ON TAP TOMORROW
LEADING THE DAY Powell lays out stakes of Trump's trade war: Federal Reserve Chairman Jay Powell said Thursday that the central bank is "hearing a rising level of concern" from U.S. businesses about the impact of President Trump's tariffs. Powell said in a radio interview with Marketplace that corporate leaders and analysts in contact with the Fed have become more alarmed about the potential harm Trump's trade policy could do to the economy. The chairman added that while the economy would benefit if Trump's actions lead to lower tariffs and barriers for U.S. goods, a protracted trade war could create "very challenging" economic conditions. Powell said that high tariffs "sustained for a long period of time" could "be a negative for our economy," but that "it's very hard to sit here today, and say which way that's going." His comments come two days after Trump announced plans to impose tariffs on an additional $200 billion in Chinese goods. Those tariffs would follow levies on $50 billion in Chinese exports that are already finalized or in the pipeline. I have more on Powell's comments and projections here. On interest rates: Powell also insisted that no one in the White House, including President Trump, had put any pressure on him to keep interest rates low despite their public comments in favor of looser monetary policy. "Nothing has been said to me publicly or privately that gives me any concern about our independence," Powell said. Consumer prices rise at highest annual rate since 2012: Consumer prices rose 2.9 percent in the year since June 2017, a six-year high, while hourly wages fell 0.2 percent in the same period, according to federal data released Thursday. The consumer price index (CPI) rose almost three percent over the past year, the highest annual increase since February 2012, according to federal data. But hourly wage earnings adjusted for inflation decreased despite record-low unemployment and U.S. businesses struggling to fill thousands of jobs. Economists have struggled to understand why wage growth has lagged while unemployment lingers near 4 percent and growth nears closer to 3 percent of GDP. Consumer prices are starting to rise at levels close to the Federal Reserve's target after years of meager increases. The Fed is keeping a close eye on inflation as it proceeds with several planned interest rate hikes. The central bank is eager to prevent higher spending, tax cuts and the burgeoning trade war from driving prices to unsustainable highs. MARKET CHECK: Reuters: "U.S. stocks climbed on Thursday as top technology names hit record highs and industrials rebounded, offsetting worries about a U.S.-China trade war. "The Dow Jones Industrial Average rose 225.45 points, or 0.91 percent, to 24,925.9, the S&P 500 gained 24.31 points, or 0.88 percent, to 2,798.33 and the Nasdaq Composite added 107.31 points, or 1.39 percent, to 7,823.92." |
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