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Westlake Legal Group > Posts tagged "Federal Reserve Bank of New York"

Federal Aid Has So Far Averted Personal Bankruptcies, but Trouble Looms

The United States went into the Great Lockdown with the most household debt in history, stagnant incomes for all but high earners, and armies of people telling pollsters they were living paycheck to paycheck. Then, for millions, their paychecks stopped.

But instead of a stampede to the bankruptcy courts, personal bankruptcy filings — a useful, if extreme, indicator of the financial health of the American consumer — have dropped sharply from April through June, even as unemployment soared, according to calculations by the American Bankruptcy Institute based on data from Epiq Global, a legal research and analytics firm.

“Filings have just gone through the floor,” said Henry E. Hildebrand III, a consumer bankruptcy trustee in Nashville. Such trustees supervise the finances of people who have declared bankruptcy and agreed to pay creditors over three to five years. Mr. Hildebrand usually gets 350 to 400 new cases a month, he said, but last month he added just 107. Nationwide, the drop in personal bankruptcy filings is the biggest in 15 years.

One reason for this counterintuitive picture: The federal government’s stimulus package, which, beginning in April, has put cash into unemployed people’s hands on a weekly basis, allowing them not just to buy groceries and pay rent, but to pay down existing debt.

As of mid-June, the Treasury Department had issued nearly $270 billion worth of stimulus payments to some 160 million people. Unemployment benefits, which normally average about $340 a week, were temporarily increased by $600 a week. Some unemployed people now have more income than when they were working.

But those benefits are set to expire this month. Congress will take up the issue of whether to extend them, along with other emergency aid, when the Senate returns next week, but if no more aid is forthcoming after July — given the double-digit unemployment rate and a resurgent virus in many parts of the country — a far more dire portrait of the financial pain of millions of Americans is set to emerge in the coming months. Bankruptcy experts say consumer bankruptcy filings will then start to rise.

ImageWestlake Legal Group merlin_174478344_4bb6d2b5-1ef5-44a1-97a0-ac98c97473a5-articleLarge Federal Aid Has So Far Averted Personal Bankruptcies, but Trouble Looms United States Economy Unemployment Personal Finances Personal Bankruptcies Labor and Jobs Federal Reserve Bank of New York Debt Collection Credit and Debt Coronavirus Aid, Relief, and Economic Security Act (2020) Coronavirus (2019-nCoV) Consumer Protection Banking and Financial Institutions
Credit…Brett Carlsen for The New York Times

The banking industry is already gearing up for a wave of defaults on everything from mortgages to credit card debt. Several of the nation’s biggest banks, including JPMorgan Chase, Wells Fargo and Citigroup, said in their second-quarter earnings reports that they had added tens of billions of dollars to their reserves to cover losses they expect to incur on business and consumer loans.

Jess Brown, 42, quit her marketing job two years ago to start a small house-sitting business, but ended up crushed under more than $40,000 of credit card debt. The card companies offered her rehabilitation plans, but only if she let them automatically withdraw the payments from her checking account. That led to overdrafts and bank penalties.

Not knowing what else to do, last October she dropped out of those plans, moved in with relatives, changed her phone and avoided the debt collectors. She went online to learn about budgeting and compound interest and tried to research consumer bankruptcy too, but got mostly spam from debt-consolidation companies.

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Then came the pandemic. With her patchy recent earnings record, Ms. Brown was eligible for just $135 a week of regular unemployment compensation. But the supplementary $600 has kept her afloat and given her the means to keep looking for work. Ms. Brown tries not to think what will happen if the federal relief stops.

“It only brings me emotional distress,” she said.

For the economy as a whole, which is driven by consumer spending, that extra $600 a week has been “nothing short of a game-changer,” said Matt Schulz, chief industry analyst for LendingTree, the online credit marketplace. The company recently reviewed a large sample of credit card data from 800,000 users and found that unpaid balances, late payments and usage all fell from February to May, as the federal money began to flow.

“Instead of just squeaking by, that extra money has allowed many Americans to actually pay down debt and increase savings in ways that would be unimaginable under normal terms of unemployment,” Mr. Schulz said.

But even if Congress extends the relief measures, they are a temporary salve that will do little to change the long-term patterns of income stagnation and indebtedness that have left American households so vulnerable to a financial shock. Total household debt reached $14.3 trillion in the first quarter of this year, according to the Federal Reserve Bank of New York — a record.

Most of the economic gains from the last 30 years of economic growth, except for the Great Recession, have been going to top earners, leaving the bottom half of wage-earning America struggling — and also highly indebted. Research from Gabriel Zucman and Emmanuel Saez, professors at the University of California, Berkeley, showed that in 2018, those in the bottom half carried debt that was 219 percent of their income. And that’s who was hit first and hardest by the economic shock this spring.

Nearly 40 percent of households earning less than $40,000 a year had already lost at least one job by May, according to the Federal Reserve, which has been analyzing household finances closely. That compares with just 19 percent of households earning $40,000 to $100,000, and 13 percent of households earning more than $100,000 a year.

A survey done in May by the Census Bureau showed further that younger households, and those with less education and lower earnings, were likeliest to be losing income in the shutdowns. They were also likelier to say they could not make their rent or mortgage payments and had sought forbearance.

Jenny Doling, a consumer bankruptcy lawyer in San Diego, said that consumers whose debts start to snowball were generally better off seeking protection in bankruptcy right away. That’s because bankruptcy automatically halts creditors’ collection efforts, giving insolvent consumers a safe place to work out their three- to five-year repayment plans, and possibly save important assets like a house or a car.

But for many, the idea of bankruptcy comes with the threat of a stigma.

“Filing bankruptcy, for consumers, is sort of an admission that you’re a financial failure and people just can’t admit that,” said John Rao, a lawyer at the National Consumer Law Center in Boston. “They still think that they can pull out of it somehow.”

People also get sticker-shock when they hear that the cheapest consumer bankruptcy case, a liquidation, is likely to cost about $1,500. In 2005, amid concerns that spendthrift consumers were abusing the bankruptcy system, Congress tightened the laws, increasing the cost of a case and requiring legal fees to be paid upfront. The following year, the number of cases fell to around 600,000 from more than two million in 2005, but began climbing again in the aftermath of the 2008 financial crisis. Last year, 752,160 cases were filed; this year, if filings continue at their current rate, there will be 590,854 cases by the end of December.

While consumers struggle, they often turn to their credit cards to make ends meet, thinking they will pay down the balance when they’re called back to work. In the meantime, they make just the minimum monthly required payment.

Each month’s unpaid interest, accruing at 20 percent or more, is then tacked onto their principal balance, causing their debt to balloon even if they don’t buy anything.

“It becomes completely unmanageable,” said Mr. Rao.

That’s what happened to Ms. Brown. She had good credit when she quit her job in early 2018, and lined up a series of house-sitting gigs in Europe, using her credit cards for airfare and food as she moved from country to country. She was stunned to see how fast the interest compounded. But she also found that when she hit the maximum on one card, other issuers would give her new ones. Sometimes they came with offers of a gift card if she spent a lot more money quickly.

