for the committee to seek a better alignment.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Fed Cuts Interest Rates by Another Quarter Point

WASHINGTON — The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, its second cut since late July, and suggested it was prepared to move aggressively if the United States economy shows additional signs of weakening.

For now, a growing number of Fed officials expect just one more cut this year, based on economic projections released following the meeting, in line with investor and economist expectations.

Fed Chair Jerome H. Powell, speaking at a news conference said that the United States economy remains strong and unemployment is low but that “there are risks to this positive outlook.” If the economy weakens, a “more extensive” series of rate cuts would be appropriate, he said.

“Our eyes are open, we’re watching the situation,” Mr. Powell said, explaining that the Fed will stop cutting rates to sustain the expansion “when we think we’ve done enough.”

“There may come a time when the economy weakens and we would have to cut more aggressively,” he said. “We don’t know.”

The Fed’s announcement on Wednesday did little to appease President Trump, who has been pushing the central bank to cut interest rates to zero — or even into negative territory. The Fed’s policy interest rate is now set in a range of 1.75 to 2 percent, and not a single official sees it falling lower than 1.5 to 1.75 percent through the end of 2022.

“Jay Powell and the Federal Reserve Fail Again,” Mr. Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”

Stocks, which were down slightly before the announcement, fell further afterward. Shortly before 2:30 p.m., the S&P 500 index was down 0.7 percent and the Nasdaq was down 1 percent. The yield on the 10-year Treasury note was down on the day, at roughly 1.77 percent.

The Fed’s decision-making has been complicated by mixed economic signals. While risks cloud the horizon, economic data remain solid, creating a complicated backdrop. Businesses are hiring and consumers are spending, but Mr. Trump’s trade war and prospects of an unruly British withdrawal from the European Union have markets on edge. Inflation has been stuck below the Fed’s 2 percent target, giving officials room to lower rates without worrying about runaway price gains.

Mr. Powell said the decision to cut rates stemmed from a need to guard against “some notable developments” and “ongoing risks.” Mr. Powell said trade uncertainty and geopolitical tensions necessitated action.

ImageWestlake Legal Group merlin_160978143_aba2961c-c178-480b-bd1b-169e1261c53a-articleLarge Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

The Fed’s decision to cut rates was not unanimous. Three officials dissented, with two objecting to a cut and one pushing for an even bigger cut.CreditT.J. Kirkpatrick for The New York Times

“Since the middle of last year, the global growth outlook has weakened,” Mr. Powell said. “Trade policy tensions have waxed and waned,” and “elevated uncertainty” is weighing on business investment and exports, he said.

In its official statement after its meeting, the Fed said policymakers “will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”

While the median Fed official expects rates to stay at the current level through the end of the year, seven of 17 expect another rate cut. Not a single official expected three rate cuts in 2019 when the central bank last released economic projections in June, suggesting that momentum is shifting toward additional accommodation.

Mr. Powell addressed that shift, saying the change in the Fed’s policy stance over the course of the year is “the main takeaway.”

But officials are increasingly divided over what happens next. Three members of the rate-setting Federal Open Market Committee dissented in this month’s vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, wanted a more drastic half-point rate cut and voted against moving by just a quarter point. Esther George, who heads the Federal Reserve Bank of Kansas, and Eric Rosengren, who heads the Federal Reserve Bank of Boston, thought that the central bank should keep borrowing costs steady. Ms. George and Mr. Rosengren also voted against the July rate cut.

Mr. Powell acknowledged the divisions, calling it “a time of difficult judgments” but saying he welcomed “diverse perspectives.”

He added that the bulk of the committee is going “meeting by meeting.”

The dissents underscore the economic and political challenges facing the Fed.

While the Fed operates independently of the White House and answers to Congress, Mr. Trump has made a regular habit of criticizing Mr. Powell and his colleagues.

“The Federal Reserve should get our interest rates down to ZERO, or less,” Mr. Trump tweeted on Sept. 11. “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”

Officials regularly say they set policy with an eye to the longer-term economic outlook, not short-term political concerns, but Mr. Trump’s onslaught creates an optics problem for the Fed. Some share of the population could see rate cuts, like Wednesday’s, as a sign that the central bank is caving to political pressure, particularly given that it was not a unanimous decision.

But there is an economic rationale for lowering rates sooner rather than later, since doing so could keep credit flowing, helping to keep consumer and business spending as uncertainty climbs.

Westlake Legal Group fed-second-rate-cut-promo-1568827337935-articleLarge-v2 Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

Why the Fed Lowered Interest Rates Again

The Federal Reserve lowered interest rates for the second time this year, as it tries to guard the United States economy against trade-related uncertainty and slowing global growth.

The University of Michigan consumer sentiment index has drifted lower recently on the back of trade concerns, and jitters about the United States economy were also reflected in the Business Roundtable’s C.E.O. Economic Outlook Index, which declined to a three-year low in the third quarter.

Chief executives of the nation’s largest corporations have sharply lowered their plans for capital investment and their expectations for sales. Trade tensions were cited as a major factor for the worry that companies are feeling.

At the same time, employers are still hiring, wages are gradually rising and Americans in their prime have been coming back into the labor force. As households take home better paychecks, their spending is holding up, fueling strong retail sales. Even the housing market, which has struggled this year, shows signs of firming.

But global risks abound. Germany seems to be teetering on the brink of recession. Britain’s exit from the European Union remains fraught, and the United States’ trade war with China is dragging on.

Mr. Trump has placed tariffs on $360 billion worth of Chinese goods and plans to impose levies on nearly all Chinese imports by the end of the year. While the two nations are back at the negotiating table, it is unclear whether and when a deal could be reached.

The Fed has also struggled to coax inflation up to its 2 percent goal. The central bank aims for steady inflation that is low enough to allow for consumer comfort but high enough to leave policymakers extra headroom to cut interest rates, which include price gains, during a downturn.

Inflation came in at 1.6 percent in July, based on the Fed’s preferred gauge, and has been mired below its target for years. Inflation expectations, as measured by one New York Fed survey, have slipped both in the short- and the longer-term.

The Fed also lowered the rate of interest it pays on reserves — money commercial banks park at the central bank — to 1.8 percent, 0.2 percentage point below the top of the Fed’s preferred range. That technical tweak is meant to keep the Fed funds rate, which has been creeping up, anchored within its range.

It also directed the Federal Reserve Bank of New York’s trading desk to execute open market transactions as necessary and “until instructed otherwise,” to keep short-term lending rates from rising above the Fed’s target.

The move came after several days of wild activity in an important corner of financial markets.

The overnight rate on Treasury repurchase agreements, which are short-term loans used by financial institutions like hedge funds and banks, surged at the start of the week amid a shortage of dollars. A few technical factors seemed to contribute to the spike — including a corporate tax date, recent government bond issuance that sopped up cash and the aftereffects of the Fed’s shrinking of its balance sheet.

