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Yahoo
6 minutes ago
- Yahoo
Rate cut watch: All eyes on Fed Chair Powell's final Jackson Hole speech
As Federal Reserve officials gather in Jackson Hole, Wyo., this week for their 43rd annual economic policy symposium, Federal Reserve Chair Jerome Powell and his central bank colleagues face a dilemma: hold interest rates steady in September on account of rising inflation, or lower rates thanks to weaker job market reports. That's what a very divided Fed is tussling with as markets are pricing in a quarter percentage point rate cut next month — and President Trump pounds Chair Powell to lower rates. Investors will be listening for clues about what the Fed may do in September when Chair Powell gives his speech on Friday at 10 a.m. ET at the storied Jackson Lake Lodge in the middle of Grand Teton National Park. It will be his last speech in Jackson Hole as Fed chair. Fed officials have been closely watching for the impact of tariffs on inflation. But recent readings from the Consumer Price Index and the Producer Price Index have shown mild effects from tariffs as services inflation unexpectedly heated up in July, catching the attention of some Fed officials. Services account for the majority of the US economy, while goods just account for 11% of GDP. Chicago Fed president Austan Goolsbee cautioned last week that if we see services inflation heading higher in subsequent reports, that would be a concern. Other officials, including Kansas City Fed president Jeff Schmid, Cleveland Fed president Beth Hammack, and Atlanta Fed president Raphael Bostic, have been more concerned about inflation. Inflation is now running a full percentage point above the Fed's 2% target. But Bostic also believes that a weaker-than-expected July jobs report raises the risk that the labor market may be weakening. Bostic says the Fed's task is to figure out how much the job market has slumped by the next policy meeting and whether the central bank should cut rates. Read more: How jobs, inflation, and the Fed are all related The latest government jobs report showed a weaker reading on the labor market, with just 73,000 jobs added in July and with downward revisions to the prior two months, bringing the three-month average employment gain down to 35,000. Following that report, San Francisco president Mary Daly and Minneapolis Fed president Neel Kashkari both turned from more of a 'wait and see' approach to one of concern about the outlook for the job market. They join Fed governors Chris Waller and Michelle Bowman, who both dissented at the July policy meeting, preferring to cut rates by 25 basis points on concerns about jobs. Following the July policy meeting, Chair Powell reiterated that more time is needed to assess how Trump's tariffs will affect the path of inflation and the strength of the economy. He told reporters there is still a "long way to go' to figure out exactly what the impact of tariffs is, adding, "You have to think of this as still quite early days." He also made it clear that inflation was still a concern as the Fed balances its dual mandate of stable prices and maximum employment, saying, 'The economy is not performing as though restrictive policy is holding it back inappropriately, and modestly restrictive policy seems appropriate. All that said, there's also downside risk to the labor market.' Powell noted that a good amount of data before the September policy meeting will help inform the Fed's view. The question is whether the weak July jobs report is enough for Powell, who saw downside risks to employment in July. Markets are pricing in a rate cut for the next policy meeting on Sept. 17, though odds have receded slightly in recent days following a hotter-than-expected report on wholesale prices. 'Markets are still wholly convinced that the Fed will cut rates by 25bp at the upcoming FOMC meeting in September and follow that up with at least one other cut in October or December,' said Paul Ashworth, chief North America economist for Capital Economics. Ashworth says he expects that Powell, at Jackson Hole, will caution that a 'modestly restrictive policy stance remains appropriate,' as the Fed chair did in his press conference following the July policy meeting. Luke Tilley, chief economist for Wilmington Trust, said he could also envision Powell expanding on how the Fed takes into account backward-looking data versus forecasted data to make a decision on monetary policy. He is also looking to see whether the Fed chair expounds on how the central bank gauges its progress on its two goals, maximum employment and price stability, and how it calibrates interest rates accordingly. Framework unveiled? Fed Chair Powell is also set to announce the results of the central bank's policy framework review at Jackson Hole. The Fed is revisiting changes made to its strategy for monetary policy, tools, and communication last changed in 2020. The central bank adjusts its framework every five years. The last iteration of the framework adopted a flexible average inflation target, given that in the years preceding 2020 inflation remained slightly below the Fed's 2% target. Given the recent bout of inflation, and the risks it poses to inflation expectations and consumer sentiment, the Fed is likely to drop that. 