U.S. Federal Reserve officials, who have tentatively embraced the possibility they can squelch inflation without a recession, meet this week with an autoworkers strike, a possible federal government shutdown, and a student loan squeeze on consumers posing new risks to that best-case outcome.
against all three major automakers on Friday with an initial walkout of around 13,000 employees at three plants, but those numbers could grow. Federal elected officials have only until Sept. 30, when current spending authorizations expire, to come up with a deal or federal agencies will have to shutter, and congressional Republicans have stymied negotiations. Student loan repayments restart in October after a three-year suspension during the COVID-19 pandemic.
With aggressive Fed interest rate hikes still working their way through the economy, banks tightening credit, and consumers reaching the end of pandemic-era savings, it may not take much to jolt the economy off course, said Vincent Reinhart, chief economist at Dreyfus and Mellon and former head of the Fed's monetary policy division.
With the Fed already expected to leave its policy rate at between 5.25%-5.5% at its Sept. 19-20 meeting, any emerging risks may do little more than shift the atmosphere and language around the meeting. A widening strike could cut vehicle production by a third, and, accounting for the spinoff effects throughout the economy, shave as much as 0.7 percentage point from growth for as long as it continues - a large amount for an economy where trend growth is estimated at about 1.8% a year.
Pantheon Macroeconomics' Ian Shepherdson and Kieran Clancy noted this week that a jump in payments to the U.S. Department of Education coincided with a drop in online searches "for 'plane tickets', 'restaurant reservations', and 'new cars'," with the daily headcount of airline passengers dropping and other hard data "offering no hint of any near-term improvement.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
4 things to watch for at this week's Fed policy meetingHere are four things to watch at the Fed's policy meeting this week.
Read more »
Dow futures trade steady, Fed meeting in focus By Investing.comDow futures trade steady, Fed meeting in focus
Read more »
Oil prices steady near 10-mth high with Fed, central banks in focus By Investing.comOil prices steady near 10-mth high with Fed, central banks in focus
Read more »
Asian stocks dip ahead of Fed, Hong Kong shares slump By Investing.comAsian stocks dip ahead of Fed, Hong Kong shares slump
Read more »
Asia FX dips, dollar near 6-mth peak before Fed, c.bank-heavy week By Investing.comAsia FX dips, dollar near 6-mth peak before Fed, c.bank-heavy week
Read more »
Dollar edges lower in cautious trading ahead of Fed meeting By Investing.comDollar edges lower in cautious trading ahead of Fed meeting
Read more »