The jump pushed up the Fed’s key policy tool, the Fed funds rate, and forced the Federal Reserve Bank of New York to spring into action to keep it in line, a first since 2008.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Fed Cuts Interest Rates by Another Quarter Point

WASHINGTON — The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, its second cut since late July, and suggested it was prepared to move aggressively if the United States economy shows additional signs of weakening.

For now, a growing number of Fed officials expect just one more cut this year, based on economic projections released following the meeting, in line with investor and economist expectations.

Fed Chair Jerome H. Powell, speaking at a news conference said that the United States economy remains strong and unemployment is low but that “there are risks to this positive outlook.” If the economy weakens, a “more extensive” series of rate cuts would be appropriate, he said.

“Our eyes are open, we’re watching the situation,” Mr. Powell said, explaining that the Fed will stop cutting rates to sustain the expansion “when we think we’ve done enough.”

“There may come a time when the economy weakens and we would have to cut more aggressively,” he said. “We don’t know.”

The Fed’s announcement on Wednesday did little to appease President Trump, who has been pushing the central bank to cut interest rates to zero — or even into negative territory. The Fed’s policy interest rate is now set in a range of 1.75 to 2 percent, and not a single official sees it falling lower than 1.5 to 1.75 percent through the end of 2022.

“Jay Powell and the Federal Reserve Fail Again,” Mr. Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”

Stocks, which were down slightly before the announcement, fell further afterward. Shortly before 2:30 p.m., the S&P 500 index was down 0.7 percent and the Nasdaq was down 1 percent. The yield on the 10-year Treasury note was down on the day, at roughly 1.77 percent.

The Fed’s decision-making has been complicated by mixed economic signals. While risks cloud the horizon, economic data remain solid, creating a complicated backdrop. Businesses are hiring and consumers are spending, but Mr. Trump’s trade war and prospects of an unruly British withdrawal from the European Union have markets on edge. Inflation has been stuck below the Fed’s 2 percent target, giving officials room to lower rates without worrying about runaway price gains.

Mr. Powell said the decision to cut rates stemmed from a need to guard against “some notable developments” and “ongoing risks.” Mr. Powell said trade uncertainty and geopolitical tensions necessitated action.

ImageWestlake Legal Group merlin_160978143_aba2961c-c178-480b-bd1b-169e1261c53a-articleLarge Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

The Fed’s decision to cut rates was not unanimous. Three officials dissented, with two objecting to a cut and one pushing for an even bigger cut.CreditT.J. Kirkpatrick for The New York Times

“Since the middle of last year, the global growth outlook has weakened,” Mr. Powell said. “Trade policy tensions have waxed and waned,” and “elevated uncertainty” is weighing on business investment and exports, he said.

In its official statement after its meeting, the Fed said policymakers “will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”

While the median Fed official expects rates to stay at the current level through the end of the year, seven of 17 expect another rate cut. Not a single official expected three rate cuts in 2019 when the central bank last released economic projections in June, suggesting that momentum is shifting toward additional accommodation.

Mr. Powell addressed that shift, saying the change in the Fed’s policy stance over the course of the year is “the main takeaway.”

But officials are increasingly divided over what happens next. Three members of the rate-setting Federal Open Market Committee dissented in this month’s vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, wanted a more drastic half-point rate cut and voted against moving by just a quarter point. Esther George, who heads the Federal Reserve Bank of Kansas, and Eric Rosengren, who heads the Federal Reserve Bank of Boston, thought that the central bank should keep borrowing costs steady. Ms. George and Mr. Rosengren also voted against the July rate cut.

Mr. Powell acknowledged the divisions, calling it “a time of difficult judgments” but saying he welcomed “diverse perspectives.”

He added that the bulk of the committee is going “meeting by meeting.”

The dissents underscore the economic and political challenges facing the Fed.

While the Fed operates independently of the White House and answers to Congress, Mr. Trump has made a regular habit of criticizing Mr. Powell and his colleagues.

“The Federal Reserve should get our interest rates down to ZERO, or less,” Mr. Trump tweeted on Sept. 11. “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”

Officials regularly say they set policy with an eye to the longer-term economic outlook, not short-term political concerns, but Mr. Trump’s onslaught creates an optics problem for the Fed. Some share of the population could see rate cuts, like Wednesday’s, as a sign that the central bank is caving to political pressure, particularly given that it was not a unanimous decision.

But there is an economic rationale for lowering rates sooner rather than later, since doing so could keep credit flowing, helping to keep consumer and business spending as uncertainty climbs.

Westlake Legal Group fed-second-rate-cut-promo-1568827337935-articleLarge-v2 Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

Why the Fed Lowered Interest Rates Again

The Federal Reserve lowered interest rates for the second time this year, as it tries to guard the United States economy against trade-related uncertainty and slowing global growth.

The University of Michigan consumer sentiment index has drifted lower recently on the back of trade concerns, and jitters about the United States economy were also reflected in the Business Roundtable’s C.E.O. Economic Outlook Index, which declined to a three-year low in the third quarter.

Chief executives of the nation’s largest corporations have sharply lowered their plans for capital investment and their expectations for sales. Trade tensions were cited as a major factor for the worry that companies are feeling.

At the same time, employers are still hiring, wages are gradually rising and Americans in their prime have been coming back into the labor force. As households take home better paychecks, their spending is holding up, fueling strong retail sales. Even the housing market, which has struggled this year, shows signs of firming.

But global risks abound. Germany seems to be teetering on the brink of recession. Britain’s exit from the European Union remains fraught, and the United States’ trade war with China is dragging on.

Mr. Trump has placed tariffs on $360 billion worth of Chinese goods and plans to impose levies on nearly all Chinese imports by the end of the year. While the two nations are back at the negotiating table, it is unclear whether and when a deal could be reached.

The Fed has also struggled to coax inflation up to its 2 percent goal. The central bank aims for steady inflation that is low enough to allow for consumer comfort but high enough to leave policymakers extra headroom to cut interest rates, which include price gains, during a downturn.

Inflation came in at 1.6 percent in July, based on the Fed’s preferred gauge, and has been mired below its target for years. Inflation expectations, as measured by one New York Fed survey, have slipped both in the short- and the longer-term.

The Fed also lowered the rate of interest it pays on reserves — money commercial banks park at the central bank — to 1.8 percent, 0.2 percentage point below the top of the Fed’s preferred range. That technical tweak is meant to keep the Fed funds rate, which has been creeping up, anchored within its range.

It also directed the Federal Reserve Bank of New York’s trading desk to execute open market transactions as necessary and “until instructed otherwise,” to keep short-term lending rates from rising above the Fed’s target.

The move came after several days of wild activity in an important corner of financial markets.

The overnight rate on Treasury repurchase agreements, which are short-term loans used by financial institutions like hedge funds and banks, surged at the start of the week amid a shortage of dollars. A few technical factors seemed to contribute to the spike — including a corporate tax date, recent government bond issuance that sopped up cash and the aftereffects of the Fed’s shrinking of its balance sheet.