'While the adoption of the new framework in 2020 was not the primary factor behind the Fed's delay and the substantial inflation overshoot, it contributed to this outcome,' said Matt Luzzetti, chief US economist for Deutsche Bank. As a result, Luzzetti expects Powell's speech to restore a more preemptive strategy for monetary policy that recognizes risks of supply shocks and return to a balanced view of inflation and the job market. 'The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,' Powell said in a speech in May. Powell noted in that May speech that inflation could be more volatile going forward than in the 2010s and that the US may be entering a period of more frequent, and potentially more persistent, supply shocks. Powell also said that Fed officials may reconsider 'shortfalls' around trying to get to the Fed's 2% inflation target and average inflation targeting. He also stressed enhancing the central bank's formal policy communications, particularly regarding the role of forecasts and uncertainty. Investors will watch for whether the Fed rolls out changes to its quarterly Summary of Economic Projections, which contains the famous 'dot plot,' a compilation of each member of the FOMC's expectations for interest rates that year. Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
7 minutes ago
- Boston Globe
In Mississippi, one of the neediest states, Trump's federal funding cuts hit with extra heft
Then, in March, EPA terminated the grant 'on the grounds that the award no longer effectuates the program goals or agency priorities.' Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Holes puncture the stained glass windows of the chapel on Voice of Calvary Ministries' campus in Jackson, Miss. in July. A $20 million EPA grant was supposed to help renovate the century-old former school building before it was canceled by the Trump administration this spring. Julian Sorapuru/Globe Staff Mississippi, a stronghold of President Trump's political power that he won by more than 20 percentage points in 2024, is also one of the nation's Dominika Parry, founder of the environmental justice nonprofit Advertisement Parry is working without pay as a result of the cut and, months later, she remained baffled by it. 'How is this project wasteful in any way?' she asked. 2C Mississippi is with more than 20 other nonprofits and municipalities that also lost grants. Grant cancellations like the resilience hub have become common in Mississippi and across America since the Trump administration empowered the Department of Government Efficiency, under the early leadership of Elon Musk, to implement sweeping spending cuts and funding freezes that have touched almost every federal agency. In a statement to The Boston Globe, a senior White House official said, 'The Trump administration is committed to ending the Green New Scam and restoring American energy dominance. We will no longer fund 'environmental justice' projects in any state.' Debris from two powerful tornadoes in March was still visible in Walthall County, Miss., in July. FEMA aid to the area was slowed by President Trump's reticence to declare a national emergency. Julian Sorapuru/Globe Staff Mississippi receives Mississippi Governor Tate Reeves recently signed a law that would gradually Advertisement But the potential of declining state revenue coupled with the loss of federal funds has Representative Bennie Thompson — the sole Democrat in Mississippi's congressional delegation — worried. 'One of the neediest states will become even needier,' he predicted. 'There's no cavalry to come to help after the federal government.' So far, Republican state officials have largely supported Trump's policies, including the cuts. Mississippi's attorney general, like her counterparts in other GOP-controlled states, has US Senator Roger Wicker of Mississippi, a Republican, is anticipating continued support for GOP spending cuts among constituents in his deep red state. 'I really think the majority of citizens in Mississippi are satisfied that we've made judicious savings,' he told the Globe, promising federal dollars would still flow into the state via infrastructure funds and military manufacturing contracts. It's Wicker's smiling face that graces a photo hanging on a wall at Community Students Learning Center in Lexington, a small town separated from Jackson by 63 miles of verdant farmland. One of the senator's hands rests on the shoulder of Beulah Greer, executive director of the center. Wicker signed the photo years ago and inscribed it with a message: 'To my friend Beulah Greer with best wishes.' Advertisement Now, Greer is anxious about the future of her nonprofit, which for over two decades has filled community needs big and small, doing everything from helping residents pay expensive utility bills to offering mental health crisis training to local law enforcement . About 85 percent of her organization's budget currently comes from a Department of Justice program None of their grants have yet been cut, but Greer said they were unable to re-apply for next year's funding cycle since DOJ paused solicitation for the grant for months starting in late January following Trump's inauguration. The disappearance of Community Students Learning Center would have ripple effects in the 1,400-person town where Greer and her husband, Lester, are well known as problem solvers. The organization has completed many successful projects backed by federal grants from agencies ranging from the Department of Education to the Department of Agriculture. The Greers' nonprofit also built five homes in Lexington for purchase at a reduced price as part of a 2010 Department of Housing and Urban Development program for rural areas. 