Realizing she had no way out, she returned to the United States.

“I had a wall of credit card debt that was waiting for me,” she said. She kept trying to make a go of her house-sitting business. Then the economy went into shutdown and people stopped traveling. “In one day I had six cancellations,” she said.

For now, Ms. Brown said, the debt collectors have been leaving her in peace. But any day, she said, she may open the door and find a process-server standing there with the papers for a bank’s lawsuit.

“It’s not a question of ‘if’ but ‘when,’ and it weighs on me heavily,” she said.

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

Fed Chair Warns This Is a ‘Downturn Without Modern Precedent’

Westlake Legal Group 21DC-Uncertain-facebookJumbo Fed Chair Warns This Is a ‘Downturn Without Modern Precedent’ Williams, John C United States Economy Unemployment Recession and Depression Powell, Jerome H Labor and Jobs Federal Reserve System Federal Reserve Bank of New York Economic Conditions and Trends Coronavirus (2019-nCoV) Clarida, Richard H (1957- ) Brainard, Lael

Jerome H. Powell, the chair of the Federal Reserve, said the United States economy was in a “downturn without modern precedent,” one that had upended ordinary life and created “great uncertainty” about its future.

“It has already erased the job gains of the past decade and has inflicted acute pain across the country,” Mr. Powell said in remarks prepared for delivery at a virtual Fed forum. “And while the burden is widespread, it is not evenly spread. Those taking the brunt of the fallout are those least able to bear it.”

The Fed chief’s comments underscored a point his colleagues made consistently across a series of speaking engagements on Thursday: As the economy experiences a severe and unusual shock from the coronavirus, the path to recovery is wildly unclear.

“In the best of times, predicting the path of the economy with any certainty is difficult,” Mr. Powell said. “We are now experiencing a whole new level of uncertainty, as questions only the virus can answer complicate the outlook.”

The United States economy is confronting its worst downturn in generations, with another 2.4 million people filing new unemployment claims last week. As the Fed tries to cushion that blow and figure out how long it will last, officials have stressed repeatedly that the future will hinge on how the path of infection plays out, and when people feel comfortable resuming normal activity, like dining out or going to a sporting event.

Lael Brainard, a Fed governor, called the current moment an “emergency unprecedented in modern times,” speaking at the same webcast event as Mr. Powell. She noted that the strong labor market the United States enjoyed last year had quickly given way to the highest unemployment rate since the Great Depression — 14.7 percent in April.

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“We are really in just an uncharted situation right now, and my own sense is that we’ll begin to get a better sense of the scenario and the trajectory that the economy is on in the early fall,” Richard Clarida, the Fed’s vice chair, said while speaking Thursday on a webcast with the New York Association for Business Economics.

“The coronavirus pandemic poses the most serious threat to maximum employment and, potentially, to price stability that the United States has faced in our lifetimes,” he said.

John C. Williams, the president of the Federal Reserve Bank of New York, said earlier in the day that the pandemic put “a large question mark” over how industries would fare going forward.

“The cause of this recession — a global pandemic — means that our economic future will be determined in large part by the path of the virus,” he said at an event held by several upstate New York business groups. “It’s impossible to know exactly how and when workers and businesses will be fully back to work and when consumers will return to the businesses that are open.”


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  • Frequently Asked Questions and Advice

    Updated May 20, 2020

    • How many people have lost their jobs due to coronavirus in the U.S.?

      Over 38 million people have filed for unemployment since March. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Is ‘Covid toe’ a symptom of the disease?

      There is an uptick in people reporting symptoms of chilblains, which are painful red or purple lesions that typically appear in the winter on fingers or toes. The lesions are emerging as yet another symptom of infection with the new coronavirus. Chilblains are caused by inflammation in small blood vessels in reaction to cold or damp conditions, but they are usually common in the coldest winter months. Federal health officials do not include toe lesions in the list of coronavirus symptoms, but some dermatologists are pushing for a change, saying so-called Covid toe should be sufficient grounds for testing.

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • How can I help?

      Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities.


Several of the speakers stressed that policy would need to be nimble in an environment colored by stark unknowns.

While the Fed has cut rates to near-zero and announced a suite of emergency lending programs to keep credit flowing, central bank officials have signaled that more government support may be needed to get the economy through this challenging period.

Mr. Clarida pointed out on Thursday that the Fed’s policies — like rate cuts and lending programs meant to provide a backup credit option for businesses and governments — could not fill all of the needs created by the pandemic, which has already tossed millions out of work.

“The Fed is not authorized to grant money to particular beneficiaries, to meet the payroll expenses of small businesses, or to underwrite the unemployment benefits of displaced workers,” he said.

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Wall Street Suffers Worst Rout Since Black Monday as Virus Response Eludes Washington

Westlake Legal Group 12dc-virus-ledeall-1-facebookJumbo Wall Street Suffers Worst Rout Since Black Monday as Virus Response Eludes Washington United States Economy Trump, Donald J Politics and Government Pelosi, Nancy Metropolitan Museum of Art McConnell, Mitch House of Representatives Federal Reserve System Federal Reserve Bank of New York European Central Bank

WASHINGTON — Financial markets plunged again on Thursday, with Wall Street suffering its biggest one-day drop since the Black Monday stock market crash in 1987, as Washington struggled to reach agreement on how to respond to the growing economic threat posed by the spread of the coronavirus.

The Federal Reserve, in a drastic attempt to ensure Wall Street remained functional as volatility roiled even normally staid bond markets, said it would promptly inject as much as $1.5 trillion in loans into the banking system and broaden its purchases of Treasury securities. But neither the Fed’s actions, nor a plan by the European Central Bank to offer cheap loans to banks and step up its bond-buying campaign, were enough to assuage investors, who sent the S&P 500 down 9.5 percent.

The Wall Street rout only increased pressure on Congress and the White House to hammer out a relief package that would provide assistance for people affected by the virus and the resulting economic disruption. With Republicans and Democrats sparring over what to include in the package, Senator Mitch McConnell, the majority leader, reversed course on Thursday and canceled a planned one-week recess, saying the Senate would meet next week and be ready to consider a compromise coronavirus relief bill.

President Trump, for his part, appeared to be scrambling to persuade the public that things were going smoothly, while suggesting he could further restrict travel. Speaking at the White House, Mr. Trump said he could conceivably ban domestic travel to regions of the United States where the coronavirus becomes “too hot.”

His comments came on the heels of his decision Wednesday night to impose sweeping travel restrictions on non-American citizens from nearly all of continental Europe, a step that angered his foreign counterparts and contributed to the global stock sell-off.

With Washington seemingly incapable of mounting a quick response, local governments, sports franchises, schools and cultural institutions moved to try to quell the spread of a virus that has sickened at least 132,300 people worldwide, including more than 1,500 in the United States. So far, at least 39 people have died from the virus in the country.

So much was being shut down so fast that it promised to change life as most Americans know it and bring about a spring unlike any before.

