Archives for January 2020

“Ugh ugh,” Mr. Clarida replied.

An hour later, Ms. Smith sent Mr. Powell and Mr. Clarida an email containing positive comments about the Fed chair from Senator Kevin Cramer, Republican of North Dakota. The email quoted a talk radio interview in which Mr. Cramer criticized Mr. Trump’s attacks on Mr. Powell.

“This is an area where I frankly disagree with the president. He’s forever attacking the Federal Reserve and particularly Jay Powell,” Mr. Cramer said in the interview. “They are independent of politics, and they ought to remain independent of politics.”

That message met with a positive reaction from Mr. Powell, who replied with one word: “Terrific.”

Mr. Powell has not responded to Mr. Trump’s attacks, even when they are personal. He has repeatedly said that the Fed, which is independent of the White House, does not take politics into consideration.

But Mr. Powell has spent much of his tenure shoring up support on Capitol Hill, meeting with lawmakers from both parties, who routinely give the chair high marks. Their view of the chair matters, because while the president nominates members to the Fed’s Board of Governors, the White House has no other significant power over the central bank. Monetary policymakers answer to Congress.

That reality has not stopped Mr. Trump’s steady drumbeat of criticism. While the Fed cut rates two times after the August tweet, Mr. Trump has continued to blast the central bank. He said this week that “the Fed should get smart” and lower interest rates, and has tweeted about Mr. Powell personally 13 more times.

Article source: https://www.nytimes.com/2020/01/30/business/economy/fed-trump-powell-ugh.html?emc=rss&partner=rss

Many variables cloud the outlook.

Businesses are hesitant to invest when they are unsure of what’s ahead.

According to Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm, research shows that the “level of investment spending recently has been about $100 billion lower than it would have had there been no uncertainty about trade policy.”

That suggests there is room for more investment if trade policy settles.

This week, Mr. Trump signed the new North American trade agreement with Canada and Mexico into law. But tariffs remain on two-thirds of Chinese imports. At the same time, trade frictions with Europe over tariffs, airplane subsidies, digital taxes and the World Trade Organization have ratcheted up.

Also unsettling is the outbreak and spread in China of a mysterious and deadly virus that has the potential to rattle investors, and slow growth in Asia.

On the domestic front, Mr. Trump’s impeachment trial in the Senate and the coming presidential election add another large dose of political volatility.

No matter who becomes the Democrats’ nominee, “we’re likely to have two candidates with very different views on tax, regulatory and trade policy,” said Mr. Luzzetti of Deutsche Bank. “Businesses don’t know which direction that’s going to go in, so they may hold back on spending projects.”

Ana Swanson contributed reporting.

Article source: https://www.nytimes.com/2020/01/30/business/economy/gdp-numbers.html?emc=rss&partner=rss

In addition to supporters like the Natural Resources Defense Council, the payments start-up Stripe and unions including the United Farm Workers, the bill gained the backing of several counties and dozens of elected officials, including Mayors London Breed of San Francisco and Adrian Fine of Palo Alto — both representing cities where development is notoriously expensive and difficult.

But their opponents were also a diverse coalition. Take, for instance, Livable California, a group that was formed largely to oppose Mr. Wiener’s bill and others like it. The organization was founded by homeowners in exclusive suburbs in places like Marin County and the San Francisco Peninsula, but also counts activists from Leimert Park, a middle-class and predominantly African-American neighborhood in South Los Angeles, among its members.

“Nothing in this bill is giving us more say; it’s taking away what little say we have now,” said Isaiah Madison, a 24-year-old graduate student in Leimert Park who recently joined Livable California’s board. “I’m not against development. I am just for communities navigating that development with a developer. We have community plans in South Los Angeles that we’ve been working on for 30 years that included a lot of input from a community that has historically been underrepresented in urban planning, and I think that’s important to protect.”

The road to S.B. 50 began in the previous legislative session, when Mr. Wiener introduced a similar measure that prompted a national conversation about exclusionary land use rules that lead to segregation by income and race. It also tested the degree to which even liberal California voters were ready to embrace higher-density neighborhoods near job centers, an approach that various policymakers and researchers say is crucial to curbing emissions that cause climate change.

That bill was killed in its first committee vote in 2018. Mr. Wiener’s office has spent the intervening years modifying it to attract support. Among other things, provisions were added to protect tenants from displacement and to delay implementation for two years to win over cities that said the bill hampered passage of their own housing plans.

Though the governor’s office says it still wants a big housing bill like S.B. 50, Mr. Newsom has also declared that zoning reform is useless if cities don’t build in line with state housing plans. To that end, he has pushed an initiative to build affordable housing on public land, pressured cities to accommodate more housing and actually issue permits for what it zones, and signed legislation penalizing cities that don’t meet their state housing goals.