'I had been trying to find a house when somebody told me, 'Go see Beulah and Lester,'' said Lillie Williams, a Lexington resident. That was more than 10 years ago. These days, Williams sits out on her front porch with her nine dogs and enjoys the peaceful woods surrounding her home. Lillie Williams sat on the front porch of her Lexington, Miss., home with two of her nine dogs in July. Williams bought the home over a decade ago from Community Students Learning Center as part of a HUD program selling single family homes in rural areas at a reduced cost. Julian Sorapuru/Globe Staff 'The Bible says to whom much is given, much is required. And I believe what we do is what people ask us to do,' Greer said. Advertisement It's a spirit Greer thinks is currently lacking in her leaders, including Wicker. 'He's working in the political forum, not on what's humanly right,' she said. 'This is hurting his constituents. I feel like he needs to speak up about what's right in his heart.' Greer hopes the Trump administration reconsiders its funding priorities. 'The resources are really squashing the people at the bottom, it's like you're getting mashed,' Greer said. A Trump administration official, she said, should 'come here and look how we're trying to survive, and then you might have a little more compassion.' DOJ did not respond to a request for comment. Mississippi state agencies have also felt the financial effects of federal pullback. The US Department of 'The COVID-19 pandemic is over and the American people have moved on,' the senior White House official told the Globe. 'It's time for the government to move on as well and stop wasting billions in taxpayer dollars.' When the nonprofit lost federal funding through the Mississippi State Department of Health this spring, it was forced to shut down its clinic-on-wheels program that provided sexual health services to medically underserved communities across the state. Advertisement The nonprofit also had to furlough or fire half its staff, according to chief executive June Gipson, due to uncertainty around various other federal grants, such as Centers for Disease Control and Prevention funds that arrived late. They also had a 10-year, $12 million National Institutes of Health grant aimed at Gipson said it was the first time she's had to reduce the organization's workforce since she started leading it more than a decade ago. Even though some of the nonprofit's federal funding remains untouched, Gipson is wary of what's to come. The Mississippi State Department of Health's budget is 66 percent federally funded. 'How do you move forward and trust the federal government at this point?' she asked. Deja Abdul-Haqq, a program director at the nonprofit, who was furloughed until recently, believes 'the entire United States is going to turn into one big Mississippi, riddled with infectious and chronic disease' as a result of the federal government's shifting health funding priorities. The My Brother's Keeper cuts hit close to home for DR, a Jackson resident who has lived with HIV for years and requested anonymity for fear of antigay stigma. He learned he had contracted HIV when he got tested at a state-sponsored STI clinic, known as which is operated by My Brother's Keeper. It was there he met his doctor, Laura Beauchamps. 'She says, 'You now have AIDS.' And Lord knows that's the last thing I wanted to hear,' DR said, his eyes becoming misty. 'She was like, 'It's not the end. We're gonna get you on the medication that you need.'' In the end, DR said, Beauchamps 'was more positive than the virus' and helped save his life physically and emotionally. Today, DR's viral load is so low that it's undetectable and untransmittable. The empathetic, compassionate care DR received at Open Arms is something he hopes other people with HIV get to experience in Mississippi, a state with 'Had it not been for Open Arms, Dr. Beauchamps, and all the other providers, who knows if we would be having this conversation," DR said. 'Or, if I were here, what would my quality of life be like? So, the cuts do not sit right with me. 'The safety net is gone,' he continued. 'If you jump off this ledge thinking that the bungee cord is gonna snap you back up, there is no cord.' Julian E.J. Sorapuru can be reached at
Los Angeles Times
7 minutes ago
- Los Angeles Times
Trump's missile defense system is nothing but fool's gold
There can be wisdom in cliche. More than 120 years after philosopher George Santayana wrote, 'Those who cannot remember the past are condemned to repeat it,' his well-known phrase remains an essential guide for national defense. Case in point: The French failed to draw the proper lessons from the brutal trench warfare of World War I and constructed a better, yet still fixed, static defense in the 1930s — the Maginot Line — that was simply bypassed by the Germans on their way to Paris during World War II. It can also be a mistake to learn too much from a recent success, applying those lessons to different circumstances. For example, Israel has been remarkably successful at ballistic missile defense with its 'Iron Dome,' built to defend against short- and medium-range missile attacks from its regional enemies. So President Trump has launched his program to expand current U.S. missile defenses and build a 'Golden Dome' — similar in concept, but designed to defend the entire U.S. against long-range missile attacks. And already, with little national debate, Congress is allocating $38 billion this year toward the estimated $175-billion final cost, to be