In an extraordinary step, governors in Connecticut, New Jersey, California, Ohio, Washington State and New York moved to ban large gatherings and restrict smaller ones. Broadway announced it would be turning off the lights. The Metropolitan Museum of Art said that it would temporarily close its three locations, including its Fifth Avenue flagship. The two biggest concert promoters suspended all their current tours until at least April, and Disneyland, the happiest place on earth, closed its doors for only the fourth time in history.

Schools across the country, including in Ohio and Maryland, announced they would shut for several weeks, while students at dozens of colleges and universities packed up and headed home for the foreseeable future.

The N.C.A.A. announced there would be no March Madness this year as Major League Baseball postponed the start of its regular season by at least two weeks, canceling spring training games effective immediately. The N.H.L., N.B.A. and Major League Soccer also said they would pause or suspend their seasons.

“It’s the right thing to do but obviously it stinks,” the Florida Panthers center Aleksander Barkov said in a telephone interview.

European leaders were struggling with how to respond — both to the outbreak on their shores and to Mr. Trump — who did not consult them before blocking most visitors from continental Europe to the United States for 30 days.

In a strongly worded statement, the European Union said it “disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation.” It said that it was “taking strong action to limit the spread” of the coronavirus, but that it “is a global crisis, not limited to any continent and it requires cooperation rather than unilateral action.’’

Asked on Thursday why he had not consulted foreign leaders beforehand, Mr. Trump said “We had to make a decision, and I didn’t want to take time.”

He defended the move, saying, “They have some hot spots that are really bad, but they’ll get them better. Germany, I guess, has some problems now.”

“France has some problems — some pretty big problems,” he added. “And Italy, of course, is probably record-setting in terms of what they’ve gone through. Italy is having a very hard time. But we will reestablish very quickly once this ends, and it’s just a question of time.”

The administration’s approach has sown confusion at home, with conflicting messages emanating from the White House and health officials as well as from individual government agencies.

In a meeting at the White House, Mr. Trump sought to play down the pandemic and its effects on the financial markets, saying, “It’s going to work out fine.” He insisted that, “Frankly, the testing has been going very smooth,” even as the government’s top infectious disease expert, Dr. Anthony Fauci, was on Capitol Hill acknowledging to lawmakers that “it is a failing — let’s admit it.”

The president claimed that anyone who wanted to board a flight to the United States must first test negative for the virus, although there is no such policy. And he said a rally that he had been planning in Tampa, Fla., was “all sold out,” even though the idea of scheduling it was scrapped before it was ever announced.

Mr. Trump himself may have been exposed to the virus after coming into contact with a Brazilian official who tested positive just days after participating in meetings with him in Florida. The White House said Mr. Trump would not be tested for the virus.

Cabinet officials have been waiting for the Office of Management and Budget and the Office of Personnel Management to send out official guidance addressing changes to telework policies, when to impose mandatory telecommuting, whether to reconsider hosting meetings and gatherings, and whether to cancel travel — guidance that would allow them to change their own policies.

At the Justice Department, a sprawling bureaucracy with offices in several buildings, Attorney General William P. Barr sent an email to all staff last week saying that he was monitoring the fast-moving situation, and managers have been empowered to allow optional telework depending on immediate risk factors.

The lack of a clear, consistent response in the United States has only fueled the market sell-off, and this week the messiness extended to even the safest bonds, putting financial functioning at risk and prompting the Federal Reserve Bank of New York to take significant steps on Thursday to show markets that it has their backs. The New York Fed increased the size of its repurchase operations — basically short-term loans to banks — by $1.5 trillion through Friday, added to its weekly repurchase offerings, and shifted its Treasury purchases so that they extend across durations instead of focusing on shorter-term bills.

The package was meant to calm Treasury markets, where conditions had deteriorated in recent days, in part by making sure that as banks take bonds onto their balance sheets, they can have access to the funding they need to cover those positions. That the Fed is now buying across a range of maturities could help relieve pressures across the market.

But investors, along with the public, appear inconsolable and desperate for Congress to unleash aid that could help either stop the spread of the virus or at least buffet an economic hit that is threatening to tip the United States into recession.

“Until there are details on the steps that leadership intends to pursue to remedy the economic effects of the viral outbreak, equity markets will be vulnerable,” said Carl Tannenbaum, the chief economist at Northern Trust.

Mr. McConnell’s decision to cancel recess averted what had been shaping up as a remarkable collapse of talks. House Democrats scheduled a Thursday vote on their own package of paid sick leave, enhanced unemployment insurance, free coronavirus testing and food aid. Senate Republicans, who are opposed to that measure, faced the prospect of leaving Washington having taken no action to address the widening crisis.

Treasury Secretary Steven Mnuchin, in a frantic attempt to keep talks on track, spoke by phone at least seven times with Speaker Nancy Pelosi, negotiating additional changes to the House legislation so that it could have a chance of winning the support of Mr. Trump and Senate Republicans.

As of Thursday afternoon, major sticking points were hampering agreement, according to people familiar with the deliberations, who described them on the condition of anonymity. Republicans balked at a sweeping proposal to provide paid sick leave, something Senate Republicans had already blocked when Democrats sought earlier in the week to bring up a separate bill. And Republicans were insisting on inserting language into the emergency package to ban federal funding for most abortions.

Mr. McConnell started the day denouncing Ms. Pelosi’s plan as an “ideological wish list” and indicating that the Senate had no intention of moving ahead with it. But as negotiations proceeded, he faced mounting complaints from Republican senators — including those facing challenging re-election races — who opposed the House Democrats’ plan but were reluctant to leave Washington without voting on something to address the crisis.

“A haphazard bill thrown together overnight?” Senator Joni Ernst, Republican of Iowa, told reporters on Thursday. “We need to be thorough about it.”

“The Senate has no business leaving,” Senator Sherrod Brown, Democrat of Ohio, said in a speech on the floor. “We shouldn’t leave town until we pass the House package to help workers and support our communities, and President Trump needs to sign it. We need to do our jobs.”

Senators left Washington on Thursday afternoon planning to return on Monday, even as the coronavirus took its toll on the Capitol, prompting more lawmakers to quarantine themselves and close their offices. (During senators’ final vote before their departure, a page could be seen wiping down members’ desks and chairs with disinfectant.)

In the absence of a detailed economic rescue plan from the White House, Ms. Pelosi has pressed forward with a package of her own that leading Republicans have panned as ineffective, overreaching and too costly. Representative Kevin McCarthy of California, the minority leader, said on Thursday that Republicans had problems with the bill’s paid sick leave proposals and believed it should include other measures, like tax credits for employee retention.

“We should not just take a rush just because there is a bill,” Mr. McCarthy said. “We want to make sure it works.”

He added, “I think we can get this done in 24 or 48 hours.”

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a research note on Thursday that it was “up to Congress to fire the fiscal bazooka, the bigger and quicker the better.”

But in an interview, Mr. Shepherdson warned that even a large stimulus package might not stop the fall in markets, and that the worst may still lie ahead.