Article source: https://www.nytimes.com/2020/01/30/business/economy/sb50-california-housing.html?emc=rss&partner=rss

But Fed Governor Lael Brainard, the last remaining Fed Board member nominated to her current job by President Barack Obama, opposed the move, saying it could weaken the post-crisis safety net and encourage the kind of risk-taking the Volcker Rule was meant to prevent.

“I am concerned that several of the proposed changes will weaken core protections in the Volcker Rule and enable banking firms again to engage in high-risk activities,” Ms. Brainard said in her dissent. “The proposal opens the door for firms to invest without limit in venture capital funds and credit funds.”

Regulators tapped by President Trump have been steadily chipping away at post-crisis banking rules. This would mark the second set of changes to the Volcker Rule, named for the late Paul Volcker, the former Fed chairman who championed it. While the adjustments have been carefully researched and are often subtle, they generally cut in one direction: bank-friendly.

“These actions, particularly the Volcker covered funds proposal, are clearly helpful to big banks,” Ian Katz, an analyst at Capital Alpha Partners, said in a note.

The newly proposed tweaks were couched by regulators as minor, and even as responsive to Congress.

In a staff memo, regulators explained that “during congressional consideration of the Volcker Rule, several members of Congress expressed support for excluding venture capital funds” from the restrictions, specifically referencing comments by Representative Anna Eshoo, a California Democrat, and three retired senators, including Chris Dodd, a Democrat and one of the lawmakers for whom Dodd-Frank is named.

Article source: https://www.nytimes.com/2020/01/30/business/economy/volcker-rule-banks-venture-capital.html?emc=rss&partner=rss

The Chinese government has placed entire cities under lockdown to stop the spread of the coronavirus, and encouraged companies to let their workers stay home.

The moves are expected to result in a major dent in the Chinese economy — and are likely spill over to slow global growth. Jerome H. Powell, the Federal Reserve chair, said on Wednesday that “there is likely to be some disruption to activity in China and perhaps globally.”

The virus has already caused companies including Apple, Ford and Toyota to reroute supply chains and idle factories in China, while Ikea, Starbucks and other businesses have temporarily closed some Chinese stores. British Airways and Air Canada have suspended all flights to mainland China, while other major airlines have reduced the number of flights.

Mr. Ross, a wealthy investor, has been criticized for making controversial or seemingly out-of-touch statements in televised interviews before. In May 2018, he held up a can of Campbell’s soup while arguing that the administration’s metal tariffs would have a minimal effect on consumers. In early 2019, he suggested that workers who had been sent home without pay during the government shutdown should take out personal loans.

The Commerce Department, in an emailed statement, said Mr. Ross had made clear that the first step was to bring the virus under control and help victims of the disease. “It is also important to consider the ramifications of doing business with a country that has a long history of covering up real risks to its own people and the rest of the world,” the statement said.

Article source: https://www.nytimes.com/2020/01/30/business/economy/wilbur-ross-coronavirus-jobs.html?emc=rss&partner=rss

(Mr. Biden has proposed wide-ranging labor-law reforms, though his plan isn’t as ambitious as Mr. Sanders’s or Ms. Warren’s in some respects. He supports paid family leave.)

Keon Liberato, the president of a Philadelphia-based local of more than 200 workers who maintain and construct railroad tracks, said many of his members preferred Mr. Sanders. Mr. Liberato said his members, both African-American and white, knew Mr. Biden as a friend to railroad workers, but tended to believe that taking health care off the bargaining table under Mr. Sanders’s Medicare for All plan “would be huge for the American people.”

In voicing their concerns about Mr. Biden, union officials frequently cite dismay over the Obama years. They acknowledge a number of accomplishments, including the economic stimulus, the rescue of Chrysler and General Motors, and elements of the Affordable Care Act, as well as a variety of pro-labor appointments and regulations. But they express reservations about the administration’s focus on deficit reduction, its ties to Wall Street, and especially its efforts to lower barriers to foreign competition.

“I was really disappointed with his trade policies,” said Nick Diveley, a U.A.W. member in Ottumwa, who supported Mr. Obama in 2008. “That’s what pushed me to Trump.” Mr. Diveley said he was open to voting for someone other than Mr. Trump in the fall but called Mr. Biden “just another established Washington guy.”

Union members and leaders also grumble about the so-called Cadillac tax on expensive health care plans that the Obama administration sought as a way to rein in wasteful spending. “It was an egghead Ivy League idea, that people overuse health care,” said D. Taylor, the president of the hospitality and casino workers union UNITE HERE, which helped lead the unsuccessful fight against the tax.

(The union was supportive of the law and the administration over all; the tax was recently repealed.)

Article source: https://www.nytimes.com/2020/01/30/business/economy/joe-biden-labor-unions.html?emc=rss&partner=rss