The jump pushed up the Fed’s key policy tool, the Fed funds rate, and forced the Federal Reserve Bank of New York to spring into action to keep it in line, a first since 2008.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Fed Cuts Interest Rates by Another Quarter Point

WASHINGTON — The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, its second cut since late July, and suggested it was prepared to move aggressively if the United States economy shows additional signs of weakening.

For now, a growing number of Fed officials expect just one more cut this year, based on economic projections released following the meeting, in line with investor and economist expectations.

Fed Chair Jerome H. Powell, speaking at a news conference said that the United States economy remains strong and unemployment is low but that “there are risks to this positive outlook.” If the economy weakens, a “more extensive” series of rate cuts would be appropriate, he said.

“Our eyes are open, we’re watching the situation,” Mr. Powell said, explaining that the Fed will stop cutting rates to sustain the expansion “when we think we’ve done enough.”

“There may come a time when the economy weakens and we would have to cut more aggressively,” he said. “We don’t know.”

The Fed’s announcement on Wednesday did little to appease President Trump, who has been pushing the central bank to cut interest rates to zero — or even into negative territory. The Fed’s policy interest rate is now set in a range of 1.75 to 2 percent, and not a single official sees it falling lower than 1.5 to 1.75 percent through the end of 2022.

“Jay Powell and the Federal Reserve Fail Again,” Mr. Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”

Stocks, which were down slightly before the announcement, fell further afterward. Shortly before 2:30 p.m., the S&P 500 index was down 0.7 percent and the Nasdaq was down 1 percent. The yield on the 10-year Treasury note was down on the day, at roughly 1.77 percent.

The Fed’s decision-making has been complicated by mixed economic signals. While risks cloud the horizon, economic data remain solid, creating a complicated backdrop. Businesses are hiring and consumers are spending, but Mr. Trump’s trade war and prospects of an unruly British withdrawal from the European Union have markets on edge. Inflation has been stuck below the Fed’s 2 percent target, giving officials room to lower rates without worrying about runaway price gains.

Mr. Powell said the decision to cut rates stemmed from a need to guard against “some notable developments” and “ongoing risks.” Mr. Powell said trade uncertainty and geopolitical tensions necessitated action.

ImageWestlake Legal Group merlin_160978143_aba2961c-c178-480b-bd1b-169e1261c53a-articleLarge Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

The Fed’s decision to cut rates was not unanimous. Three officials dissented, with two objecting to a cut and one pushing for an even bigger cut.CreditT.J. Kirkpatrick for The New York Times

“Since the middle of last year, the global growth outlook has weakened,” Mr. Powell said. “Trade policy tensions have waxed and waned,” and “elevated uncertainty” is weighing on business investment and exports, he said.

In its official statement after its meeting, the Fed said policymakers “will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”

While the median Fed official expects rates to stay at the current level through the end of the year, seven of 17 expect another rate cut. Not a single official expected three rate cuts in 2019 when the central bank last released economic projections in June, suggesting that momentum is shifting toward additional accommodation.

Mr. Powell addressed that shift, saying the change in the Fed’s policy stance over the course of the year is “the main takeaway.”

But officials are increasingly divided over what happens next. Three members of the rate-setting Federal Open Market Committee dissented in this month’s vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, wanted a more drastic half-point rate cut and voted against moving by just a quarter point. Esther George, who heads the Federal Reserve Bank of Kansas, and Eric Rosengren, who heads the Federal Reserve Bank of Boston, thought that the central bank should keep borrowing costs steady. Ms. George and Mr. Rosengren also voted against the July rate cut.

Mr. Powell acknowledged the divisions, calling it “a time of difficult judgments” but saying he welcomed “diverse perspectives.”

He added that the bulk of the committee is going “meeting by meeting.”

The dissents underscore the economic and political challenges facing the Fed.

While the Fed operates independently of the White House and answers to Congress, Mr. Trump has made a regular habit of criticizing Mr. Powell and his colleagues.

“The Federal Reserve should get our interest rates down to ZERO, or less,” Mr. Trump tweeted on Sept. 11. “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”

Officials regularly say they set policy with an eye to the longer-term economic outlook, not short-term political concerns, but Mr. Trump’s onslaught creates an optics problem for the Fed. Some share of the population could see rate cuts, like Wednesday’s, as a sign that the central bank is caving to political pressure, particularly given that it was not a unanimous decision.

But there is an economic rationale for lowering rates sooner rather than later, since doing so could keep credit flowing, helping to keep consumer and business spending as uncertainty climbs.

Westlake Legal Group fed-second-rate-cut-promo-1568827337935-articleLarge-v2 Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

Why the Fed Lowered Interest Rates Again

The Federal Reserve lowered interest rates for the second time this year, as it tries to guard the United States economy against trade-related uncertainty and slowing global growth.

The University of Michigan consumer sentiment index has drifted lower recently on the back of trade concerns, and jitters about the United States economy were also reflected in the Business Roundtable’s C.E.O. Economic Outlook Index, which declined to a three-year low in the third quarter.

Chief executives of the nation’s largest corporations have sharply lowered their plans for capital investment and their expectations for sales. Trade tensions were cited as a major factor for the worry that companies are feeling.

At the same time, employers are still hiring, wages are gradually rising and Americans in their prime have been coming back into the labor force. As households take home better paychecks, their spending is holding up, fueling strong retail sales. Even the housing market, which has struggled this year, shows signs of firming.

But global risks abound. Germany seems to be teetering on the brink of recession. Britain’s exit from the European Union remains fraught, and the United States’ trade war with China is dragging on.

Mr. Trump has placed tariffs on $360 billion worth of Chinese goods and plans to impose levies on nearly all Chinese imports by the end of the year. While the two nations are back at the negotiating table, it is unclear whether and when a deal could be reached.

The Fed has also struggled to coax inflation up to its 2 percent goal. The central bank aims for steady inflation that is low enough to allow for consumer comfort but high enough to leave policymakers extra headroom to cut interest rates, which include price gains, during a downturn.

Inflation came in at 1.6 percent in July, based on the Fed’s preferred gauge, and has been mired below its target for years. Inflation expectations, as measured by one New York Fed survey, have slipped both in the short- and the longer-term.

The Fed also lowered the rate of interest it pays on reserves — money commercial banks park at the central bank — to 1.8 percent, 0.2 percentage point below the top of the Fed’s preferred range. That technical tweak is meant to keep the Fed funds rate, which has been creeping up, anchored within its range.

It also directed the Federal Reserve Bank of New York’s trading desk to execute open market transactions as necessary and “until instructed otherwise,” to keep short-term lending rates from rising above the Fed’s target.

The move came after several days of wild activity in an important corner of financial markets.