“What stops the fear is evidence that the rate of increase of infections is slowing — believable evidence,” he said. “Everywhere you would look for reassurance, for leadership, for policy action, for reliable information — all are absent.”

Reporting was contributed by Katie Benner, Nicholas Fandos, Alan Rappeport and Sheryl Gay Stolberg from Washington; Matt Phillips, Melena Ryzik and Ben Sisario from New York; and Brooks Barnes and Andrew Knoll from Los Angeles.

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Paul A. Volcker, Fed Chairman Who Waged War on Inflation, Is Dead at 92

Westlake Legal Group 00volcker-toppix-sub-facebookJumbo Paul A. Volcker, Fed Chairman Who Waged War on Inflation, Is Dead at 92 Volcker, Paul A United States Economy Federal Reserve Bank of New York Deaths (Obituaries)

Paul A. Volcker, who helped shape American economic policy for more than six decades, most notably by leading the Federal Reserve’s brute-force campaign to subdue inflation in the late 1970s and early ’80s, died on Sunday in New York. He was 92.

The death was confirmed by his daughter, Janice Zima.

Mr. Volcker, a towering, taciturn and somewhat rumpled figure, arrived in Washington as America’s postwar economic hegemony was beginning to crumble. He would devote his professional life to wrestling with the consequences.

As a Treasury Department official under Presidents John F. Kennedy, Lyndon B. Johnson and Richard M. Nixon, Mr. Volcker waged a long, losing struggle to preserve the postwar international monetary system established by the Bretton Woods agreement.

As a senior Federal Reserve official from 1975 to 1987, in addition to battling inflation, he sought to limit the easing of financial regulation and warned that the rapid growth of the federal debt threatened the nation’s economic health.

In his last official post, as chairman of President Barack Obama’s Economic Recovery Advisory Board, formed in response to the 2008 financial crisis, he persuaded lawmakers to impose new restrictions on big banks — a measure known as the “Volcker Rule.”

Mr. Volcker interlaced his long stretches of public service with a lucrative career on Wall Street, most prominently as chief executive of the investment bank Wolfensohn & Company.

His reputation for austere integrity also made him a popular choice as an independent arbiter. In one instance he oversaw the reclamation of deposits that Swiss banks had failed to return to the families of Holocaust victims.

His defining achievement, however, was his success in ending an extended period of high inflation after President Jimmy Carter chose him to be the Fed’s chairman in 1979.

He prevailed by delivering shock therapy, driving the economy into a deep recession to persuade Americans to abandon their entrenched expectation that prices would keep rising rapidly.

The cost was steep. As consumers stopped buying homes and cars, millions of workers lost their jobs. Angry homebuilders mailed chunks of two-by-fours to the Fed’s marble headquarters in Washington. But Mr. Volcker managed to wring most inflation from the economy.

His victory inaugurated an era in which the leaders of both political parties largely deferred to the central bank, allowing technocrats to chart the course of monetary policy with little political interference.

Ben S. Bernanke, the Fed’s chairman from 2006 to 2014, kept on his bookshelf one of the chunks of wood that Mr. Volcker received during the anti-inflation campaign.

“He came to represent independence,” Mr. Bernanke said in an interview for this obituary. “He personified the idea of doing something politically unpopular but economically necessary.”

Proud, confident and 6-foot-7 in socks, Mr. Volcker struck many as remote and intimidating. Those who knew him well said the gruff exterior concealed a shy man with a puckish wit. His first wife told a biographer that she had waited vainly for a proposal before she finally asked him if he wanted to marry.

He was famously frugal, favoring drugstore cigars and ill-fitting suits. In the 1960s, when the driver’s seat in his Nash Rambler collapsed, Mr. Volcker propped it up with a chair and continued to drive the car. As chairman of the Fed, he lived in an apartment building populated by George Washington University students and took his laundry to his daughter’s house in the Virginia suburbs.

His time in the national spotlight began in August 1979. Mr. Carter, struggling to salvage public confidence in his administration, decided to reshuffle his cabinet, plucking the Fed chairman G. William Miller to serve as Treasury secretary. Mr. Volcker, who was then serving as president of the Federal Reserve Bank of New York, was not Mr. Carter’s first choice as a replacement.

Mr. Volcker was known to be frustrated with the Fed’s halfhearted efforts to curb inflation, leading Mr. Carter’s aides to warn that he might drive the economy into recession.

Meeting Mr. Carter in the Oval Office, Mr. Volcker slumped on a couch, a familiar cigar in hand, and gestured at Mr. Miller, who was in the room. “You have to understand,” Mr. Volcker said he told the president, “if you appoint me, I favor a tighter policy than that fellow.”

In taking the job, Mr. Volcker strained his finances and his family life.

The job of chairman paid half as much as his post at the New York Fed, and Mr. Volcker’s wife at the time, Barbara Volcker, who struggled for much of her life from debilitating rheumatoid arthritis as well as diabetes, remained in New York to be near her longtime physician. (She died in 1998.) Their son, James, who was born with cerebral palsy, also remained in New York.

Mr. Volcker married Barbara Bahnson in 1954. After her death, he married Anke Dening, his longtime assistant, in 2010. Besides her, he is survived by his son, James; a daughter, Janice Volcker Zima; and four grandchildren.

When Mr. Volcker arrived in Washington, the national inflation rate was exceeding 1 percent a month. (By comparison, in 2017 inflation was less than 2 percent for the whole year.) Rapid and unpredictable inflation encourages spending while discouraging investment, a combination that creates economic instability and, often, political instability.

Henry C. Wallich, a Fed governor who had lived through the hyperinflation of Weimar Germany and often told of paying 150 billion marks to use a neighborhood swimming pool, was among those warning that the Fed was losing control.

Many economists still argued that the Fed could reduce inflation gently, without causing a recession, by raising interest rates just enough to slow economic activity. But Mr. Volcker said inflation had become a self-fulfilling prophecy. People had come to expect prices and wages to rise, so they borrowed and spent more and demanded larger pay increases, and prices and wages rose.

The Fed had been promising to crack down on inflation for more than a decade, but it had repeatedly caved in to intense political pressure so as to avoid a recession. Mr. Volcker decided a dramatic gesture was necessary to convince the public that this time would be different.

“I wanted to move the story at least to the front page,” he told a biographer.

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Fed Could Hit Back at Trump, a Former Top Official Suggests

WASHINGTON — A former top Federal Reserve official implied that the central bank should consider allowing President Trump’s trade war to hurt his 2020 election chances, an assertion that drew a firestorm of criticism and a rare pushback from the Fed itself.

William Dudley, the former president of the Federal Reserve Bank of New York and now a research scholar at Princeton University, said in a Bloomberg Opinion piece that “Trump’s re-election arguably presents a threat to the U.S. and global economy.” Mr. Dudley added that “if the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.”

