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Yahoo
19 minutes ago
- Yahoo
3 Reasons You Should Care About the Jackson Hole Economic Symposium
Key Takeaways The Jackson Hole conference will serve as a forum for Federal Reserve officials to signal whether the central bank will start cutting interest rates in September. Fed Chair Jerome Powell may also discuss whether the Fed is changing its inflation-fighting strategy, moving away from a flexible approach that failed to stop inflation from surging after the pandemic. Powell may also defend the Fed's independence from political control amid increasing pressure from President Donald Trump. This year, the Jackson Hole conference in Wyoming is more than just a chance to see central bankers outside their natural annual economics symposium, which begins Thursday, brings together top monetary policy officials from around the world. This year, the central bankers discuss economic policies and research centered on the theme "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy." While that may sound dull, the conversations could affect your wallet. This year, there are at least three reasons the conference is worth paying attention to: Interest Rate Outlook Federal Reserve Chair Jerome Powell is scheduled to give a speech, during which he could provide some insight into whether the Fed is poised to lower borrowing costs in September. The Fed is currently caught in a dilemma about whether to lower the federal funds rate, driving down borrowing costs on all kinds of officials have held the fed funds rate at a range of 4.25% to 4.5% all year. They have kept it higher than usual in an effort to stifle the post-pandemic surge of high inflation, which is still running well above the Fed's goal of a 2% annual rate. Fed officials have also voiced concerns that President Donald Trump's tariffs could push up consumer prices even more and fuel an inflation more recently, tariffs and an immigration crackdown have slowed the economy, grinding down job growth and threatening to increase unemployment. Two members of the 12-person committee that votes on monetary policy have already called for lower rates, and financial markets are betting a rate cut is may use his speech to signal his position on the issue. If he casts doubt on rate cuts, he could shake up expectations and shock financial markets. The Federal Reserve's Decision-Making Framework Powell's speech is also set to cover the Fed's ongoing policy framework review, which could have longer-term implications for monetary policy. The framework is a set of strategies that guide the Fed's decisions on interest rates. Economists expect Powell to discuss whether the Fed is reconsidering its approach to targeting the Fed's strategy is to use monetary policy to keep inflation at an average rate of 2% a year over time. Controversially, in 2020, the Fed adopted a flexible average inflation targeting strategy, meaning that if inflation ran under 2% for a period of time, it would tolerate higher-than-2% inflation for a while. The policy was put to the test almost immediately when the pandemic hit. A surge of inflation in the pandemic's aftermath roiled an economy that had gotten used to over a decade of low inflation. That led some experts to question whether the Fed's new policy had been a little too flexible. It delayed the central bankers' cranking up interest rates to fight inflation and contributed to price increases getting out of hand in including Deutsche Bank economists, expect Powell to say the central bank is changing its flexible approach."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," Matthew Luzzetti, chief economist at Deutsche Bank, wrote in a commentary. "For this reason, we expect Powell's speech in Jackson Hole to highlight changes to the Fed's statement on longer-run goals that will reflect this reality." The Fed's Independence The high-profile conference is also a chance for Powell and other officials to assert the central bank's independence from direct control of the White House. As it's currently set up, the president does not control interest rates and has only limited authority to change the makeup of the committee in charge of recent months, President Donald Trump has challenged that status quo, demanding that the Fed lower interest rates and threatening to fire Powell. He has even threatened to take legal action against Powell and other fed officials, turning up the pressure on policymakers to either follow his lead or said the Fed's traditional independence from political influence is one reason for the relative stability of the U.S. economy. Countries where the central bank is more under the direct control of the president typically submit to pressure to lower interest rates, and according to several studies, they have higher rates of inflation and poor economic performance. Read the original article on Investopedia
Los Angeles Times
21 minutes ago
- Los Angeles Times
Texas shows how Trump's anti-green moves threaten a red economy
Deep-red Texas needs to build power plants at an astonishing speed and scale to keep its economy humming. President Donald Trump just made that much harder. So many data centers, crypto-mining operations and factories are planned for the Lone Star State that its peak electricity demand is poised to surge in the next five years — perhaps even double. The vast majority of new power capacity planned there would utilize the sun, the wind or batteries. But Trump's One Big Beautiful Bill kills tax credits for renewable projects starting in 2028, making them more expensive to build. Other states face the same problem, as power demand nationwide is expected to soar after decades of minimal growth. But it's particularly acute in Texas, which has been rapidly adding renewable energy while it struggles to build gas-burning power plants. The state's bustling economy will be threatened if it can't add more electricity. Texas' gross domestic product jumped 51% from 2020 through 2024 — compared to 37% for the country as a whole — fueled by cheap power. 