The overnight rate on Treasury repurchase agreements, which are short-term loans used by financial institutions like hedge funds and banks, surged at the start of the week amid a shortage of dollars. A few technical factors seemed to contribute to the spike — including a corporate tax date, recent government bond issuance that sopped up cash and the aftereffects of the Fed’s shrinking of its balance sheet.

The jump pushed up the Fed’s key policy tool, the Fed funds rate, and forced the Federal Reserve Bank of New York to spring into action to keep it in line, a first since 2008.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Fed Cuts Interest Rates by Another Quarter Point

WASHINGTON — The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, its second cut since late July, and suggested it was prepared to move aggressively if the United States economy shows additional signs of weakening.

For now, a growing number of Fed officials expect just one more cut this year, based on economic projections released following the meeting, in line with investor and economist expectations.

Fed Chair Jerome H. Powell, speaking at a news conference said that the United States economy remains strong and unemployment is low but that “there are risks to this positive outlook.” If the economy weakens, a “more extensive” series of rate cuts would be appropriate, he said.

“Our eyes are open, we’re watching the situation,” Mr. Powell said, explaining that the Fed will stop cutting rates to sustain the expansion “when we think we’ve done enough.”

“There may come a time when the economy weakens and we would have to cut more aggressively,” he said. “We don’t know.”

The Fed’s announcement on Wednesday did little to appease President Trump, who has been pushing the central bank to cut interest rates to zero — or even into negative territory. The Fed’s policy interest rate is now set in a range of 1.75 to 2 percent, and not a single official sees it falling lower than 1.5 to 1.75 percent through the end of 2022.

“Jay Powell and the Federal Reserve Fail Again,” Mr. Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”

Stocks, which were down slightly before the announcement, fell further afterward. Shortly before 2:30 p.m., the S&P 500 index was down 0.7 percent and the Nasdaq was down 1 percent. The yield on the 10-year Treasury note was down on the day, at roughly 1.77 percent.

The Fed’s decision-making has been complicated by mixed economic signals. While risks cloud the horizon, economic data remain solid, creating a complicated backdrop. Businesses are hiring and consumers are spending, but Mr. Trump’s trade war and prospects of an unruly British withdrawal from the European Union have markets on edge. Inflation has been stuck below the Fed’s 2 percent target, giving officials room to lower rates without worrying about runaway price gains.

Mr. Powell said the decision to cut rates stemmed from a need to guard against “some notable developments” and “ongoing risks.” Mr. Powell said trade uncertainty and geopolitical tensions necessitated action.

ImageWestlake Legal Group merlin_160978143_aba2961c-c178-480b-bd1b-169e1261c53a-articleLarge Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

The Fed’s decision to cut rates was not unanimous. Three officials dissented, with two objecting to a cut and one pushing for an even bigger cut.CreditT.J. Kirkpatrick for The New York Times

“Since the middle of last year, the global growth outlook has weakened,” Mr. Powell said. “Trade policy tensions have waxed and waned,” and “elevated uncertainty” is weighing on business investment and exports, he said.

In its official statement after its meeting, the Fed said policymakers “will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”

While the median Fed official expects rates to stay at the current level through the end of the year, seven of 17 expect another rate cut. Not a single official expected three rate cuts in 2019 when the central bank last released economic projections in June, suggesting that momentum is shifting toward additional accommodation.

Mr. Powell addressed that shift, saying the change in the Fed’s policy stance over the course of the year is “the main takeaway.”

But officials are increasingly divided over what happens next. Three members of the rate-setting Federal Open Market Committee dissented in this month’s vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, wanted a more drastic half-point rate cut and voted against moving by just a quarter point. Esther George, who heads the Federal Reserve Bank of Kansas, and Eric Rosengren, who heads the Federal Reserve Bank of Boston, thought that the central bank should keep borrowing costs steady. Ms. George and Mr. Rosengren also voted against the July rate cut.

Mr. Powell acknowledged the divisions, calling it “a time of difficult judgments” but saying he welcomed “diverse perspectives.”

He added that the bulk of the committee is going “meeting by meeting.”

The dissents underscore the economic and political challenges facing the Fed.

While the Fed operates independently of the White House and answers to Congress, Mr. Trump has made a regular habit of criticizing Mr. Powell and his colleagues.

“The Federal Reserve should get our interest rates down to ZERO, or less,” Mr. Trump tweeted on Sept. 11. “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”

Officials regularly say they set policy with an eye to the longer-term economic outlook, not short-term political concerns, but Mr. Trump’s onslaught creates an optics problem for the Fed. Some share of the population could see rate cuts, like Wednesday’s, as a sign that the central bank is caving to political pressure, particularly given that it was not a unanimous decision.

But there is an economic rationale for lowering rates sooner rather than later, since doing so could keep credit flowing, helping to keep consumer and business spending as uncertainty climbs.

Westlake Legal Group fed-second-rate-cut-promo-1568827337935-articleLarge-v2 Fed Cuts Interest Rates by Another Quarter Point United States Politics and Government United States Economy Trump, Donald J Recession and Depression Powell, Jerome H Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Federal Open Market Committee

Why the Fed Lowered Interest Rates Again

The Federal Reserve lowered interest rates for the second time this year, as it tries to guard the United States economy against trade-related uncertainty and slowing global growth.

The University of Michigan consumer sentiment index has drifted lower recently on the back of trade concerns, and jitters about the United States economy were also reflected in the Business Roundtable’s C.E.O. Economic Outlook Index, which declined to a three-year low in the third quarter.

Chief executives of the nation’s largest corporations have sharply lowered their plans for capital investment and their expectations for sales. Trade tensions were cited as a major factor for the worry that companies are feeling.

At the same time, employers are still hiring, wages are gradually rising and Americans in their prime have been coming back into the labor force. As households take home better paychecks, their spending is holding up, fueling strong retail sales. Even the housing market, which has struggled this year, shows signs of firming.

But global risks abound. Germany seems to be teetering on the brink of recession. Britain’s exit from the European Union remains fraught, and the United States’ trade war with China is dragging on.

Mr. Trump has placed tariffs on $360 billion worth of Chinese goods and plans to impose levies on nearly all Chinese imports by the end of the year. While the two nations are back at the negotiating table, it is unclear whether and when a deal could be reached.

The Fed has also struggled to coax inflation up to its 2 percent goal. The central bank aims for steady inflation that is low enough to allow for consumer comfort but high enough to leave policymakers extra headroom to cut interest rates, which include price gains, during a downturn.

Inflation came in at 1.6 percent in July, based on the Fed’s preferred gauge, and has been mired below its target for years. Inflation expectations, as measured by one New York Fed survey, have slipped both in the short- and the longer-term.

The Fed also lowered the rate of interest it pays on reserves — money commercial banks park at the central bank — to 1.8 percent, 0.2 percentage point below the top of the Fed’s preferred range. That technical tweak is meant to keep the Fed funds rate, which has been creeping up, anchored within its range.