It is a controversial statement, particularly coming from an official who ranked among the Fed’s most powerful policymakers as recently as 2018. It also comes at a sensitive moment for the Fed, which has been under attack from Mr. Trump and trying to assert its independence from the White House and politics in general.

“The Federal Reserve’s policy decisions are guided solely by its congressional mandate to maintain price stability and maximum employment,” Michelle Smith, a Fed spokeswoman, said when asked about the column. “Political considerations play absolutely no role.”

Mr. Trump has waged a yearlong campaign to pressure the Fed to cut rates, accusing the central bank of hurting the economy by keeping rates too high and putting the United States at a disadvantage to other nations, like China and Germany.

“The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world,” Mr. Trump said in a tweet on Tuesday. “Has anyone looked at what almost all other countries are doing to take advantage of the good old USA? Our Fed has been calling it wrong for too long!”

The attacks have put the Fed on the defensive, prompting top officials including Jerome H. Powell, the Fed chair, to insist that the central bank sets policy to achieve economic goals without taking politics into account.

The Fed cut rates for the first time in more than a decade in July and has kept the door open to future cuts, with Mr. Powell saying the central bank is prepared to act to protect the economy against slowing global growth and as Mr. Trump’s trade fights stoke uncertainty.

Mr. Dudley essentially said the Fed should wade into politics, arguing that the central bank should consider the political ramifications of the policy decisions it makes. By lowering interest rates to offset economic harm caused by Mr. Trump’s trade war with China, Mr. Dudley said the central bank could give the White House room to ramp up trade tensions.

“The central bank’s efforts to cushion the blow might not be merely ineffectual,” he wrote. “They might actually make things worse.”

ImageWestlake Legal Group merlin_158555928_53e2861c-d51c-47ff-a42b-8e322197baeb-articleLarge Fed Could Hit Back at Trump, a Former Top Official Suggests United States Politics and Government United States Economy Trump, Donald J Presidential Election of 2020 International Trade and World Market Interest Rates Federal Reserve System Federal Reserve Bank of New York Economic Conditions and Trends Dudley, William C Banking and Financial Institutions

The opinion piece comes as the Fed has been under attack from Mr. Trump and trying to assert its independence from the White House and politics in general.CreditLexey Swall for The New York Times

Fed watchers responded to Mr. Dudley’s piece with widespread concern, asserting that it could feed conspiracy theories that the central bank is trying to influence political outcomes.

“The Fed for decades has scrupulously avoided doing that, and has tried to avoid giving that perception,” said Adam Posen, the president of the Peterson Institute for International Economics. “And this isn’t some ‘deep state’ fake: They genuinely don’t want to get into it, because ultimately they are accountable to Congress.”

Mr. Trump announced an escalation of the trade war with China just a day after the Fed cut rates in July, and the concern that Fed policy is enabling the tariffs is often repeated by analysts. Michael Strain at the American Enterprise Institute said it was a valid point to raise and consider.

But Mr. Strain pushed back against the idea that the Fed’s policymakers should try to guide political outcomes.

“It’s wildly irresponsible,” he said. “The Fed is not elected; it is appointed. It has a responsibility to adhere to a narrow reading of its mandate.”

The central bank’s leadership consists of 12 regional presidents, who are selected by businesspeople and community leaders from their districts and who share four annually rotating votes on interest rates. The New York Fed president is the most powerful regional leader and has a constant vote on policy.

The rate-setting committee also includes seven governors who are nominated by the president and confirmed by the Senate. Only five of those positions are currently filled, although Mr. Trump has said he intends to nominate another two members to the Fed.

The Fed does not answer to the White House by design: It is removed from politics so that it will make better long-term decisions for the economy, rather than trying to goose the economy going into election years. It is, however, responsible to Congress, which can change the rules that govern it.

That insulation has, historically, helped to fuel criticism that the Fed is removed from the public and in the pocket of bankers. The central bank has long been the target of conspiracy theories, and popular books about it have borne titles like “Secrets of the Temple.”

More recently, the president has placed the central bank firmly in political cross hairs. In a Twitter post last week, he asked whether Mr. Powell or President Xi Jinping of China was a “bigger enemy” of the United States. Mr. Trump has reportedly considered firing or demoting Mr. Powell in the past, and he recently told reporters that he would accept Mr. Powell’s resignation if it were offered.

Despite that pressure campaign, Fed officials have repeatedly pushed back against the idea that they would in any way take the White House’s comments or potential actions into account when setting policy.

“We’re never going to take political considerations into account or discuss them as part of our work,” Mr. Powell said at a news conference in January. “We’re human. We make mistakes. But we’re not going to make mistakes of character or integrity.”

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The Fed Just Cut Interest Rates. Here’s What That Means for You.

Americans juggle a lot of interest rates in their daily lives. They pay interest on car loans, credit card balances and mortgages. They earn interest, at least a little, on the money they save with banks.

Technically speaking, Federal Reserve officials did not touch any of those rates when they announced a quarter-point interest-rate cut on Wednesday, the first cut in a decade. The rate they reduced is the federal funds rate, which is what banks and other financial institutions charge one another for very short-term borrowing.

Most consumers don’t do that sort of overnight borrowing, but the Fed’s moves still affect the borrowing and saving rates they encounter every day.

The effect is not always direct or immediate, so consumers probably will not wake up on Thursday to find that all of their favorite rates have changed by a quarter of a point. There is even solid evidence that the mere expectation that the Fed would cut rates on Wednesday had already pushed down some of the key rates that consumers pay.

One of the biggest potential impacts of the Fed’s cut may be one you don’t see: heading off a recession. If the move works, it could prevent the economy from weakening and forestall layoffs and other economic damage that could hurt workers and consumers.

Westlake Legal Group why-fed-lower-rates-promo-1564519931873-articleLarge-v2 The Fed Just Cut Interest Rates. Here’s What That Means for You. Williams, John C United States Economy United States Savings Recession and Depression Personal Finances Mortgages Labor and Jobs Interest Rates Government Bonds Federal Reserve System Federal Reserve Bank of New York Credit and Debt Certificates of Deposit Banking and Financial Institutions Automobile Financing

Why the Federal Reserve Cut Interest Rates for the First Time Since the Crisis

The move is what’s called an “insurance cut” — one that central bankers are making to keep growth chugging along.

Here’s where you might see effects from the cut.

When the Fed held rates near zero for years after the 2008 financial crisis in hopes of stoking growth and job creation, there was basically no financial incentive to save money with a bank. Near the end of 2015, the average one-year certificate of deposit account yielded an annual return of just over 0.25 percent, according to Bankrate.com.

Fed officials have raised rates nine times since then, by a quarter-point in each instance. The increases have lifted savers, though not by that much. The average yield on a one-year C.D. briefly cracked 1 percent this year. But it has fallen since then, as has the average yield on the five-year C.D., amid bigger hints from Fed officials that a rate cut was in the works. The trend could continue.

Savers looking for a higher return might consider online savings accounts, which, in many cases, are still paying yields of 2 to 2.5 percent. Some accounts require a minimum balance, but that is occasionally as low as $1.