'We're in an energy crunch,' said Joshua Rhodes, an electricity expert and research scientist at the University of Texas at Austin. 'We should be doubling down on everything we can build right now. Making things more expensive is antithetical to that.' Clean power is expected to continue growing across the US, despite Trump's tax and spending bill. But the legislation will cut the amount installed. BloombergNEF, for example, forecasts that annual deployment of new solar, wind and energy storage facilities in 2035 will be 23% lower than it would have been without the bill. Oil and gas get most of the attention, but green energy has been the Texas economic boom's secret ingredient. All but 6% of new electric capacity added to the state's grid since 2020 has come from renewables or batteries. With vast, windswept plains, Texas has long been the top market for wind power. Solar surged as panel prices declined almost 50% in the past five years. It certainly helps that renewables are fast and relatively easy to install, compared to fossil fuel power plants that take years to build. Texas now has more clean energy and storage systems than any other state, supplying more than 30% of its electricity. Texas enjoys relatively low electricity prices — which have become a magnet for energy-hungry facilities like data centers. The state's power grid manager, known as Ercot, forecasts peak demand to approach 150 gigawatts by 2030, up from a record of 85.5 gigawatts in 2023. Transmission service providers, including utility companies, say demand could get even higher, topping 200 gigawatts in 2030. For a sense of scale, a gigawatt is the output of one commercial nuclear reactor and can power about 200,000 Texas homes. The state now has about 178 gigawatts of installed generating or storage capacity, but not all of that electricity is available at any given moment. Gas and coal plants need to be taken offline for maintenance, batteries must recharge after use, and the output of solar and wind facilities varies with the weather and time of day. There always needs to be a comfortable cushion between installed capacity and actual demand. Texas' grid is largely cut off from the rest of the country, so meeting expected demand growth will require adding lots of generation within the state — quickly. The state's clean-energy boom had been expected to continue. But with Trump's budget bill, wind and solar projects that go into service after the start of 2028 will no longer qualify for key federal incentives, unless they begin construction by July 5, 2026. Less-profitable projects will likely be cancelled. A White House spokesman said that depending on 'unreliable energy sources' could lead to reliability issues. The new policies will prompt developers to focus instead on domestically produced coal, gas and nuclear energy, Deputy Press Secretary Harrison Fields said in an emailed statement. Led by Republican Governor Greg Abbott, Texas officials have tried to encourage construction of power plants burning natural gas. They've even set aside $5 billion of public money to offer gas plant developers low-interest loans. But projects keep dropping out of the loan program due to cost uncertainties and problems procuring equipment. Indeed, there's currently a global manufacturing shortage of the turbines used in gas-fired plants, with a five-year backlog for new orders. Anyone planning a new gas plant faces a long wait for the gear. A spokeswoman for Ercot said the state continues to see new power-generating projects being proposed to address growing demand. But any obstacle to new supplies poses a threat to the Texas economy, which would be the world's eighth-largest if the state were considered as a country. Curtailing renewables would mean less electricity added to the grid. The renewable plants that do get built will cost more than before the One Big Beautiful Bill, driving up prices. Residential ratepayers in Texas could pay about 23% more in 2035 than they would have if the bill hadn't upended the market, while industrial customers could see bills surge 54%, according to Energy Innovation Policy & Technology, an energy and climate think tank. Higher utility bills for consumers will mean less money to spend elsewhere every month. 'We will severely restrict economic growth,' said Doug Lewin, a Texas energy expert and president of Stoic Energy Consulting. 'Because we can't grow without energy.' Wade, Malik and Sanchez write for Bloomberg. Mark Chediak and Jennifer A. Dlouhy contributed.
Business Insider
22 minutes ago
- Business Insider
Sony blames 'challenging economic environment' for PS5 price hikes
It's about to get more expensive to escape reality. PlayStation, owned by Sony, announced on Wednesday that it will increase the recommended retail price for its PlayStation 5 consoles by about $50 starting August 21. "Similar to many global businesses, we continue to navigate a challenging economic environment," PlayStation said in a press release. President Donald Trump's tariffs have pushed numerous companies to consider price increases for their US consumers, including Shein and Adidas. Sony's decision to hike PS5 prices follows a similar move by its rival Nintendo, which said it would also raise prices for its original Switch console in the US. Nintendo cited "market conditions" in a press release earlier this month. The PS5 burst onto the gaming scene to immense fanfare in 2020, becoming the biggest console launch in US history at the time. The PS5's popularity made it difficult for Sony to keep up with demand, which made purchasing the coveted console difficult for gamers — even six months after its release. Sony shared the following new prices for the PlayStation 5: PlayStation 5 — $549.99 PlayStation 5 Digital Edition — $499.99 PlayStation 5 Pro — $749.99