It also directed the Federal Reserve Bank of New York’s trading desk to execute open market transactions as necessary and “until instructed otherwise,” to keep short-term lending rates from rising above the Fed’s target.

The move came after several days of wild activity in an important corner of financial markets.

The overnight rate on Treasury repurchase agreements, which are short-term loans used by financial institutions like hedge funds and banks, surged at the start of the week amid a shortage of dollars. A few technical factors seemed to contribute to the spike — including a corporate tax date, recent government bond issuance that sopped up cash and the aftereffects of the Fed’s shrinking of its balance sheet.

The jump pushed up the Fed’s key policy tool, the Fed funds rate, and forced the Federal Reserve Bank of New York to spring into action to keep it in line, a first since 2008.

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The Fed Is Poised to Cut Rates Again. Here’s What to Watch.

Westlake Legal Group 18dc-fedpreview2-facebookJumbo The Fed Is Poised to Cut Rates Again. Here’s What to Watch. United States Politics and Government United States Economy Powell, Jerome H Interest Rates Federal Reserve System Federal Open Market Committee Banking and Financial Institutions

WASHINGTON — Federal Reserve officials are expected to cut interest rates for a second time on Wednesday, a move that could prove divisive among Fed officials and aggravate President Trump’s anger toward the central bank.

The Fed’s rate decision, which will be announced at 2 p.m. in Washington, will be accompanied by a fresh set of quarterly economic projections and followed by a news conference at 2:30 p.m. with the chair Jerome H. Powell.

That means markets will have plenty of information to digest as they try to game out what comes next for the Fed, which lowered its policy interest rate by a quarter point for the first time in more than a decade in July as officials tried to protect the economy against uncertainty created by Mr. Trump’s trade war and a global economic slowdown.

Mr. Trump has been pushing for an extensive cut, one that leaves rates at or below zero, but investors anticipate another quarter-point move — setting rates in a range of 1.75 to 2 percent. Here’s what else to watch out for.

The Fed will release an updated version of its postmeeting statement Wednesday, and economists are looking for any changes to the language that could provide clues about whether officials are becoming more or less concerned with the economic outlook.

Perhaps more crucially, the Fed’s 17 participants will publish new economic projections at this meeting, giving an updated snapshot of where the group believes growth is headed and whether officials believe the Fed might need to provide additional support.

“The most important question” coming out of this meeting, according to Goldman Sachs economists, “is how many participants will project additional rate cuts.”

The last set of Fed funds rate projections — commonly referred to as the “dot plot” because it depicts rate expectations as blue dots on a graph-paper background — showed that as of June, not one policymaker expected more than two rate cuts by the end of 2019.

But risks have mounted since then, putting the Fed under increasing pressure to help keep America’s record-long economic expansion going.

Mr. Trump ramped up his trade war with China immediately after the Fed’s rate cut in July.

While China and the United States plan to resume talks next month, a resolution is hardly assured and the global economy continues to wobble. Manufacturing data has been deteriorating globally, job growth in the United States is decent but moderating, Britain’s smooth exit from the European Union is still a question mark and airstrikes on Saudi oil facilities could heighten geopolitical tensions.

Will it be enough to tip some officials in favor of future rate cuts? Probably, based on their public remarks. James Bullard, the president of the Federal Reserve Bank of St. Louis, suggested in a recent interview with Reuters that he would favor a half-point rate cut — the equivalent of a third cut, for dot-plot purposes.

But not everyone is expected to agree with even a moderate cut. Esther George and Eric Rosengren, who are also voting members of the rate-setting Federal Open Market Committee, have been less enthusiastic about getting ahead of risks before they turn into economic reality. They dissented against the July rate cut and could do so again at this meeting.

When it comes to the data, things actually look pretty good. At 3.7 percent, unemployment is hovering near a 50-year low. Overall growth has held up, and consumers are still spending strongly, though the University of Michigan survey suggests that they are becoming less confident as the trade war spooks many.

Inflation is still stuck below the Fed’s target of 2 percent — as it has almost been pretty regularly since the central bank formally adopted that goal in 2012 — but it has been showing signs of creeping back up.

The Fed will release new projections for growth, joblessness and price gains through 2022, and those could offer insight into what officials are expecting. They previously forecast that the unemployment and inflation rates would climb slightly in the coming years while growth moderated.

Perhaps the biggest wild card at this meeting is Mr. Powell’s news conference. The Fed chair roiled markets after the July meeting because investors interpreted his statement that the Fed’s rate cut was a “mid-cycle adjustment” as a sign that the central bank did not plan to aggressively cut borrowing costs.

Mr. Powell has little to gain by making definitive promises: Trade policies are one of the major risks on the horizon, and they have the potential to change quickly. The Fed could face very different conditions by its Oct. 29-30 meeting, which comes after United States and Chinese officials are scheduled to meet.

“We think Powell will steer clear from the phrase mid-cycle adjustment that caused waves in July, favoring instead an open-minded recalibration of rates,” economists at Evercore ISI wrote in a research note previewing the meeting.

Whatever Mr. Powell says seems likely to draw a reaction from the White House. While Mr. Trump has no ability to directly influence Fed policy — the central bank is insulated from politics and answers to Congress, not the White House — he has made a habit of weighing in on its decisions.

Mr. Trump has ramped up his attacks on Twitter in recent months, figuratively calling Mr. Powell a bad golfer, labeling him an enemy and saying that he and his colleagues are “boneheads.” He has even suggested that the Fed should adopt negative rates, a policy intact in the eurozone and Japan, which have very low inflation and more fragile economies.

You might also hear the phrase “standing repo facility” bandied about around 2 p.m.

A little background: There has been some turmoil in the money markets this week as a corporate tax due date and Treasury bond issuance combined to fuel a cash shortage. That creates problems for the Fed — it makes it harder for it to keep its policy rate under control, and risks tightening financial conditions in ways that slow down borrowing and spending.

As a result, some economists believe the Fed will discuss ways to keep those markets chugging along smoothly — while also steadying the Fed funds rate — at their meeting. Analysts think options might include a technical tweak to the Fed’s rate-setting tool, a resumption of bond-buying that will keep the Fed’s balance sheet growing alongside the economy to guard against future cash crunches in money markets, and a standing repo facility.

“Repo” is short for Treasury repurchase agreements, short-term loans taken out overnight by financial institutions like hedge funds and banks. The “standing facility” refers to a regular Fed program that allows banks to convert Treasury securities into reserves — money holdings at the central bank — on demand, at a rate the Fed sets.

In theory, such a tool would keep reserves, which banks sometimes prefer to hold for regulatory reasons, from becoming scarce. That would help money markets function better at times of stress, because banks would be less likely to hoard their reserves. As a result, it would keep the Fed from having to step in to cool things down. The central bank had to do so twice this week, a first since the financial crisis.