If you borrowed money to buy a house late last year, you were unlucky — and it cost you. In November, as the Fed neared what appears to have been the end — for now at least — of its slow march of interest-rate increases, the average rate on a 30-year mortgage was nearly 5 percent. It has since fallen to 3.75 percent.

The slide was tied to expectations that the Fed was going to cut rates, said Greg McBride, Bankrate.com’s chief financial analyst, and for consumers, it is probably the most consequential effect of the shift in the Fed’s policy path.

It is also probably fully priced in, unless the Fed shows a strong hint that more rate cuts are coming.

“Mortgage rates are tied to long-term rates, so they move well in advance,” Mr. McBride said. “Any further movement in mortgage rates will be tied to the outlook ahead.”

Historically speaking, mortgage rates do not have much farther to fall. In the past half-century, the average 30-year rate has never dipped below 3.3 percent.

One interest rate that has risen by as many percentage points as the federal funds rate in the past few years is the one you probably wish would stay lower: the average interest rate on credit-card debt. It is now nearly 18 percent, and unlike savings yields and mortgage rates, it has not fallen in recent months. That probably means you should not expect it to fall immediately after Wednesday’s cut.

Rates on car loans have risen since 2016, but they fell back slightly this year. After peaking near 5 percent at the end of last year, the rate on the average five-year loan for a new car is now just under 4.75 percent, according to Bankrate.com. Like rates on credit cards, the rate on car loans does not always move in line with the Fed: It fell in 2016 even as the Fed raised rates.

Those rates help explain, in part, why most economists do not expect that a single Fed rate cut will be enough to change consumers’ spending habits.

“The impact on the household budget of one rate cut is inconsequential,” Mr. McBride said. “It’s not like it’s going to unleash a flurry of consumer activity”

In the scope of your financial life, of course, what you pay to borrow — or what you are paid to save — typically takes a back seat to more basic questions about how much you are able to work and to earn. Those questions appear to be on Fed officials’ minds as they cut rates.

“It’s better to take preventative measures than to wait for disaster to unfold,” John Williams, the president of the Federal Reserve Bank of New York, said two weeks ago, in comments that were widely interpreted as signaling that the rate cut was on the way.

In other words: By moving to reduce rates, now and possibly again this fall, policymakers are trying to reduce the risk that millions of Americans could be thrown out of work. They are trying to ward off the prospect of a job-killing recession by giving the economy a little extra boost.

Fed Cuts Interest Rates for First Time Since 2008 Crisis

Jul 31, 2019

Westlake Legal Group 31DC-FED-01-threeByTwoSmallAt2X The Fed Just Cut Interest Rates. Here’s What That Means for You. Williams, John C United States Economy United States Savings Recession and Depression Personal Finances Mortgages Labor and Jobs Interest Rates Government Bonds Federal Reserve System Federal Reserve Bank of New York Credit and Debt Certificates of Deposit Banking and Financial Institutions Automobile Financing

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The Fed Just Cut Interest Rates. Here’s What That Means for You.

Americans juggle a lot of interest rates in their daily lives. They pay interest on car loans, credit card balances and mortgages. They earn interest, at least a little, on the money they save with banks.

Technically speaking, Federal Reserve officials did not touch any of those rates when they announced a quarter-point interest-rate cut on Wednesday, the first cut in a decade. The rate they reduced is the federal funds rate, which is what banks and other financial institutions charge one another for very short-term borrowing.

Most consumers don’t do that sort of overnight borrowing, but the Fed’s moves still affect the borrowing and saving rates they encounter every day.

The effect is not always direct or immediate, so consumers probably will not wake up on Thursday to find that all of their favorite rates have changed by a quarter of a point. There is even solid evidence that the mere expectation that the Fed would cut rates on Wednesday had already pushed down some of the key rates that consumers pay.

One of the biggest potential impacts of the Fed’s cut may be one you don’t see: heading off a recession. If the move works, it could prevent the economy from weakening and forestall layoffs and other economic damage that could hurt workers and consumers.

Westlake Legal Group why-fed-lower-rates-promo-1564519931873-articleLarge-v2 The Fed Just Cut Interest Rates. Here’s What That Means for You. Williams, John C United States Economy United States Savings Recession and Depression Personal Finances Mortgages Labor and Jobs Interest Rates Government Bonds Federal Reserve System Federal Reserve Bank of New York Credit and Debt Certificates of Deposit Banking and Financial Institutions Automobile Financing

Why the Federal Reserve Cut Interest Rates for the First Time Since the Crisis

The move is what’s called an “insurance cut” — one that central bankers are making to keep growth chugging along.

Here’s where you might see effects from the cut.

When the Fed held rates near zero for years after the 2008 financial crisis in hopes of stoking growth and job creation, there was basically no financial incentive to save money with a bank. Near the end of 2015, the average one-year certificate of deposit account yielded an annual return of just over 0.25 percent, according to Bankrate.com.

Fed officials have raised rates nine times since then, by a quarter-point in each instance. The increases have lifted savers, though not by that much. The average yield on a one-year C.D. briefly cracked 1 percent this year. But it has fallen since then, as has the average yield on the five-year C.D., amid bigger hints from Fed officials that a rate cut was in the works. The trend could continue.

Savers looking for a higher return might consider online savings accounts, which, in many cases, are still paying yields of 2 to 2.5 percent. Some accounts require a minimum balance, but that is occasionally as low as $1.

If you borrowed money to buy a house late last year, you were unlucky — and it cost you. In November, as the Fed neared what appears to have been the end — for now at least — of its slow march of interest-rate increases, the average rate on a 30-year mortgage was nearly 5 percent. It has since fallen to 3.75 percent.

The slide was tied to expectations that the Fed was going to cut rates, said Greg McBride, Bankrate.com’s chief financial analyst, and for consumers, it is probably the most consequential effect of the shift in the Fed’s policy path.

It is also probably fully priced in, unless the Fed shows a strong hint that more rate cuts are coming.

“Mortgage rates are tied to long-term rates, so they move well in advance,” Mr. McBride said. “Any further movement in mortgage rates will be tied to the outlook ahead.”

Historically speaking, mortgage rates do not have much farther to fall. In the past half-century, the average 30-year rate has never dipped below 3.3 percent.

One interest rate that has risen by as many percentage points as the federal funds rate in the past few years is the one you probably wish would stay lower: the average interest rate on credit-card debt. It is now nearly 18 percent, and unlike savings yields and mortgage rates, it has not fallen in recent months. That probably means you should not expect it to fall immediately after Wednesday’s cut.

Rates on car loans have risen since 2016, but they fell back slightly this year. After peaking near 5 percent at the end of last year, the rate on the average five-year loan for a new car is now just under 4.75 percent, according to Bankrate.com. Like rates on credit cards, the rate on car loans does not always move in line with the Fed: It fell in 2016 even as the Fed raised rates.

Those rates help explain, in part, why most economists do not expect that a single Fed rate cut will be enough to change consumers’ spending habits.