completed by January 2029 — its timing a parting gift from the president (assuming he leaves the White House on schedule). Is this modern shield a sustainable or wise choice for allocating U.S. defense dollars? It assumes that the Israeli missile defense against threats in its neighborhood can be replicated by the United States — a nation nearly 450 times the size of Israel — against global threats including the world's big boys, Russia and China. That assumption could produce a massively expensive venture, not 'golden' but instead built of fool's gold, with as little thought for the future strategic environment as the French gave to the Maginot Line. The vision of an American public protected from nuclear disaster is alluring — and the threats are real. Ballistic missiles are a clear danger to U.S. allies and bases and our homeland. Russia has hundreds of long-range ballistic missiles that can strike the U.S. within minutes; China is enhancing its arsenal of long-range weapons and has a huge arsenal of shorter-range missiles that could hit Taiwan and other U.S. allies and bases in the Asia-Pacific region. Ominous, yes. But even more important in assessing the Golden Dome is that today's threats are rapidly evolving, beginning with long-range ballistic missiles. These systems traveling at significantly greater speeds are inherently harder to defend against than the threats facing Israel. Russia, China and others are also investing in advanced missiles designed to evade defenses through their trajectory, maneuverability and the deployment of decoys. Shorter-range ballistic missiles too are becoming more capable of evasion. When fired in large groups they can penetrate a significant defense, as Iran did at times during June's 12-day war with Israel. Nor are ballistic missiles the only strategic threat. Witness Ukraine's use of cheap, conventionally armed drones to target Russia's strategic bomber force in a successful surprise attack in May. We should anticipate our adversaries' investing in cheap swarms of lethal drones and other new technologies to bypass our eye-poppingly expensive Golden Dome, like German tanks bypassing the Maginot Line. The design of the Golden Dome defense also remains incomplete. It will reportedly include both ground and space-based interceptors as part of a layered defense. But the details are sketchy and still difficult to assess. U.S. defense contractor Lockheed Martin says the Golden Dome is 'about connecting a global array of complex systems that need to work at lightning speed and with pinpoint precision at the mission's moment of truth.' That sounds impressive, even intimidating. But the rules of physics, and the offense-defense dynamic, have historically worked against strategic missile defense systems. Incoming weapons must be detected; interceptors must be guided to their targets through swarms of decoys; and the defense at the 'moment of truth' must achieve a near-perfect score against an increasingly lethal array. Imagine a relatively 'small' attack of 100 nuclear-tipped missiles and a Golden Dome that shoots down 80% of the incoming barrage. Pretty good. But that still leaves 20 nuclear warheads capable of destroying 20 American cities — with swarms of undetected nuclear-tipped drones mopping up — and space-bound nuclear detonations devastating civilian and military communications for years. Could any rational American president rely on such a defense in an actual crisis? Also, what if an American president, believing the rhetoric surrounding the Golden Dome, calculated that he or she could achieve American dominance through the threat or actual use of nuclear weapons — without fear of a nuclear response? As we became more isolated from allies and others around the world, the Golden Dome could help enclose us in a kind of gilded cage. Which brings us back to the cost. The Trump administration estimates the Golden Dome's price tag to reach $175 billion. Yet the Congressional Budget Office believes the space-based interceptors alone could cost more than $500 billion — equivalent to half of the annual defense budget. In a new era of federal spending, which will greatly expand our budget deficits while shrinking programs for our citizens most in need, the cost of the Golden Dome is unconscionable. Forty years ago, President Reagan proposed an ambitious, highly complex, missile defense system with space-based interceptors. Reagan's special advisor, Paul Nitze, declared that 'Star Wars' (as the media dubbed it) should be deployed only if the defense were effective, survivable and 'cost effective at the margins' — or in his words: 'They must be cheap enough to add additional defensive capability so that the other side has no incentive to add additional offensive capability to overcome the defense.' The Nitze criteria prevailed: Two successive U.S. administrations recast America's missile defenses to focus on short- and medium-range threats, not the immensely more capable threats from Russia and China. Over time, our missile defenses became more affordable, focused and effective — without the expense of space-based interceptors. The savings were applied to other defense and domestic priorities. And America became stronger still. A good lesson from the past. Steven Andreasen, who served as the National Security Council's staff director for defense policy and arms control from 1993 to 2001, teaches public policy at the University of Minnesota. Anthony Lake was a national security advisor in the Clinton administration.