It is not clear whether the Fed is going to make any big changes at this meeting. Its officials tend to be a contemplative bunch, and they have not foreshadowed a shake-up. But market conditions could drive the institution’s hand, so it is worth watching for moves in that direction.

“I had been skeptical that they were going to introduce a standing repo facility — I think now the probability on that has gone up,” said Seth Carpenter, chief United States economist at UBS.

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Trump Calls for Fed’s ‘Boneheads’ to Slash Interest Rates Below Zero

Westlake Legal Group 11DC-TRUMPFED-facebookJumbo Trump Calls for Fed’s ‘Boneheads’ to Slash Interest Rates Below Zero United States Politics and Government United States Economy Trump, Donald J Powell, Jerome H Interest Rates Federal Reserve System European Central Bank Europe Banking and Financial Institutions

WASHINGTON — President Trump urged the Federal Reserve to cut interest rates below zero, suggesting a last-ditch monetary policy tactic tested abroad but never in America.

His comments came just one day before European policymakers are widely expected to cut a key rate further into negative territory.

In a series of tweets, Mr. Trump said that “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt,” adding that “the USA should always be paying the the lowest rate.”

Mr. Trump continued to criticize his handpicked Fed chair, Jerome H. Powell, saying “it is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”

He concluded by calling Mr. Powell, whom he nominated to head the central bank in 2017, and his colleagues “Boneheads.”

Mr. Trump’s request is extraordinary for several reasons. The United States economy is still growing solidly and consumers are spending strongly, making this an unusual time to push for monetary accommodation, particularly negative rates, a policy that the Fed debated but passed up even in the depths of the Great Recession. It is also typical for countries with comparatively strong economies to pay higher interest rates, not the “lowest” ones.

Negative rates, which have been used in economies including Japan, Switzerland and the Eurozone, mean that savers are penalized and borrowers rewarded: Their goal is to reduce borrowing costs for households and companies to encourage spending. But they come at a cost, curbing bank profitability.

While it’s unclear how effective they have been as a policy tool — some research suggests negative rates could curtail lending — they are increasingly a reality in much of the world as central banks rush to support economic growth and investors look for safe assets.

The timing of Mr. Trump’s tweet is also significant. The European Central Bank is expected to cut a key interest rate to a record-low negative 0.5 percent and roll out additional stimulus measures at its meeting on Thursday, in a bid to shore up very-low inflation and waning growth in important economies like Germany. Central banks around the world have been lowering their policy rates, partly because Mr. Trump’s trade war is combining with Brexit jitters and a global manufacturing slowdown to threaten growth in many nations.

The American president has commented on foreign central bank rate moves before, tweeting in June that “they have been getting away with this for years,” when Mario Draghi, who heads the European Central Bank, indicated that officials might provide additional stimulus to shore up the eurozone economy.

The Fed itself has already cut rates for the first time in more than a decade in July and is poised to lower borrowing costs further as risks to economic growth loom. Mr. Powell and his colleagues lowered interest rates to a range of 2 percent to 2.25 percent at their July meeting, and they are widely expected to cut by another quarter of a percentage point at their meeting next Tuesday and Wednesday in Washington.

“The Fed has, through the course of the year, seen fit to lower the expected path of interest rates,” Mr. Powell said in a speech last week, adding “that’s one of the reasons why the outlook is still a favorable one, despite these crosswinds we’ve been facing.”

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Amid Recession Worries, Trump Points Finger at American Businesses

WASHINGTON — President Trump wants Americans to understand that the economy is doing great, thanks to him. But if in fact the economy sours, then it is someone else’s fault.

Mr. Trump’s Blame List is long. On top, of course, is Jerome H. Powell, the chair of the Federal Reserve — never mind that Mr. Trump was the one who appointed him. Then there are the Democrats, and not to mention the news media.

And on Friday, the president added American businesses to the list, arguing that struggling companies have only themselves to blame and are rationalizing their own mistakes by pointing to, just to name an example, Mr. Trump’s multibillion-dollar tariffs and America’s biggest trade war in generations.

“Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management…and who can really blame them for doing that?” Mr. Trump wrote on Twitter. “Excuses!”

He repeated his point later with reporters. “A lot of badly run companies are trying to blame tariffs,” he said. “In other words, they’re running badly and they’re having a bad quarter or they’re just unlucky in some way. They’re trying to blame the tariffs. It’s not the tariffs. It’s called bad management.”

The president’s search for economic villains comes amid signs of a slowdown, exacerbated by uncertainty from his showdown with China over the future of the relationship between the two largest economies in the world.

Consumer confidence, which increased significantly on Mr. Trump’s watch, fell by 8.6 percent in August, its largest monthly decline since 2012 when the government was on the edge of a so-called fiscal cliff. The University of Michigan, which measures confidence, attributed it to the trade war, reporting that one in three consumers cited Mr. Trump’s tariffs without being prompted.

The concern appears to be bleeding into the presidential race. For the first time since Mr. Trump was elected, more voters responding to a Quinnipiac University poll said the national economy is getting worse than better. Altogether, 37 percent saw the economy heading downward compared with 31 percent who thought it was improving and 30 percent who said it was the same.

To Mr. Trump’s benefit, most voters in the poll still rated the economy good or excellent, but the number of those detecting dark clouds was up by 14 percentage points since June.

The economy is crucial to any president seeking a second term, but few have wrapped themselves in the issue as tightly as Mr. Trump. Polls have shown that the economy has been his strongest asset going into next year’s election.

He has a politically compelling story to tell, with unemployment at nearly a 50-year low at 3.7 percent, average wages now rising and the Dow Jones stock index about 32 percent higher than when he took office. But overall growth has been much slower than he predicted, deficit spending is increasing and various signs point to trouble ahead.

“The historical lesson is whatever happens, the sitting president gets credit or blame,” said Douglas Holtz-Eakin, the president of the American Action Forum, a center-right economic group, and an adviser to Senator John McCain’s 2008 presidential campaign. “That’s always been true regardless of the merits. He is clearly trying to make sure he has some fingers to point.”

The president has increasingly expressed anxiety to advisers that a downturn would harm his re-election chances. He has lashed out repeatedly at Mr. Powell for not lowering interest rates further and faster, even calling him an “enemy,” and he has complained that his opponents and journalists are cheerleading for a recession to take him down.

ImageWestlake Legal Group merlin_159896784_26b40d25-1ebe-49f3-89c8-835698959de9-articleLarge Amid Recession Worries, Trump Points Finger at American Businesses White House Council of Economic Advisers United States Politics and Government United States Economy United States Chamber of Commerce Trump, Donald J Powell, Jerome H International Trade and World Market Holtz-Eakin, Douglas Furman, Jason Economic Conditions and Trends China

“We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem,” President Trump tweeted on Friday. “They don’t have a clue!”CreditDoug Mills/The New York Times

“We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem,” he wrote on Friday. “They don’t have a clue!”

