Business
Behind Powell’s High-Stakes Decision to Stay at the Fed
Over the past year, Jerome H. Powell has frequently said that the Federal Reserve faced “no risk-free paths” as it confronted a series of economic shocks that simultaneously lifted inflation while denting growth.
The same could be said for his momentous decision to stay on at the Fed as a governor after his term as Fed chair ends May 15.
In choosing to stay, Mr. Powell used the one tool of leverage he had left to push back on an administration that has aggressively attacked the central bank for its refusal to bend to the president’s demands for lower interest rates. Unless another Fed governor departs, President Trump will not have another vacancy to fill until Mr. Powell’s term ends in January 2028, stymieing the president’s plans to get more of his supporters on the powerful board of governors.
The move, which Mr. Powell announced on Wednesday at his final news conference after eight years as chair, drew an immediate rebuke from the administration. Mr. Trump quipped that Mr. Powell was staying because “he can’t get a job anywhere else — nobody wants him.” Scott Bessent, the Treasury secretary, called Mr. Powell’s decision a “violation of all Federal Reserve norms.”
On Thursday, Mr. Trump seemed to soften his approach, saying during remarks at the White House that he did not care if Mr. Powell stayed on and only was concerned about getting his Mr. Warsh into the top job.
The question now is whether Mr. Powell’s continued presence will further inflame tensions between the administration and the central bank, leading to even more intense attacks that will keep the institution on the defensive. Weeks before Mr. Powell announced his decision, Mr. Trump threatened to fire him if he did not resign after his term as chair ended.
“This could still go sideways, and if it does, some people will point to Powell staying as a provocation,” said Claudia Sahm, a former forecaster at the Fed who is now the chief economist at New Century Advisors. “Stay or go, there are risks on either side of this.”
Mr. Powell made clear on Wednesday that he wanted nothing more than to leave the Fed. Yet he said he had “no choice” but to stay and guard against further encroachments on the institution where he has served for nearly 14 years, first as a governor and then as chair. The last time a chair whose term had expired stayed on as a governor was in 1948.
“I’m literally staying because of the actions that have been taken,” Mr. Powell said when asked about whether his decision would be viewed as a political act. “I have long planned to be retiring.”
The decision had nothing to do with Kevin M. Warsh, Mr. Trump’s pick to replace him as chair, Mr. Powell stressed on Wednesday.
He said he took Mr. Warsh at his word that he would stand up to political pressure from the president. Mr. Powell also vowed to keep a “low profile as a governor,” despite retaining a vote on decisions around rates and other policies.
William Dudley, who previously was the president of the Federal Reserve Bank of New York, said he expected Mr. Powell to stay relatively quiet and embrace a “one man, one vote” approach.
Mr. Powell spent much of his news conference explaining that his decision to stay rested on a belief that the central bank’s independence was fundamentally “at risk” amid a litany of legal threats that were far from over.
“These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions,” he said. “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.”
Top of mind for Mr. Powell is a criminal investigation that the Justice Department began against the Fed regarding renovations to its headquarters in Washington and whether he lied to Congress about the plans. Federal prosecutors dropped the inquiry on Friday, but maintained that they could reopen it at any point. Jeanine Pirro, the U.S. attorney for the District of Columbia, said on Thursday that there was “no question” the Justice Department would appeal a federal judge’s recent ruling that quashed subpoenas issued to the central bank. For now, the Fed’s inspector general is looking into the renovation, an inquest that Mr. Powell requested in July.
“You’ve got billions of dollars in cost overruns on a very small project,” she said, adding that prosecutors would await the “decision” by the Fed’s internal watchdog and “based upon that decision we will then decide what we are going to do.”
Mr. Powell has long stipulated that he would not leave the Fed until the Justice Department’s investigation was “well and truly over, with finality and transparency.” But a mounting concern is whether Mr. Trump will now use the allegations leveled in the investigation to try to fire Mr. Powell, having already accused him of “incompetence” and questioned whether he committed fraud.
“There’s definitely a cost-benefit analysis one would think Powell engaged in, and the cost of staying is that it greatly increases the likelihood that there will be a for-cause removal case against him involving the renovations, which would be a novel litigation,” said Lev Menand, an associate professor at Columbia Law School.
A president can remove a Fed official only for cause, which legal experts interpret to mean gross misconduct or a dereliction of duty. The issue is being debated by the Supreme Court after the president’s attempt to fire Lisa D. Cook, a governor, in August.
Joseph Gagnon, a former senior member of the Fed staff who is now at the Peterson Institute for International Economics, said it was crucial for Ms. Cook to win that case. “If they let Trump fire governors at will, then there’s no more independent monetary policy,” he said.