“The impact on the household budget of one rate cut is inconsequential,” Mr. McBride said. “It’s not like it’s going to unleash a flurry of consumer activity”

In the scope of your financial life, of course, what you pay to borrow — or what you are paid to save — typically takes a back seat to more basic questions about how much you are able to work and to earn. Those questions appear to be on Fed officials’ minds as they cut rates.

“It’s better to take preventative measures than to wait for disaster to unfold,” John Williams, the president of the Federal Reserve Bank of New York, said two weeks ago, in comments that were widely interpreted as signaling that the rate cut was on the way.

In other words: By moving to reduce rates, now and possibly again this fall, policymakers are trying to reduce the risk that millions of Americans could be thrown out of work. They are trying to ward off the prospect of a job-killing recession by giving the economy a little extra boost.

Fed Cuts Interest Rates for First Time Since 2008 Crisis

Jul 31, 2019

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The Fed May Cut Interest Rates. Here’s What That Means for You

Americans juggle a lot of interest rates in their daily lives. They pay interest on car loans, credit card balances and mortgages. They earn interest, at least a little, on the money they save with banks.

Technically speaking, Federal Reserve officials will not touch any of those rates when they announce what economists widely expect will be a quarter-point interest-rate cut on Wednesday, which would be the first cut in a decade. The rate they would be reducing is the federal funds rate, which is what banks and other financial institutions charge each other for very short-term borrowing.

Most consumers don’t do that sort of overnight borrowing, but the Fed’s moves still affect the borrowing and saving rates they encounter every day.

The effect is not always direct and it is not always immediate, so consumers probably will not wake up on Thursday to find that all of their favorite rates changed by a quarter of a point. There is even solid evidence that the mere expectation that the Fed will cut rates on Wednesday has already pushed down some of the key rates that consumers pay.

One of the biggest potential impacts of the Fed’s expected cut may be one you don’t see: heading off a recession. If the move works, it could prevent the economy from weakening and forestall layoffs and other economic damage that could hurt workers and consumers.

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Why the Federal Reserve Is Poised for Its First Rate Cut Since the Crisis

The Federal Reserve on Wednesday is widely expected to cut interest rates for the first time in more than a decade, even as the economic expansion in the United States reaches record length.

Here’s where you might see effects from the expected cut.

When the Fed held rates near zero for years after the 2008 financial crisis in hopes of stoking growth and job creation as the economy recovered from a brutal recession, there was basically no financial incentive to save money with a bank. Near the end of 2015, the average one-year certificate of deposit account yielded an annual return of just over 0.25 percent, according to Bankrate.com.

Fed officials have raised rates nine times since then, by a quarter-point in each instance. The increases have lifted savers, though not by that much. The average yield on a one-year C.D. briefly cracked 1 percent earlier this year. But it has fallen since then, as has the average yield on the five-year C.D. amid bigger hints from Fed officials that a rate cut was in the works. The trend could continue, especially if officials signal an openness to another rate cut in the fall.

Savers looking for a higher return might consider online savings accounts, which, in many cases, are still paying yields of 2 to 2.5 percent. Some accounts require a minimum balance, but that is occasionally as low as $1.

If you borrowed money to buy a house late last year, you were unlucky — and it cost you. In November, as the Fed neared what appears to have been the end — for now at least — of its slow-march of interest-rate increases, the average rate on a 30-year mortgage was nearly 5 percent. It has since fallen by more than a percentage point, to 3.75 percent.

The slide is tied to the Fed’s expected move to cut rates, said Greg McBride, Bankrate.com’s chief financial analyst, and for consumers, it is probably the most consequential effect of the shift in the Fed’s policy path.

It is also probably fully priced in, unless the Fed shows a strong hint that more rate cuts are coming.

“Mortgage rates are tied to long-term rates, so they move well in advance,” Mr. McBride said. “Any further movement in mortgage rates will be tied to the outlook ahead.”

Historically speaking, mortgage rates do not have much farther to fall. In the past half-century, the average 30-year rate has never dipped below 3.3 percent.

One interest rate that has risen by as many percentage points as the federal funds rate in the past few years is the one you probably wish would stay lower: the average interest rate on credit-card debt. It is now at nearly 18 percent and, unlike savings yields and mortgage rates, it has not fallen in recent months. That probably means you should not expect it to fall immediately after the Fed’s anticipated cut.

Rates on car loans have risen since 2016, but they fell back slightly this year. After peaking near 5 percent at the end of last year, the rate on the average five-year loan for a new car is now just under 4.75 percent, according to Bankrate.com. As with rates on credit cards, the rate on car loans does not always move in line with the Fed: It actually fell in 2016, even as the Fed raised rates.

Those rates help explain, in part, why most economists do not expect that a single Fed rate cut will be enough to change consumers’ spending habits.

“The impact on the household budget of one rate cut is inconsequential,” Mr. McBride said. “It’s not like it’s going to unleash a flurry of consumer activity”

In the scope of your financial life, of course, what you pay to borrow — or what you are paid to save — typically takes a back seat to more basic questions about how much you are able to work and to earn. Those questions appear to be on Fed officials’ minds as they consider cutting rates.

“It’s better to take preventative measures than to wait for disaster to unfold,” John Williams, the president of the Federal Reserve Bank of New York, said this month, in comments that were widely interpreted as signaling that a rate cut was on the way.

In other words: By moving to reduce rates, now and possibly again this fall, policymakers are trying to reduce the risk that millions of Americans could be thrown out of work. They are trying to ward off the prospect of a job-killing recession by giving the economy a little extra boost.

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

Trump Isn’t Alone. These Millennials on the Left Want Low Interest Rates, Too.

As President Trump rails against the Federal Reserve and urges it to lower interest rates, a similar push is coming from a group founded this year by three left-leaning millennials — albeit for very different reasons.

Mr. Trump regularly points out that inflation is low and says that the Fed should slash rates, which would weaken the dollar and help with his continuing trade wars. The new group, Employ America, wants central bankers to place a higher priority on fostering job growth and sees looser monetary policy as a way to protect workers as the economy shows early signs of slowing. It is using research, and Twitter, to make its case.

The campaign may seem oddly timed: Unemployment in the United States is at a nearly 50-year low, and there are more job openings than applicants. The Fed’s key benchmark interest is also low, relative to past business cycles.

But Employ America is embracing an unusual moment in the politics of central banking. Democrats have long favored lowering interest rates to fuel stronger growth even if doing so risked raising prices, while Republicans have traditionally criticized such moves as potentially inflationary.

Now that a Republican president is in the White House and price gains have proven surprisingly subdued, members of both parties have coalesced around a preference for low borrowing costs.

The Fed itself is engaged in a yearlong review of its monetary policy practices and communications, creating an opportunity to question what the central bank’s goal of maximum sustainable employment means in the modern era, and, potentially, a chance to push monetary policymakers toward a more expansive definition.