But his attack on American businesses takes the blame game to a new level, faulting the very sector that he has sought to court with his moves to lower corporate taxes and lift the burden of regulations.

“Blaming businesses for the economic situation is silly since they respond to incentives and uncertainty,” said Jason Furman, who was chairman of the President’s Council of Economic Advisers under Barack Obama. “The job of a policymaker is to help create an environment for businesses to fuel economic growth, not to preemptively blame them for the potential lack of growth.”

Thomas J. Collamore, a former executive vice president of the United States Chamber of Commerce, said he would advise Mr. Trump “to charge his very able trade negotiators” to strike the best deal possible with China, which would allow businesses to expand and stimulate the economy.

“The uncertainty created by additional tariffs or threats of more is causing business to pause and sit on their hands, which could unwittingly lead to an economic version of Hurricane Dorian,” Mr. Collamore said.

The president’s outburst at businesses came a day after Americans for Free Trade, a coalition of industry groups, released a letter signed by more than 160 business associations asking him to postpone further tariff increases.

“Tariffs are taxes that cost American jobs and hurt consumers, creating a problem for the entire U.S. economy,” the group said in response to the president on Friday. “The fact that companies find extra taxes as high as 30 percent challenging is not an excuse, it’s an economic reality.”

A number of large American companies have struggled with life under Mr. Trump’s trade war and in recent days several have reported or projected slowing sales and profits that they attributed to the tariffs.

Deere & Co., which manufactures agricultural equipment, said last week that it was cutting its profit forecast for the second time this year, attributing it to farmers delaying purchases for fear that they will not have as much access to foreign markets.

Best Buy lowered its revenue forecast for the year on Thursday, with its chief executive noting that major products like televisions and smartwatches will be subject to new 15 percent tariffs ordered by Mr. Trump. Clothing retailers like J. Jill and Chico’s have also said they expect lower sales in the third quarter as the next round of tariffs go into effect on Sunday.

“He’s got a substantive problem,” Mr. Holtz-Eakin said of Mr. Trump. “He’s proud of his fulfilling campaign promises — that is a centerpiece of his re-elect and what he’s got with China is higher tariff walls on both sides, damage to both economies and the global economy and nothing to show for it.”

By hammering away at Mr. Powell, his opponents and now American businesses, aides say Mr. Trump wants Americans to know the impediments hindering the economy even as he continues to make the case that the country is still in good shape.

“The economy is doing great,” he said on Friday. “The economy is amazing actually.”

After wild fluctuations in recent days, the markets took his latest comments relatively calmly. The S&P and Nasdaq indexes were essentially flat on Friday, and the Dow Jones closed for the day up by about 1.5 percent.

But as tariffs continue to rise and the election year approaches, Mr. Trump will soon be left to make a calculation about how far he can go in staring down China before it puts his political future in jeopardy, no matter who else he plans to blame. The Chinese know that and they do not have an election to worry about.

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Will America Talk Itself Into a Recession? Trump’s Advisers Are Worried

Westlake Legal Group 30dc-recession-facebookJumbo Will America Talk Itself Into a Recession? Trump’s Advisers Are Worried United States Politics and Government United States Economy Trump, Donald J Shopping and Retail Recession and Depression Powell, Jerome H International Trade and World Market Consumer Confidence (Economic Indicator) Consumer Behavior

President Trump’s economic advisers do not see a recession on the horizon, but they worry that gloomy news reports and a drumbeat of recession warnings could turn fear of one into reality.

In an interview on Thursday, the acting chairman of Mr. Trump’s Council of Economic Advisers, Tomas Philipson, said that reporters who had fixated on possible signs of a recession in bond markets this month appeared “to want people to lose jobs” and “become not economically self-sufficient.”

“As an American,” Mr. Philipson said, “you should not want a recession, no matter your political views.”

Mr. Trump’s escalating trade war is the reason economists, traders and the American public are increasingly worried about the possibility of recession. As the president punishes China with higher tariffs — and Beijing retaliates — the fight is exacerbating a global growth slowdown while dragging on investment and business confidence in America.

Investment has slowed this year, and actually contracted in the spring, and manufacturing output has slumped. Global growth is cooling, and the Federal Reserve has cut interest rates, partly out of concern over tariff-driven uncertainty. The overall growth rate has fallen, compared with last year.

Through all that, Americans have kept shopping, continuing to power economic growth. Consumer spending increased at an annualized rate of 4.7 percent in the spring, the Commerce Department said on Thursday, its fastest quarterly increase in nearly five years.

But one measure of consumer sentiment slipped by the most since 2012, data Friday showed, seemingly on tariff concerns: One in three respondents spontaneously mentioned the trade war.

Administration officials want to keep confidence high and are increasingly shifting blame for any slowdown on the media, Democrats and the Fed, which Mr. Trump has accused of putting the United States at a disadvantage to other countries by keeping interest rates too high.

“The way the media reports the weather won’t impact whether the sun shines tomorrow,” Mr. Philipson said. “But the way the media reports on our economy weighs on consumer sentiment, which feeds into consumer purchases and investments.”

Mr. Trump himself has raised similar concerns but has dismissed any talk of recession as improbable given the “strong” economy.

On Friday, Mr. Trump continued his attack on the Fed as the main culprit in any slowdown, saying on Twitter, “The Euro is dropping against the Dollar ‘like crazy,’ giving them a big export and manufacturing advantage … and the Fed does NOTHING!”

He also rejected the idea that his tariffs are hurting American companies, saying any corporate pain is self-inflicted. “Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management … and who can really blame them for doing that? Excuses!”

Even as signs of nervousness surface, official White House forecasts, issued as recently as this summer, continue to call for growth to accelerate in the second half of this year. While bond traders, business economists and poll respondents are expressing rising concern over the health of the economy, economists independent of the White House say there is no reason to believe a recession is inevitable in the United States over the next year or so. Independent forecasts predict that economic growth in July, August and September will be about where it was in April, May and June: around 2 percent, slow and steady.

“There really is no reason why the expansion can’t keep going,” Jerome H. Powell, the chair of the Fed, said at his last news conference.

Many economists say that if a recession does arrive, cratering consumers will not be the root cause — and that Mr. Trump’s trade policies and the uncertainty they are stoking are the more likely culprit.

But some forecasters agree that fear itself could become a problem. Consumers drive about 70 percent of economic activity in America, and if they become spooked and pull back on purchases, growth could slow more sharply. Stock market losses could unsettle Americans and cause them to clamp their wallets shut.

“If headlines about trade wars and currency wars dominate the media and the airwaves,” then “you could get in this spiral where people lose confidence and stop spending,” said Megan Greene, a senior fellow at the Harvard Kennedy School. Still, she does not expect an outright recession until 2021 in part because the labor market remains strong, making an imminent consumer pullback avoidable.