If Mr. Trump or the Justice Department pursues any additional legal actions, “being on the inside is always better than being on the outside,” Scott Alvarez, who previously served as the Fed’s general counsel, said of Mr. Powell’s decision to stay.
Graham Steele, a longtime financial regulation lawyer and a former Treasury Department official, noted that there would be “strategic” advantages in doing so, such as “physical proximity, access to information and the institutional halo effect that come from being a sitting governor.”
For the time being, Mr. Powell’s continued presence at an institution that has gone through so much tumult in the past year and is now on the cusp of a major leadership transition is “symbolically really important,” said Jon Faust, a fellow at the Center for Financial Economics at Johns Hopkins University and a former senior adviser to the outgoing chair.
What perhaps will matter even more is when Mr. Powell decides to leave, Ms. Sahm said.
“It will mean so much when he says, ‘I’m ready to retire,’ because that will be a sign from someone who cares deeply about the institution that it’s going to be OK.”
— Tony Romm contributed reporting.
Airbnb unveiled a new set of services for guests on Wednesday, adding car rentals, airport pickup and grocery delivery to its online marketplace that connects travelers with local hosts.
Customers can now get groceries delivered to their Airbnb through a partnership with Instacart and have a driver meet them at the airport with Airbnb’s Welcome Pickups. The app is also offering luggage storage in partnership with Bounce and will add in-app car rentals later this summer.
At the same time, Airbnb is ramping up its use of AI by adding AI-powered review summaries and lodging comparisons, the company said.
The company has been expanding beyond lodging since last year, when it introduced Airbnb Experiences and Services, giving guests the option to book private tours and chef-cooked meals through the app.
In an earnings call earlier this month, the company’s chief executive, Brian Chesky, said the company is at “the very, very beginning of how AI is going to change how we all do our jobs.”
The changes are coming in time for the 2026 FIFA World Cup, which will take place in 16 cities across the U.S., Mexico and Canada. The company said its offering exclusive World Cup experiences, such as watch parties and access to stadiums.
“In terms of what we’ve seen in cumulative bookings heading into the event, the World Cup is slated to be the largest event in Airbnb’s history,” said the company’s chief financial officer, Ellie Mertz, on the earnings call.
Airbnb gained popularity for offering travelers unique and homey stays on other people’s property, but it added boutique hotel bookings to its platform late last year. The move had some customers questioning if the app was straying too far from its original purpose.
In its announcement this week, the company said it is partnering with more independent hotels in 20 top destinations, including New York, London and Singapore. On the earnings call, Chesky said hotels on Airbnb could become a multibillion-dollar revenue business.
The San Francisco-based company was founded in 2007 and gave homeowners the opportunity to earn money by renting out their space to travelers seeking something different from a hotel. Airbnb bookings can range from private bedrooms in a shared home to luxury mansions and yachts.
The company’s revenue grew 18% year over year to $2.7 billion in the first quarter, while net income increased slightly to $160 million. Airbnb’s new services and offerings could transform it from a home-sharing platform to a holistic travel marketplace, analysts said.
Shares of the company have increased by 14% over the past six months and fell by less than 1% on Thursday.
Elon Musk wants to take investors on a ride to the moon — and beyond.
His pioneering rocket company SpaceX filed Wednesday for what’s expected to be the largest initial public offering in history, potentially raising at least $75 billion and valuing the company at as much as $2 trillion.
The registration statement with the Securities and Exchange Commission for an expected public offering next month explicitly sets aside stocks for retail investors, though the exact number will be spelled out in a later filing, as will the offering price and company valuation.
Interest in the stock offering is expected to be high despite the billionaire’s controversial politics, including his involvement last year with the Department of Government Efficiency, the makeshift cost-cutting effort that resulted in the loss of hundreds of thousands of government jobs.
“Potential investors are probably just as polarized as the electorate is too, given his dabbling in politics,” said Carol Schleif, chief market strategist for BMO Private Wealth. “But it’s not just the SpaceX IPO per se, it’s a bigger, broader excitement among investors for space investment in general.”
Investor interest was piqued by the Artemis II moon mission this year that SpaceX did not participate in, she said. However, the company is expected to play a larger role in future missions that take astronauts to the moon..
Ultimately, Musk, 54, wants to establish a colony on Mars but those plans have been set on the back burner, with NASA now focusing on moon missions.
Musk will remain the company’s chief executive and chairman. Under a dual-class stock structure as a holder of special Class B shares he will be able to control the election of directors, the filing says.
The IPO is expected to be at least twice as large as the current record holder: Saudi Aramco, the state-controlled national oil and gas company of Saudi Arabia, which raised nearly $30 billion in 2019.
Nearly two dozen banks will be underwriting the IPO and offering shares to investors, including Goldman Sachs, Bank of America and Citigroup.