“It’s a good time to broaden the conversation,” said Alexander Berger of the Open Philanthropy Project, who helped to approve a short-term, $300,000 grant for Employ America that could be increased and extended if the group gains traction. The philanthropy project relies on funding from Dustin Moskovitz, a founder of Facebook, and his wife, Cari Tuna.

Sam Bell, Employ America’s founder, is an unlikely monetary-policy crusader. He has a degree in philosophy and political science from Swarthmore College, but no formal training in economics. He spent his early career focused on genocide intervention, but became interested in the job market following the financial crisis. His nights and weekends soon dedicated economic textbook-reading time.

As Mr. Bell watched a slow jobs recovery unfold, he became convinced that the Fed was placing too much weight on guarding against inflation, and too little on fostering a strong and rapid labor market recovery.

ImageWestlake Legal Group merlin_155737824_a4ebfdf4-8c91-4005-9be2-0ec931e2ce57-articleLarge Trump Isn’t Alone. These Millennials on the Left Want Low Interest Rates, Too. Williams, John C United States Politics and Government United States Economy United States Unemployment Tuna, Cari Trump, Donald J Republican Party Recession and Depression Philanthropy Moskovitz, Dustin Moore, Stephen (1960- ) Labor and Jobs Interest Rates Inflation (Economics) House of Representatives Hiring and Promotion Gold Standard (Monetary) Federal Reserve System Federal Reserve Bank of New York Employ America Clarida, Richard H (1957- ) Brainard, Lael

A vintage Federal Reserve money bag, a gift from Mr. Bell’s wife, is pinned on the bulletin board in the family’s house. Mr. Bell and his Employ America want the Fed to focus less on inflation and more on expanding the labor market.CreditTing Shen for The New York Times

Employ America wants to change that. Mr. Bell, together with his colleagues Skanda Amarnath and Kim Stiens, hopes to convince the Fed to tweak its policy-setting approach, in part by channeling a conversation that is already happening on social media into targeted research and advocacy.

“There’s a wonky tribe on Twitter that we’re trying to be a home for, to some extent,” Mr. Bell, 35, said. “I want to harness some of that conversation.”

The Fed’s job is to sustain the highest level of employment that is consistent with low and stable inflation. Policymakers have operated for decades under the assumption that very low unemployment eventually leads to higher prices, but that relationship is either muted or broken. Unemployment is at 3.6 percent, but inflation has been stubbornly low and wages are growing only moderately.

After years of saying employment was at, near or even past its sustainable level — and lifting rates nine times to avert a spike in prices that never arrived — officials are now less sure.

“There is no destination point for full employment, there’s no one number that you could pick and say: we’re there,” Lael Brainard, a member of the Fed’s Board of Governors, said in a recent television interview.

John C. Williams, the president of the Federal Reserve Bank of New York, has said that if the economy could achieve a 3.5 percent unemployment rate with stable inflation, that would be “terrific” news.

The shift in mind-set has created an opening for Employ America. In addition to publishing articles and policy papers directed at Fed officials and their congressional overseers, the group wants to prevent inflation-focused policymakers from landing Fed leadership jobs.

Mr. Bell, who calls himself Employ America’s “chief tweeting officer,” recently helped to derail Stephen Moore’s chances of joining the Fed’s Board of Governors. When news broke that Mr. Trump was considering nominating Mr. Moore, a campaign adviser and early advocate for higher interest rates after the recession, Mr. Bell dug up and tweeted out the conservative commentator’s quotes on everything from monetary policy to his opinions about certain Midwest cities.

Mr. Moore’s past comments about women, which Mr. Bell mostly steered clear of, ultimately cost him support in the Senate. But key lawmakers said it was a drip of information about his past positions that ruined his chances. Mr. Bell uncovered many of those, listening to hours of Mr. Moore’s past television and radio interviews and then using Twitter to highlight the conservative commentator’s support for the gold standard and his characterization of Cincinnati and Cleveland as “armpits of America.”

“The soundtrack to our children’ short lives has been `Wheels on the Bus’ and Stephen Moore interviews,” said Kate Kelly, Mr. Bell’s wife. “I say that with an eye-roll mixed with admiration.”

For all of Mr. Bell’s efforts, Mr. Moore said he had never heard of him or Employ America. He also said Mr. Bell was incorrect to think that he would have been an inflation-focused Fed governor.

Mr. Bel, an unlikely monetary-policy crusader, was inspired to create Employ America after watching the slow job recovery after the financial crisis.CreditTing Shen for The New York Times

“I’ve been saying for six months that the Fed is too tight,” he said, meaning he thinks the central bank should start to cut interest rates.

Employ America won’t oppose every pick Mr. Trump makes for the Fed: Mr. Bell often praises Richard H. Clarida, the Fed’s vice chair, who was nominated by Mr. Trump. Nor is the group anti-Fed. Mr. Amarnath worked at the New York branch after college and has either participated in or coached Fed Challenge, in which team members role-play real life policymakers, since he was 15. He is something of an organizational enthusiast.

But Mr. Amarnath, 27, left his job as a hedge fund economist to help start the group because he thinks the Fed could use a push toward deeper self-reflection. Policymakers started saying the economy was near full employment in 2016, for instance, but businesses have continued to hire steadily since then.

“There are always priors to challenge,” said Mr. Amarnath, a Columbia graduate who studied economics. “These are costly errors. You say, ‘We’re at maximum employment,’ and then eight million jobs show up.”

He recently published an article on Medium suggesting that the Fed should set policy with an eye toward overall labor income, rather than inflation, when the economy is shaky. Such an approach would result in lower policy rates for longer and, in theory, faster labor market healing. More recently, he has published a “quick and dirty case” for a .50 percentage point rate cut at the Fed’s June meeting, which would be a more aggressive and earlier move than most economists and investors expect.

Ms. Stiens, 33, manages Employ America’s operations and will help with hiring if the organization’s funding is extended.

If it is a little brazen for three people with a trial grant to try to influence a 105-year-old central bank that employs hundreds of Ph.D. economists, at least there is some precedent. Fed Up, started in 2014 and also funded by Open Philanthropy, brought protesters in green shirts emblazoned with the words “What Recovery?” to high-profile events like the Fed’s annual meeting in Jackson Hole, Wyo., to pressure policymakers to maintain low rates.

At a time when groups on the right were calling loudly for rate increases, the Fed Up organizers landed meetings with Fed officials and drew media attention. Mr. Bell consulted with Fed Up and admired the group’s work, but wanted to create a wonkier complement to its grass-roots outreach.

The climate in Washington is friendlier to Employ America’s message, but political winds and Fed leadership can change. Beyond making a case for lower rates now, Mr. Bell and his colleagues want to make sure that policymakers’ comfort with low unemployment lasts into the next recession and expansion.

Now is the time to wage that campaign, as the Fed holds conferences, including a recent one in Chicago, to consider possible changes to its policy-setting framework. The review is expected to wrap up later this year, and Fed officials will make their conclusions public in early 2020.

“The Fed is showing itself to be much more open to reconsidering its policy regime,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania’s Wharton School. “Employ America is likely to have, potentially, a big effect.”

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