By several measures, the American economy continues to thrive, particularly when compared with other rich countries. Unemployment is hovering around its lowest level since 1969, the job market is growing faster than many economists had thought possible, and wage growth is picking up as companies compete for workers. That is leaving average Americans with more money in their pocket and greater wherewithal to spend.

Despite recession chatter, consumers are likely to remain strong as long as their paychecks are growing, said Seth Carpenter, the chief United States economist at UBS.

“If somebody gets a raise and their spouse gets a new job, they’re still going to be spending,” he said.

Households could keep the economy chugging along even as trade uncertainty drives companies to behave cautiously, if recent precedent holds. When growth slowed down in 2016, thanks in large part to an oil price slump that caused a drop-off in business investment, America kept shopping — and the expansion continued.

For all of its importance to growth, consumers’ behavior is historically a poor indicator of where the economy is headed. Shopping habits change quickly and often pull back only after a broader slowdown has taken hold.

“When the American consumer is strong, the expansion will have at last some momentum,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and previously an economic adviser to Vice President Joseph R. Biden Jr. But “it’s harder to see around any more distant corners.”

That is why economists monitor forward-looking economic indicators, some of which are showing cracks.

Interest rates on short-term government securities exceeded those on longer-dated bonds — a reliable recession indicator that suggests investors are pessimistic about the economic outlook. Trade tensions and slower global growth are weighing on business sentiment and investment, and measures tracking both factory and service industries have slowed down.

Tariffs are set to ramp up in the coming months, which could further restrain business activity. Mr. Bernstein expects the escalation that is already planned to help slow growth to 1 percent by the second half of next year. That weakening could be painful even if it stops short of a recession, which is usually defined as two or more quarters of outright economic contraction, leading to higher unemployment and slower wage growth for everyday Americans.

“Crossing zero obviously catches everyone’s attention,” Mr. Bernstein said. “But a deceleration can feel just as bad to a lot of people.”

There is a way to keep the current jitters from taking a turn for the worse, many economists say: Stop ramping up the trade war.

“The trade war is categorically the single biggest risk,” Mr. Carpenter said. He did not expect the tensions to cause a recession next year, but said they would slow the economy down, increasing the risk that any surprise shock would tip off a downturn.

If growth does start to sour, walking back the tariffs could provide some relief. But once pessimism becomes entrenched, even that may not offer a quick fix.

“Just taking them off absolutely is helpful in some regard,” Mr. Carpenter said. But businesses may be slow to believe that tensions have eased, so their investment may take time to recover. “Most of the damage will have been done.”

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Powell Highlights Fed’s Limits. Trump Labels Him an ‘Enemy’

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Jerome H. Powell, the Federal Reserve chair, kept future interest rate cuts squarely on the table on Friday but suggested that the central bank was limited in its ability to counteract President Trump’s trade policies, which are stoking uncertainty and posing risks to the economic outlook.

Mr. Powell’s remarks drew a swift and angry reaction from Mr. Trump, who equated the Fed leader with the president’s adversary in the trade war, President Xi Jinping of China.

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?,” Mr. Trump wrote in one of a series of Twitter posts.

The president’s harsh response to Mr. Powell, a frequent target of Mr. Trump’s ire, came after the Fed chair emphasized the limits of the central bank’s ability to overcome economic uncertainty stemming from the president’s trade war.

“While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rule book for international trade,” said Mr. Powell, who spoke in Jackson, Wyo., at the Federal Reserve Bank of Kansas City’s annual symposium.

“Our challenge now is to do what monetary policy can do to sustain the expansion” to achieve the Fed’s goals of low unemployment and stable inflation, he had said earlier in the speech.

Mr. Powell’s remarks indicated that the Fed, which cut interest rates in July for the first time in a decade, remained willing to cut again in order to keep the economy growing.

But his reluctance to clarify the timing or size of any such move highlighted the central bank’s predicament: Unemployment is low and consumer spending is strong, but Mr. Trump’s trade conflict is fueling uncertainty, weighing on manufacturing and roiling markets. And the Fed is limited in its ability to resolve unpredictability.

“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Mr. Powell said, adding that there were “no recent precedents to guide any policy response to the current situation.”

His comments followed Beijing’s announcement on Friday that China would retaliate against the Trump administration’s next round of tariffs by increasing taxes on $75 billion of American imports, including agricultural products, crude oil and cars. Both countries plan to increase their levies in September and December, which could exacerbate the economic harm from a trade war that is already causing financial pain across the globe.

Mr. Powell noted that the period since the Fed’s last meeting, on July 31, “have been eventful.” The day after that meeting, Mr. Trump announced that the United States would tax another $300 billion in Chinese products. Further evidence a global slowdown has also emerged since then, and financial markets have reacted to the “complex, turbulent picture,” Mr. Powell noted.

He said that policymakers were “carefully watching developments” as they assessed the implications for the economic outlook and monetary policy, and maintained an earlier pledge to “act as appropriate to sustain the expansion.”

Against that backdrop, some members of the policy-setting Federal Open Market Committee support cutting rates to shore up economic growth, while others want to wait to monitor how the trade dispute plays out.

“Risk management enters our decision making because of both the uncertainty about the effects of recent developments and the uncertainty we face regarding structural aspects of the economy,” Mr. Powell said.

Mr. Trump, who appointed Mr. Powell to a four-year term, has said that the Fed should use monetary policy to even the playing field with trading partners like China and Germany, which he believes are weakening their currencies and lowering rates to gain an economic advantage over the United States.

“Our Federal Reserve does not allow us to do what we must do,” the president said in a tweet on Thursday, adding that Fed officials “move like quicksand. Fight or go home!”

Investors fully expect a rate cut in September and anticipate another before the end of the year, based on market pricing measured by the CME Group.

Fed officials often point to two mid-1990s rate-cutting cycles as rough templates for how the central bank is approaching policy now. In both instances, the Fed cut rates by 75 basis points to help get the economy through rough patches.

Mr. Powell referred those episodes in his remarks on Friday, noting that “the Fed was cutting, not raising, rates in the months prior to the end of the first two expansions in this era, and the ensuing recessions were mild by historical standards.”

Speaking on Bloomberg Television on Friday, James Bullard, the president of the Federal Reserve Bank of St. Louis, called those instances a “great baseline” to reference for policy now, although he did not commit to matching their size.

“That’s what they did in the ’90s,” Mr. Bullard said. “I don’t know where we’ll end up.”

The Fed is also contending with inflation that has run stubbornly below the 2 percent level that the central bank views as consistent with a healthy economy. The need to return inflation to that goal quickly was one reason that the central bank cut rates in July.

While policymakers have historically set interest rates to keep extremely low unemployment from spurring faster inflation, Mr. Powell’s remarks showed how that the calculus is changing.

Mr. Powell noted that in the 1990s, the Fed was able to cut rates to support employment “without destabilizing inflation.” At another point in the speech, he said that “low inflation seems to be the problem of this era, not high inflation.”

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