Founded in 2002 in El Segundo, SpaceX has revolutionized the aerospace industry by developing the reusable Falcon 9 rocket that has radically lowered launch costs.
The company moved its headquarters from Hawthorne to Texas in 2024. However, SpaceX retains large operations in the South Bay city and blasts off regularly from Vandenberg Space Force Base in Santa Barbara County.
Scores of former SpaceX employees have launched startups in Southern California, including rocket company Relativity Space, hypersonic missile startup Castelion and satellite manufacturer Apex Space.
Since developing its reusable rocket technology, SpaceX has established its Starlink network as the leading satellite-based broadband internet service. It also is moving into satellite-based cellular service and this year merged with Musk’s xAi artificial intelligence company that also included his X social network.
Marco Cáceres, an aerospace analyst at Teal Group, said that the advantage of going public for SpaceX lies in the IPO’s ability to raise a large amount of capital quickly to complete development of its Starship rocket.
“It is going to dominate the market even more than the Falcon 9 is dominating the market now,” he said. “That’s going to be ultimately what’s going to drive their business for the next 10 years.”
The 12th test launch of Starship is set for Friday from the company’s south Texas launch facility. The rocket is the third version of craft, standing more than 400 feet tall and with about three times the payload of the second version.
The regulatory filing claims that the market for its rocket, internet and mobile telephone businesses could be as large as $28.5 trillion.
SpaceX also plans to launch thousands of orbiting data centers powered by the sun that would perform AI calculations.
With the company making massive capital investments, it recorded a $4.28-billion loss in the first quarter. Last year, it recorded $18.7 billion in revenue and lost $4.94 billion, according to the filing.
The public offering is expected to hit the market next month after a “road show,” during which SpaceX will seek to drum up interest from institutional and retail investors.
It will arrive after a fairly quiet year for IPOs that was brightened last week when Cerebras Systems, a Sunnyvale company that makes semiconductors for AI supercomputers, went public.
Shares at Cerebras were offered at $185 and jumped 68% on its opening day. They closed Wednesday at $290.69.
Matt Kennedy, a senior strategist at Renaissance Capital, said the SpaceX offering would dwarf that of Cerebras, as it is expected to raise more than every IPO combined in the last two years.
“A win here or a loss could really impact the IPO market,” he said. “The sheer size of this deal is going to make or lose fortunes.”
Among the oddest disclosures of the IPO is a decision by the company’s board in January to grant Musk 1 billion Class B shares if the company reaches a certain market capitalization and establishes a “permanent human colony on Mars with at least one million inhabitants.”
Erewhon opened its newest location in Glendale on Wednesday, marking the luxury grocer’s 14th store in Southern California with more set to open soon.
The new store, located at 520 N. Glendale Ave., includes the chain’s signature cafe and tonic bar as well as an indoor-outdoor patio space.
Known for its upscale, trendy products and high prices, Erewhon has grown into a tourist destination in Los Angeles and a hot spot for celebrities and influencers.
The Glendale location will bring Erewhon staples to trendy consumers in the area, including the beloved Strawberry Glaze Skin Smoothie, which until last year was named after the model Hailey Bieber.
Employees at the store handed out complimentary gift bags and fresh flowers during the grand opening Wednesday morning.
“This location was designed to reflect the spirit of the neighborhood while creating a welcoming space to gather, centered around wellness, connection, and a commitment to the quality standards that define Erewhon,” Erewhon President Josephine Antoci said in a statement.
The company purchased the space, which was formerly a hardware store, in 2024.
Erewhon has locations in several of Southern California’s wealthiest areas, including Calabasas and Beverly Hills. It also has stores in Venice, Manhattan Beach and at the Grove.
“Erewhon’s decision to invest in Glendale reflects confidence in our city’s economic future,” Glendale Mayor Ardashes Kassakhian said in a news release.
The grocer was founded in 1966 by Japanese immigrants Michio and Aveline Kushi — pioneers of the natural-foods macrobiotic movement — who began selling imported organic goods out of their Boston home. In 1969, the company opened its first Los Angeles location on Beverly Boulevard.
Josephine and Tony Antoci bought the company in 2011 and helped launch it to its luxury status with a cult-like following. Tony serves as chief executive while Josephine handpicks much of the store’s merchandise.
By the mid-2010s, Erewhon had become a watering hole for celebrities such as the Kardashians and the Beckhams.
The company has its eye on further expansion. A Thousand Oaks location is slated to open this August and stores in Costa Mesa and downtown Los Angeles are planned for 2027. An Erewhon cafe opened in the Los Angeles County Museum of Art’s new David Geffen Galleries earlier this month.
The Pacific Palisades location, which shut down after the wildfires last year, is set to reopen in January.
The Glendale Erewhon takes the place of Virgil’s Hardware Home Center, which opened in 1932 and closed in 2019.
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